By Bernard Hickey
The government has detailed a series of tweaks for banks, farmers and rich families claiming Working For Families payments that could raise at least NZ$31 million.
The Budget 2011 announcements came as the government revealed the Inland Revenue Department's crackdown on tax avoidance had already gathered NZ$115.2 million of tax inside the first nine months of the crackdown.
Last year the IRD was allocated NZ$119.3 million over four years to help chase down tax avoiders. So far the IRD had recovered NZ$5.74 in tax for every NZ$1 spent on investigating avoidance.
"In these difficult times, anything short of full compliance with tax obligations is effectively stealing from the honest New Zealand taxpayers paying their due. I am committed to following up on tax evaders," Revenue Minister Peter Dunne said.
Dunne said the government would change 'thin capitalisation rules' for foreign-owned banks from 4% to 6% from April 1 2012. The change limits the amount of debt that non-banking multinationals can use to increase their interest deductions for tax purposes.
The change would raise around NZ$8 million of extra tax revenues in the first year and a further NZ$31 million in each subseqent fiscal year, Dunne said.
He also announced plans to review the treatment of non cash benefits for employees claiming Working For Families so they could not be used to dampen down taxable income.
The government would also review the tax treatment of 'mixed-use' assets such as yachts and holiday homes.
"There have been instances where high-value assets such as yachts and holiday homes which are both rented out and used privately have provided owners with inflated tax deductions, which either result in less taxable rental income or tax losses that can be used to offset other income," Dunne said.
"Everyone would like to own a holiday home, but it should not be subsidised by the taxpayer," he said.
Livestock valuations
Dunne said the government had begun looking at options for fairer rules covering livestock valuation elections.
Under the current rules, farmers usually value their livestock for tax purposes under one of two valuation methods -- the herd scheme or the national standard cost scheme.
"Under current rules, a farmer can switch back and forth between the two methods, choosing the more favourable outcome for tax purposes. This can mean increases in market valuations go untaxed, while decreases in valuation can be eligible for tax deductions," Dunne said.
10 Comments
Small time player this Dunne guy unfortunatly we will be subsidising this conman for the rest of his life.
"Everyone would like to own a holiday home, but it should not be subsidised by the taxpayer," he said.
I think its more a case of we the citizens are sick of subsidising you and bankers!
You make enough coin a week more than the average kiwi why dont you go sort out your own retirement like the rest of us have to?
Theres a saving straight away...now add all the other poor preforming confidence tricksters and I bet that saving would be more than 30 million per year...
Errr... Dunne needs to learn about the livestock schemes. In one you pay no tax for 'increases' but neither is there a deduction for 'losses'. In the other one you pay on 'profit' and deduct on 'losses'.
Actually agree with the holiday house rort coming to an end.
* How many government MPs do NOT have at least one holiday home?
* How likely is it that National and Bill English (Southland dairy farmer from Southland dairy farm family, brother of Federated Farmers CEO Connor English) will ever take anything even remotely resembling a "hard line" of any sort against NZ farmers?
* How likely is it that this government (fruit of the loins of NZ's wealthiest families, best friend of Big Business, implementor of significant tax cuts for the nation's wealthiest, increaser of GST) will ever take anything even remotely resembling a "hard line" of any sort against NZ's wealthy?
Bill English placed his million-dollar family home into a trust administered by his wife then claimed a $50,000 per year accommodation allowance from NZ taxpayers. He used NZ tax dollars to bail out SCF "investors" for HIGHLY suspect reasons. He plotted to sell Kiwibank while assuring the nation that he had no plans to sell Kiwibank. He has thrown a spanner into the Kiwisaver works, and he is borrowing NZ into the poor house.
This is not a government of or for the people, except its own people and those at the very top, who are usually one and the same thing.
Just to tweak your figures: Double Dipton the Southland farmer -- not to mention Minister of Finance and Deputy Prime Minister -- was gifted $900 p/w by oblivious taxpayers to live in his own $1.2m home.
Other than that, I'd say you were essentially correct on all points.
Bill English was legally entitled to claim that allowance. He did nothing wrong yet English paid it all back even though he didn't have to. You can be sure that every Labour MP was claiming the same allowance but none of them repaid anything. That's why people trust Bill English but no one trusts Labour.
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