Bright line test extension fast tracked
Wednesday 28 February 2018
The legislation extending the bright line on residential property sales from two years to five years will not be going through the Select Committee process.
By Miriam Bell
Revenue Minister Stuart Nash introduced a Supplementary Order Paper to the Taxation Bill, which gives effect to the proposed changes, into Parliament earlier this month.
He wants the extension to the bright-line test to apply to residential investment properties purchased from the date on which the bill receives the Royal Assent, which is expected in March.
But the Opposition is not happy with the pace the government is pushing the changes through at.
National Party Finance Spokesman Steven Joyce says the government has now refused a motion to send the policy to the Finance and Expenditure Committee for examination.
“There is no urgent need for this change – it could go through the proper considered parliamentary process.”
He says the government doesn’t want to hear any submissions about the impact of the change, especially as government officials are not keen on the extension.
Treasury and the IRD recently released a regulatory impact statement prepared for the Ministers of Finance and Revenue, which says it is difficult to quantify the benefits of the extension.
They note there are several key risks, including “over-reach” and “lock-in”, and that it is likely to lead to a reduction in the supply of rental properties and upward pressure on rents.
Joyce says the extension of the bright line test is at odds with the government’s professed enthusiasm for lifting the supply of housing.
“You don’t encourage more investment in housing supply by discouraging investors from putting their money in and treating them all like they are speculators.
“Whether it’s this, negative gearing or the proposed capital gains tax, it’s all designed to disadvantage legitimate property investors.”
In contrast, Nash says the extension will ensure that property speculators pay income tax on their gains and makes property speculation less attractive.
“Reducing speculative demand will help improve housing affordability for owner-occupiers.”
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