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Property investors pay IRD extra $63mWednesday 23 December 2009 Property investors have paid an extra $63.6 million since Inland Revenue started a crackdown programme. By Jenha White
The Property Compliance Programme started in June 2007 and now has 40 dedicated investigators reviewing the tax implications of rental property transactions. So far the programme has spent $10.7 million of its $14.6 million budget. "We provide information about property tax rules in areas where mistakes are commonly made. "To date we have contacted around 50,000 customers." For the year ended June 2008 the programme assessed extra tax of $15 million, for the year ended June 2009, $37.3 million and for the current year to 31 October 2009, $11.3 million. It has also had 331 people come forward to make voluntary disclosures. Inland Revenue says five prosecutions are also underway and while cases before the Taxation Review Authority are rare, a court ruling on a "own-home LAQC" has been found in favour of the Commissioner. A number of campaigns have also been running as part of the Property Compliance Programme focusing on property spectators or traders. An LAQC campaign began last May focusing on LAQC shareholders who may be living in a LAQC owned property which is also their private residence, where the LAQC deducts what would otherwise be private expenses. The campaign found that the total of LAQC losses claimed more than tripled since 2003 when $709.8 million of LAQC losses were claimed. Last year $2.258 billion in losses were claimed. The IRD says there are 144,000 existing LAQCs and as a result of its campaign there have been 4,000 de-registrations in the 2008-09 tax year. Another campaign launched by Inland Revenue looked at people who were thinking of selling an investment property and who may not have been aware of the potential GST implications. The Property Compliance Programme is now looking to address another area over the coming months focused on people who have sold or are thinking of selling property, such as a unit or section, purchased "off the plan." Inland Revenue says with few exceptions these sorts of transactions are taxable in the same way as other property transactions and it will be contacting people identified as having an interest in that area. The New Zealand Institute of Chartered Accountants (NZICA) has concerns about this campaign, saying a brochure issued at the start of December by Inland Revenue on off-the-plan property sales contains potentially misleading advice. The NZICA strongly endorsed the recommendation in the brochure that people should obtain tax advice from a professional.
Comments from our readersOn 23 December 2009 at 9:32 pm colin said:
good job - its about time they woke up. I am an "investor" buy and hold - it brasses me off to see speculators stuffing up the market by doing the quick flick and tax free. I might be alone in thinking capital gains is a good thing - It should stop these tax free leaches - but it must be done across the board - not hitting only a few - it must hit everyone. Then i think there would become more stability in the housing prices. I dont think it will affect the long term investor - we might just have to hold on for an extra year before selling - but it will certainly affect the speculators and the property hoppers in the private sector. Add your comment:Soft housing activity predicted for the rest of the year amid weak REINZ data Economists are predicting the housing market will stay soft for the rest of the year after Real Estate Institute data showed sales volumes stayed under pressure last month. Review may give investors some depreciation relief Commercial and industrial property investors should still be able to claim significant depreciation allowances, an asset depreciation expert says. Economist pushes out dates for next OCR hikes One economist has pushed out the date for the Reserve Bank’s next official cash rate hike citing recent downgrades to its forecasts for global GDP growth, including in Australia and New Zealand. |
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