IRD's property focus getting sharper

Friday 23 July 2010

The Inland Revenue Department's focus on the property market has not let up due to the recession.

By Rob Hosking

The department's latest annual Compliance Focus publication, released today, shows, if anything, an increased focus on getting more tax out of the property investment sector.

The release also shows the department got an extra $83 million in tax in the last year out of its stepped up property compliance programme.

Just over $6.6 million of this came from voluntary disclosures but the rest - $77.1 million - came from audits.

The Compliance Focus shows an increased focus on property - whether the taxpayer is an individual, a small business, a corporate, or a "high wealth and high income individual".

"An involvement in property development is one of the risk assessment criteria we use when selecting high wealth individuals for review," the document says.

And small to medium sized businesses (SMEs) with property holdings are also a target.

This is partly through loss attributing qualifying companies (LAQCs) and the department says that after the combination of recently announced changes in this year's Budget, plus a stepped-up activism from the department, the number of new LAQCs has dropped and there has been a significant increase in the number of LAQCs being deregistered.

However, many of the deregistered LAQCs have not lodged tax corrections and the department is following this up.

But on top of the LAQC issue, there has been a rise in the number of shareholders which have recently established trusts and partnerships as an alternative structure for their property holdings.

"They continue to claim private expenses and avoid their tax. We're investigating these cases."

Comments from our readers

On 26 July 2010 at 11:10 am aileen said:
Hm IRD hitting us poor people who have tried to do something for our retirement getting kicked again. why dont the IRD look at people kicking the system, double dipping benefits etc etc instead of hitting the people to are honest, they ird/govt didnt help all those poor retirees who lost money in the financial crash, no govt guarantees for us but we battle on to get kicked again. paying tax on money invested/losted is a bit over the top what is this fair land coming to.
On 26 July 2010 at 3:36 pm rob said:
gosh, aileen, poster above..you're right..we the taxpayer should subsidise your whinging arse so you can have a bit more dough in your gnarled old hand..blah, bosh..you're part of the problem ,not the solution..move on and stop expecting to get away with rorting the system just 'cos you're old!
On 27 July 2010 at 7:17 pm ward said:
gosh, rob, poster above.. what you don't seem to realise is providing rental properties for the general population is a viable business for some people who would like to go into this type of investment. This investment type is actually more viable then many investments currently out there and it is providing housing for many many new zealanders. and no, I do not have any investment properties.
On 1 August 2010 at 2:11 pm Garry said:
Leave the property investors alone MR IRD. All you are doing is planting the seeds which will grow into higher rents for those who can least afford it and driving more investors offshore to countries that welcome their money.
Commenting is closed

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