Commenting on the Tax Working Group’s final report Property Council New Zealand CEO Leonie Freeman says;
“With regards to a capital gains tax, we were looking for the working group (TWG) to recognise that the cost of doing business should not restrain business. We think they have fallen short.”
“Commercial property houses most New Zealand businesses. It is a key part of the infrastructure of the productive economy.”
“It is important that the tax system encourages, not penalises, progressive upgrades to the buildings business work in.”
“Unless there are sensible roll-over relief provisions, businesses may be penalised for trading up to new assets/buildings. The taxation of capital gains will effectively be a stamp duty, acting as a brake on market transactions, and potentially preventing transactions going through because of the tax cost. In short, this will mean lost opportunities for growth and lost productivity gains.”
“What we want to see are progressive improvements to New Zealand’s commercial buildings. We need the buildings that house New Zealand’s businesses and workers to keep up with the changing needs of the future.”
“The fact is that commercial buildings do depreciate. Trying to ignore it won’t change what actually happens.”
“It’s important that building owners are incentivised to upgrade and maintain their buildings given the importance of safe and environmentally friendly buildings for our economic and social wellbeing.”
“The perverse situation we have at the moment is that if a building falls down in an earthquake, a building owner is entitled to tax relief. If the building owner proactively tries to prevent earthquake damage, there is no relief.”
“We would have liked to see a stronger recommendation from the TWG about reinstating depreciation on commercial buildings. It is a no-brainer from both a safety and a productivity perspective.”
“New Zealand needs to keep in step with its international counterparts. Rundown, out of date buildings will not help our economy be the best it can be.“
“It is important to note the report is simply a set of recommendations to the Government. There is a difficult and lengthy (months to years) political process to go through before any changes become law.”
ENDS