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Inland Revenue

Tax Policy

Announcements
PUBLISHED 13 September 2012

Taxation bill introduced

The Taxation (Livestock Valuation, Assets Expenditure and Remedial Matters) Bill was introduced to Parliament today.

The bill aims to ensure fairness in the tax system and proposes to tighten the rules for deducting costs of assets such as holiday homes, boats and aircraft that are used by the owner, both privately and to earn income.

The bill also proposes an exception to the herd scheme irrevocability rule enacted as part of Budget 2012 legislation and proposes new rules for the disposal of herd scheme livestock.

In addition, the bill contains proposed changes to the GST rules to support businesses trading internationally.

For more information see the media statement, the bill, the commentary on the bill and the regulatory impact statements.


Hon Peter Dunne
Minister of Revenue

13 September 2012

Media statement

Dunne: new tax bill for fairer tax system, stronger economy

A new tax bill introduced to Parliament today continues the Government’s focus on ensuring everyone pays their fair share of tax, while continuing to support the economy, Revenue Minister Peter Dunne said.

The Taxation (Livestock Valuation, Assets Expenditure and Remedial Matters) Bill includes supporting provisions proposed to the livestock valuation rules which made elections to use the herd scheme generally irrevocable.

“The situation had previously been too loose, allowing some farmers to switch between the two main livestock valuation methods to receive an unfair tax advantage over those farmers who applied the rules as they were intended,” Mr Dunne said.

The core herd scheme irrevocability rule was enacted as part of Budget 2012 legislation. This bill details the exception to this. The proposed new rules for the disposal of herd scheme livestock are also detailed.

The bill also contains a proposal to tighten the rules for deducting costs of assets such as holiday homes, boats and aircraft that are used by the owner, both privately and to earn income. The proposal was announced in Budget 2012 and has been consulted on publicly.

Mr Dunne said it is a complex matter.

“It is important that the so-called mixed-use rules work properly when the property is held in a company. Achieving this is not straightforward as companies are generally allowed automatic tax deductions for interest expenditure. As a result the bill proposes rules that apportion company interest deductions,” he said.

Mr Dunne said that the bill also had a focus on helping businesses.

“It is important to the Government that New Zealand businesses are supported in becoming more competitive against the rest of the world,” he said.

“Our current GST laws can present an obstacle to that and we need to address this to stay globally competitive. GST is a tax on consumption—not a tax on business and therefore should be neutral for both resident and non-resident businesses.

“The bill proposes to allow non-resident businesses to register for, and claim back, GST in a broadly similar way to a comparable resident business,” Mr Dunne said.

Another GST issue affecting global trade will be resolved in the bill.

Where a New Zealand resident manufacturer charges an overseas customer for the creation or modification of tools required to produce specific exported products, a new rule is proposed that will allow these tooling costs to be zero-rated for GST.

The bill also confirms that farmers’ riparian planting is immediately deductible. Also the rules concerning the tax treatment of certain capital payments and receipts, and capital losses in the horticultural industry, are clarified. These will generally help those kiwifruit orchardists affected by the Psa virus.

In addition, donee status is proposed for three organisations: The Hunger Project New Zealand, OneSight New Zealand, and Fund for Timor.

Ends

Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985