Finance Minister Bill English and Revenue Minister Peter Dunne are calling for submissions on the fairness of New Zealand's tax system.
Two papers were released by the IRD today detailing its issues with current tax laws for livestock valuation and mixed use assets.
See the release below from English and Dunne:
Two issues papers released today for public consultation continue the Government’s focus on ensuring fairness in the tax system, Finance Minister Bill English and Revenue Minister Peter Dunne say.
The issues papers, which were announced in Budget 2011, provide options for making the tax system fairer in two areas:
Livestock valuation - this paper presents options for fairer rules covering livestock valuation elections. Mr Dunne says the current rules appear to be too loose, allowing farmers to switch between valuation methods providing an unfair tax advantage.
Mixed use assets - this paper provides options to address unfairness in the tax treatment of assets such as holiday houses used for both private and income-earning purposes.
Mr Dunne says unfairness arises when some owners claim their house is available for rent during the significant periods of the year the house is empty.
“This provides them with a basis for claiming tax deductions for expenses relating to the period the property is empty. Claiming these deductions could be regarded as unfair, particularly if the owner holds the asset primarily for private enjoyment,” Mr Dunne says.
Officials are also working on a third issues paper focusing on the tax and social assistance treatment of salary traded off for other benefits. This will be released separately once policy analysis is complete.
“Tax dollars are needed for a wide range of government services such as health, education, justice, lowering the road toll, reducing family violence, immunisation programmes and conservation,” Mr Dunne says. “Taxes also pay for work in Christchurch on roads, hospitals, schools and emergency recovery.
Mr English says it’s important that everyone pays their fair share of tax.
“By tightening the rules around property investment, aligning the top personal and the trustee tax rates and by ensuring greater fairness in social assistance programmes, Budget 2010 had a strong focus on fairness and integrity of the tax system.
“Today’s announcement continues that focus,” Mr English says.
The closing date for submissions is 30 September 2011. The two issues papers and fact sheet are available on the Inland Revenue policy website at: http://taxpolicy.ird.govt.nz/publications/year/2011
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