Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

Canterbury tax relief, GST loophole closed

Hon Stuart Nash

Minister of Revenue

14 August 2018


Revenue Minister Stuart Nash has confirmed Parliament will extend tax relief for Canterbury businesses affected by issues relating to depreciation following the earthquakes.

Mr Nash today introduced a Supplementary Order Paper (SOP) to the Taxation (Annual Rates, Modernising Tax Administration, and Remedial Matters) Bill currently making its way through Parliament.

“The SOP extends tax relief for Canterbury businesses affected by earthquakes. It extends depreciation roll-over relief for a further five years to the end of the 2023-24 income year. I have been advised that at least 40 Canterbury businesses will be adversely affected if current depreciation provisions are not extended.

“The tax issue arises because an insurance payout on a depreciable asset can attract a tax liability which may cause consequent cash flow problems. We do not want to hinder the city’s recovery or unfairly burden these taxpayers.

“Many Canterbury businesses are experiencing problems outside their control, such as delays with insurance pay-outs or finding tenants for properties or making progress on building projects. This measure will provide relief to affected businesses and further assist with the Canterbury rebuild.”

Mr Nash says the SOP will also close a loophole which allows non-profit entities to potentially avoid GST on income from asset sales. The change was signalled in an issues paper released on 15 May and will apply from that date.

“The GST treatment of non-profit organisations differs from other entities,” says Mr Nash. “Non-profits can register for GST and claim GST refunds on most of their expenses, even if their turnover is below the $60,000 threshold for GST registration. In many cases non-profit bodies do not pay much GST on their activities.

“In turn, when a GST-registered body sells an asset for which it has claimed GST expenses, it must pay GST on the income from the sale. Inland Revenue has applied this rule since GST was first introduced in 1986.

“Revenue officials have recently been advised of a new legal interpretation of this rule which exposes the tax system to potential losses. For the avoidance of doubt, the SOP introduced today will clarify the GST rules.

“The new interpretation is not consistent with the way the GST rules have been applied and understood in the past. If GST expenses have been claimed by a non-profit body in relation to an asset, GST should apply to the asset when it is sold or there is an equivalent event, such as an insurance pay-out.

“The tax system is based on fairness, and being simple and efficient to operate. The new interpretation threatens those principles and the law change restores certainty.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Tax Working Group’s Road Map

Trying to analyse the interim report on the Tax Working Group (TWG) is like trying to review an entire All Blacks game, but at the half- time mark.

With so much still to be finalised, Sir Michael Cullen and his colleagues are going to need all the All Blacks’ fabled finishing skills to get a coherent, fiscally neutral package together by the February 2019 deadline. More>>

 

Meth Testing Report: Housing NZ "To Right Wrong"

Phil Twyford “Housing NZ acknowledges that around 800 tenants suffered by either losing their tenancies, losing their possessions, being suspended from the public housing waiting list, negative effects on their credit ratings or, in the worst cases, being made homeless.” More>>

ALSO:

No Reshuffle: Meka Whaitiri Removed As A Minister

Meka Whaitiri will be removed as a Minister with immediate effect... The decision was made after receiving a report into an incident that occurred on 27 August in Gisborne, involving Meka Whaitiri and one of her staff. More>>

ALSO:

Pay Equity Bill: Making History For Women’s Pay

The Equal Pay Amendment Bill, introduced to the House today, will make it easier for workers to make a pay equity claim , using a more simple and accessible process within New Zealand’s existing bargaining framework. More>>

ALSO:

Suffrage 125: NZ A Trailblazer For Women

“We acknowledge the work of Kate Sheppard, Meri Te Tai Mangakāhia, and all of the suffragists who tirelessly campaigned for the vote… Today we also need to ask each other: how we can continue to make our country a fairer and better place to continue the legacy of the suffragists.” More>>

ALSO:

Asylum: Refugee Quota Increasing To 1500

“The quota increase will take place from July 2020. In the meantime, we will work to increase the number and spread of refugee resettlement and support services. We need to make sure we’re prepared for this change in policy.” More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels