Tax changes to ‘rebalance' economy away from housing

• Tweet

The second round of Budget 2010 tax changes will help shift the economy towards savings, investments and exports and away from the "overinvestment in housing of the past decade," said Finance Minister Bill English.

Wednesday, March 23rd 2011, 12:00AM 2 Comments

by Benn Bathgate

The changes include ending landlords' and businesses' ability to claim depreciation on buildings with a useful life of 50 years or more and abolishing loss attributing qualifying companies (LAQCs), replacing them with a new structure that ensures owners cannot claim a tax deduction on losses at a higher rate than they pay on profits.

English and Finance Minister Bill Dunne said the changes, set to come into effect on April 1, or for the 2011/2012 income year, would also make the tax system fairer and encourage reinvestment of earnings back into jobs and growth.

Dunne said the changes make the tax system fairer by ensuring the treatment of property is consistent with other forms of investment.

"Ending depreciation tax breaks on buildings made sense. On average, New Zealand buildings actually increase, rather than decrease, in value over time," he said.

"Changes to the LAQC rules and the introduction of the new-look through company tax rules will reduce the opportunities for tax structuring," he said.

"Closing loopholes that allow families to structure their income through the use of trusts or to use investment losses to increase their eligibility for Working for families payments will also make the tax system fairer."

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

Comments from our readers

Commenting is closed