Tax Update - Capital gains or not?
Senior Advocacy Advisor, Jane Budge, provides an update on the Tax Working Group's review of our tax system, why it's important to our members and discusses the issue of the moment, capital gains.
The Government established a Tax Working Group, Chaired by Sir Michael Cullen, to provide recommendations that would improve the fairness, balance and structure of the tax system over the next 10 years.
Why is this important for Property Council members?
It’s important to our members because currently the tax system is unfair, particularly for the commercial property sector. Members are paying an unfair share of tax due to the removal of depreciation on commercial buildings.This was a short-sighted decision to pay for the 2010 income tax cuts.
What work has been done so far?
We set up our own internal Tax Working Group to help the Advocacy team formulate our position and to assist with our submissions. The members of our working group include:
- Chris Gudgeon, Kiwi Property, initial Chair
- Andy Eakin, Goodman, Co-Chair
- Gavin Parker, Kiwi Property, Co-Chair
- Richard Hilder, Precinct
- Jennifer Whooley, Stride
- Brent Gilchrist, CGML
- Craig Pierce, PFI
- Nathan Williams, PFI
- Dave Fraser, Argosy
- KPMG (tax expert assistance)
The Government’s Tax Working Group released an initial report in March 2018 seeking input on the future of tax. It ran a two-month public consultation between 1 March and 30 April 2018. Property Council made a submission on the interim discussion paper and were then subsequently invited to speak with the Tax Working Group on our submission. We received excellent feedback from various working group members on our submission and how constructive we were in our consideration.
Collaboration with the Government
Following our submission, the Government’s Tax Working Group released an interim report in September 2018 seeking input from a key range of stakeholders on the detail associated with the future of tax and what it might look like. Property Council again was invited to participate in this debate and again made a submission on the issues associated with the proposals.
The main point of the discussion is regarding “capital gains or not?” There has been a significant amount of debate regarding a capital gains tax and its potential introduction, and ultimately it will be a political decision (and potentially an election winner or loser) on if or when it is introduced. At a basic level we would like the depreciation on commercial buildings to be re-instated recognising that commercial buildings become obsolete over time. It’s absurd that there is relief on a building that has fallen down in an earthquake but no relief if a building owner earthquake strengthens the building .
What happens next?
Final recommendations will be issued in February 2019.
Should you require any further information or wish to get involved in our internal working group, please contact Jane Budge.
Author | Jane Budge
Upon joining Property Council in 2017, Jane brought a wealth of experience to the advocacy team, having worked in senior policy advisory roles at both local and central government level. Her experience spans many government departments including Standards New Zealand, the Ministry of Consumer Affairs and the Department of Social Welfare.
Jane also spent four years with the New Zealand Police, where she was responsible for the road policing strategy and policy development, and most recently she held a senior policy role at Taupo District Council. Jane’s aptitude for building relationships and eye for detail make her a formidable addition to the team.
Get in touch with Jane.