Housing Trust welcomes resolution to tax issue

Yesterday the Government announced plans to introduce new tax legislation to give certainty to community housing providers assisting low-income families into home ownership. The new legislation will provide tax exemption for approved community housing providers bringing to an end some years of uncertainty.

The new legislation solves the go forward status of the Queenstown Lakes Community Housing Trust that was deregistered as a charity five years ago and subsequently lost an appeal in the High Court.

The Trust was then subject to an Inland Revenue assessment which resulted in a $6m tax bill that was settled on behalf of the Trust by the Crown.

Under the impending tax provisions a point of entry test and new eligibility criteria will be introduced, focused on the income and assets of the community housing providers’ clients, and will match the KiwiSaver HomeStart programme criteria.

This means that the income threshold has been set at $80,000 for an individual and $120,000 for a couple, with no asset test for first-home buyers.

The new legislation will be applied retrospectively from 14th April 2014, which means the Trust will face no further tax obligations since its IRD settlement.

Trust Chair, David Cole, said he was pleased with the decision - “Trustees are delighted to see common sense prevail on this issue and we are delighted with Minister Bennett’s determination to resolve this problem. If the High Court decision was applied across other coomunity housing providers there would be other organisations that would face deregistration like Queenstown. This decision will allay many fears amongst trustees around the country who have been concerned about their tax status arising from the High Court decision.”

Mr Cole went on to say - “From the beginning, the Queenstown community worked closely alongside the Crown in the formation of the Trust. The Crown approved the structure, signed-off the Trust Deed, and approved the programmes and the activities of the Trust – even going so far as approving every individual household the Trust assisted. So it was disappointing that another arm of the Crown undermined this collaboration by striking the organisation from the Charities register.”

“It has taken more than 3 years to resolve this complex matter with Crown Agencies and we are very pleased the uncertainty of the Trust’s tax status during that period and going forward will now be resolved with this government announcement.”

“This issue has been hugely distracting for trustees over many years and I am pleased our energies and focus can now be wholly directed on delivering more houses for lower income households for a community that has among the most expensive housing costs in the country.”

© Scoop Media