6 August, 2012
Dunne: SOP on quake issues, international tax matters
A tax legislation supplementary order paper will benefit Canterbury earthquake victims still facing real and ongoing difficulties, Revenue Minister Peter Dunne said in releasing it today.
“It is nearly 18 months since the big earthquake in Christchurch, and this SOP is another way the Government is supporting the people of Christchurch by providing all the practical help we can,” Mr Dunne said.
The SOP to the Taxation (Annual Rates, Returns Filing and Remedial Matters) Bill addresses a range of issues including:
Ensuring that the tax depreciation roll-over rules introduced last year work as intended, and that they also cover certain assets assessed as uneconomic to repair. Optional matching rules are provided to smooth the timing of income and deductions/disposal losses and recognise only the net balance.
Changing the year in which income or expenditure is recognised in some circumstances to acknowledge the extended disruption to businesses from the earthquakes.
Extending roll-over relief to properties held on revenue account and which have not been demolished.
Ensuring that acceptance of the Government’s red zone compensation offer does not trigger certain land provisions that could deem a property to be on revenue account rather than capital account.
Clarifying that amounts received by a New Zealand resident insurer from a non-resident insurer are not subject to GST.
Amending the thin-capitalisation rules to account for impairment of earthquake-damaged assets.
“These were all issues raised by Canterbury people, so I am confident that we are providing practical help for real situations affecting people in Canterbury,” Mr Dunne said.
He said that the SOP also contains a number of remedial items to ensure that the international tax rules are working as intended.
‘In particular, retrospective changes have been made to relieve over-taxation of interests in controlled foreign companies by better aligning the tax treatment of income and related deductions.
“The changes continue the thrust of the international reforms and by removing tax impediments to normal business activities, are a pragmatic response to the circumstances of taxpayers,” Mr Dunne said.
The SOP also adds the Queen Elizabeth II Diamond Jubilee Trust, a New Zealand Trust set up to commemorate the 60th anniversary of the Accession, to the list of donee organisations in schedule 32 of the Income Tax Act 2007.
The change allows donations to the trust to be eligible for tax benefits and applies from 31 May 2012.