Dunne: tax treatment of earthquake demolition costs clarified
The Government will amend tax legislation after IRD officials identified concerns with the tax implications of asset disposal costs, including demolition costs, from the Canterbury earthquake, Revenue Minister Peter Dunne said today.
"The legislative changes will allow a more accurate tax treatment of those costs," Mr Dunne said.
He said that current legislation was unclear on the tax treatment of disposal and demolition costs where assets had been irreparably damaged by a natural event, such as last month's earthquake.
"Parliament clearly intended that such costs be dealt with as part of the disposal of the asset.
"This uncertainty is not helpful. Legislation will therefore be clarified so that Parliament's intention is clearly reflected in the Tax Act.
"In general, the amendment will apply from 1 April 2010, but where taxpayers have filed their returns on the basis that these costs are part of the disposal cost of an asset, those returns will be grandparented," Mr Dunne said..
Further information for people affected by the earthquake is available on Inland Revenue's website www.ird.govt.nz.
Mark Stewart | Press Secretary | Office of Hon Peter Dunne
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