Tax relief for Chch should be the first of many steps

20.04.2011

Revenue Minister Peter Dunne’s acknowledgement of the impact of the Canterbury earthquakes on property owners by providing tax relief on depreciation is a sensible way to assist with business recovery.

In proposed changes to depreciation rules Cabinet agreed to last week, three new rules will cover rollover relief, the timing of deemed sales of destroyed insured assets and losses on buildings.

A five-year period for acquiring replacement assets will be allowed.

Property Council chief executive Connal Townsend said the changes would relieve property owners in Canterbury from providing a “windfall” to the Government.

“The changes are fair. Deferring depreciation recovered on buildings and assets that have been destroyed or required to be demolished gives cash-strapped businesses a chance to avoid a tax liability.

“The Revenue Minister is right to say that the Government should not “collect a windfall gain from depreciation recovered where taxpayers use their insurance proceeds to replace assets destroyed by the quakes.”

Other measures that should be considered to give property owners a chance to recover include a moratorium on charging development contributions and financial contributions in Christchurch for the next seven years.

“Development contributions cannot fund the redevelopment of Christchurch, as they can only legally be used to fund growth, not the replacement of buildings that collapsed or were subsequently demolished.”

Mr Townsend said rating tools could also be used to encourage recovery and the repopulation of the CBD. “Properties within the CBD should be rated on land value only for the next seven years and after that, a fixed capital value for three years.”

Halving rates on qualifying heritage restoration in Christchurch, Lyttleton, Selwyn and Waimakariri properties would help to ensure all heritage buildings were not lost, he said.

“These are some of the financial tools and legislative changes the Government and Christchurch City Council could respond with to make sure the CBD is regenerated and Canterbury businesses can recover.

“The rebuilding of the CBD in particular will be long and expensive. The Government needs to do what it can to support, promote and incentivise developments that bring sustainable populations back into the city.”

ENDS

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