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Inland Revenue

Tax Policy


Ten submissions were received on the amendments relating to community housing entities and most of them supported the underlying policy intention of the amendments. However, the majority of these submitters (mainly from the community housing sector) were strongly opposed to the eligibility criteria and recommended significant changes. The sector’s opposition centres on the proposed income and assets tests that would be applied to the intended recipient class.

The sector believes that the proposed tax exemption is unlikely to apply to community housing entities that they believe are most in need of it. This is because their current housing clients are unlikely to meet the proposed criteria for the intended recipient class. For example, Habitat for Humanity considers that the income and asset levels of some of its current housing clients would mean that it would not be eligible for the proposed tax exemption, should it no longer be eligible to be a registered charity.

Officials support the use of an income threshold to help determine the intended recipient class as it will ensure that the proposed exemption is effectively targeted. Furthermore, an income threshold is objective and can easily be applied in a self-assessment environment. Finally, we acknowledge that the way in which the regulation-making provision in new section 225D is drafted means Ministers can dispense with any one of the factors in determining the intended recipient class. Therefore, there is some flexibility for the responsible Ministers to make recommendations on the overall scope of the recipient class and to target the exemption accordingly.