Property Industry Welcomes Changes to IRD Policy

MEDIA RELEASE
27.09.2012

Property Industry Welcomes Changes to IRD Policy

Changes to Inland Revenue Department’s proposed lease inducement policy announced today by the Minister of Revenue, Hon Peter Dunne, have been welcomed by commercial property advocate Property Council New Zealand.

This is a move that shows the Government is listening and understanding very real concerns faced by the property industry, according to Property Council’s chief executive, Connal Townsend.

“Property Council is pleased that most of the submission points raised with Inland Revenue have been reviewed and accepted. The proposed changes are indeed a positive step in the right direction,” Mr Townsend noted.

“The biggest change to the Government’s position on the tax treatment of lease inducement payments is that this policy will now apply to commercial leases entered into on or after 1 April 2013. Previously, the original proposals were intended to apply from 26 July 2012, which would have effectively allowed a retrospective tax policy.”

“This will undoubtedly help remove immediate uncertainty on tax that is owed, assisting landlords to plan any tax payments in advance, rather than retrospectively,” he said.

“Another change which Property Council is pleased to see is confirmation that lease inducement payments will be deductible and will override the capital limitation, as this was previously unclear.”

“However, it is disappointing to see that income and expenditure deductions arising from these payments are set to be spread evenly over the term of the lease. Property Council would have preferred the payments to be deducted at the time the payment is made.”

ENDS

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