New Zealand: Business tax measures and proposed tax changes to housing policy
New Zealand: Business tax measures
A bill that contains the government’s housing policy includes certain business tax measures.
Under the proposal, there are provisions that:
- Contain the new “business continuity test” for carrying forward tax losses
- Would allow a deduction for the cost of donated trading stock
Housing policy tax measures
The housing policy announcements also reflect certain tax changes, including:
- For residential investment property acquired on or after 27 March 2021, a 10-year (rather than the current five-year) bright-line test and measures amending the main home exemption so that it would better reflect the split between personal and rental use.
- No interest deductions for residential rental property acquired on or after 27 March 2021, and for already acquired properties, a phase-out of interest deductions over four years.
- The bright-line period extension would not be intended to apply to “new builds” (a future consultation expected). The government would also consult on whether the proposed interest deduction restrictions would apply to new rental builds.
The bright-line changes are in a bill that is expected to be enacted. The interest deduction restrictions would be subject to legislation later this year, with an effective date of 1 October 2021.
Read a March 2021 report prepared by the KPMG member firm in New Zealand
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