28 March 2012

Herd elections changes don’t hit the bullseye

The New Zealand Institute of Chartered Accountants (NZICA) has reviewed today’s announcement from the government regarding tightening livestock valuation rules, but has some reservations with the proposed changes.

NZICA Tax Director, Craig Macalister, says that NZICA supports the government reducing the opportunities for livestock owners to switch between valuation options to achieve tax savings. However, NZICA is not convinced that making herd livestock scheme elections irrevocable is the right solution.

“We support any initiative that upholds the integrity of the tax system, but we are opposed to irrevocability as it invariably leads to unforseen consequences.

“Rigid changes such as these may be seen as an appropriate policy solution to suit a particular problem at a particular point in time, but may not be the right policy solution in the long term,” says Mr Macalister.

NZICA was in favour of a three year rule in which livestock owners made their election now which took effect in three years time. This allows livestock owners some flexibility to opt out of the herd livestock scheme while reducing the concerns raised by government.

About NZICA

NZICA is New Zealand’s largest professional body and represents more than 32,000 members in New Zealand and over 90 other countries. We act in the public interest through regulating the profession, developing financial reporting standards and promoting quality, integrity and expertise. Our members hold one of three prestigious professional accountancy designations: Chartered Accountant (CA), Associate Chartered Accountant (ACA) or Accounting Technician (AT).

ENDS

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