Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

New Bill seeks to disarm bright-line traps

Chartered Accountants Australia and New Zealand is welcoming the intent of a Bill responding to the peak membership body’s warning of bright-line traps for nomadic homeowners, but says that some pitfalls still remain.

Under the current rules, ‘main-home owners’ are granted a continuous safe harbour period of up to 365 days where they do not need to occupy the home. NZ Tax Leader John Cuthbertson had warned that in many instances this wouldn’t be long enough to protect them from the bright-line coming into effect, for example, homes that take longer than 12 months to build.

A new Taxation Bill intends to give these new homeowners more leeway, so that they are not caught out by the bright-line test if their home takes more than 12 months to build.

But questions around the proposed Bill have been raised, particularly how the phrase, ‘reasonable efforts to construct a dwelling intended for use as their main home,’ will be interpreted. Relevant questions from CA ANZ include ‘when do reasonable efforts to construct a dwelling commence,’ and what is captured by the term 'to construct’?

“Construction arguably implies the physical erection of a home. What needs to be included here is the whole build process. It’s important that resource consenting, geo-tech reporting, building design and other elements of the build process are covered in this change,” says NZ Tax Leader John Cuthbertson.

“It’s also important that the short period of time between when an owner acquires the land and starts actively engaging in the building process falls with the main home exclusion. That’s something all parties would want to see.”

“This is a recognition that to build a house, you have to purchase a piece of land, and that building doesn’t commence immediately, but within a reasonable time.”

Additionally, the proposed change to the 365-day safe harbour period does not include taxpayers in other circumstances that could easily run longer than 12 months, such as secondments, displacement due to natural disasters, end of life care or other common life occurrences.

“Overseas secondments for our large accounting firms, and even government departments like MFAT all run to about two years, long enough to trigger a pro-rata tax obligation if they sell within the bright-line period,” says Mr Cuthbertson.

“If your home becomes uninhabitable for over a year due to a natural disaster such as fire, flood or earthquake, that will also trigger the bright-line rule for those homeowners, and we’ve had all three of those disasters in recent times.”

“As many people will be aware, the insurance process can take time and would increase the period when people are outside their main home.”

“There’s also a range of end-of-life scenarios – say you become unwell, go into hospital, and then move straight to a rest home or other care, with family then clearing out the home for sale – that could easily run over 365 days.”

“It’s good to see the Government has moved to address our specific concern around the construction of new homes. We like the intent here, but there’s still some work to do on the current drafting,” concluded Mr Cuthbertson.

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines


Gordon Campbell: On Covid Vaccine Inequality, Plus Cowboy Bebop


Plainly, the Big Pharma model – where vaccine development, distribution, and pricing is left in the hands of the private sector - is not fit for purpose when it comes to meeting the global challenge of Covid vaccine coverage. Last week, Amnesty International released a major report on how the global response to the pandemic is only accentuating the inequalities... More>>


Government: Self-isolation Pilot To Start With 150 People


The goal of safely re-opening our borders and developing new ways for people to travel will start with a self-isolation pilot, COVID-19 Response Minister Chris Hipkins confirmed today. “As part of the Reconnecting New Zealanders plan announced in August, the self-isolation pilot will look at self-isolation for vaccinated travellers... More>>

ALSO:




 
 



Government: Details Of Interest Deductibility Rules Released

The Government has released the draft legislation outlining the details of the policy limiting the deductibility of interest costs on residential property investments.
Finance Minister Grant Robertson said the interest limitation proposals... More>>

ALSO:


Wellington Council: Mayor Suggests UK-style Arts-sector Insurance Scheme
It’s time New Zealand thought about an arts and events sector insurance scheme, not unlike that in the United Kingdom, says Wellington Mayor Andy Foster. His call follows the cancellation of the World of WearableArts 2021 show... More>>

Government: Next Steps To Improve Safety In Wake Of Whakaari White Island Tragedy
The Government is moving to improve safety in light of the Whakaari White Island tragedy and has released proposals to reinforce safety standards in registered adventure activities... More>>

Land Air Water: Two-thirds Of NZ’s Monitored River Sites Ecologically Impaired

Today, the Land, Air, Water Aotearoa (LAWA) project has released the LAWA River Water Quality National Picture Summary 2021, alongside updated river monitoring result histories for more than 1500 individual sites across New Zealand... More>>

Power: Bill Changes Bring Fairness To Charges

A key recommendation of an independent panel to make electricity charges fairer across all households will be put in place, the Energy and Resources Minister Megan Woods has announced... More>>



Government: Parks expiry of licenses, WoFs and regos
As a result of the Delta outbreak, driver licences, Warrants of Fitness (WoFs), Certificates of Fitness (CoFs), vehicle licences (‘regos’) and licence endorsements that expired on or after 21 July 2021 will be valid until 30 November 2021, Transport Minister Michael Wood has announced today... More>>


 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels