INDEPENDENT NEWS

Budget proposals to make tax system fairer

Published: Thu 19 May 2011 03:18 PM
Budget proposals to make tax system fairer
Hon Peter Dunne
Minister of Revenue
19 May 2011
Budget 2011 signals measures to ensure fairer treatment of employee benefits, new rules for mixed-use assets, and a new approach to livestock valuation elections for farmers, Revenue Minister Peter Dunne says.
Employee definitions of income
Building on the Budget 2010 changes to improve the integrity of the tax system, two further aspects of the tax and social assistance treatment of non-cash benefits are to be examined for fairness.
“The questions now are whether the definition of income for Working for Families tax credit purposes should be further widened to include more fringe benefits provided to employees, and whether salary that can be traded off for non-taxed non-cash benefits should be subject to tax,” Mr Dunne says.
Mixed-use assets
The Government will also review the tax treatment of mixed-use assets used for both private and business purposes.
“We want to make sure the rules are fairer and do not distort investment decisions,” Mr Dunne says.
“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.
“Everyone would like to own a holiday home, but it should not be subsidised by the taxpayer.”
Livestock valuation elections
The Government has also begun investigating 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. Substantial differences in values between them are possible.
“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,” Mr Dunne says.
Public consultation documents will be released on all three Budget initiatives later this year.
ENDS

Next in New Zealand politics

Gordon Campbell on welfare vs infrastructure spending
By: Gordon Campbell
New direction for criminal justice reform
By: New Zealand Government
Surgical mesh restorative justice report received
By: New Zealand Government
Government’s power to order decryption must respect privacy
By: Joint Press Release
National will invest in quality healthcare
By: New Zealand National Party
Report on combatting foreign election interference delivered
By: RNZ
Name suppression lifted for officers A & B
By: New Zealand Police
Child Poverty Monitor: Big, bold, permanent change needed
By: Office of the Children's Commissioner
Chief Victims Advisor reappointed for a further two years
By: New Zealand Government
Justice report highlights systemic racism and inequality
By: Green Party
"The Best Christmas present ever"
By: Wellington Howard League
First Step toward Protecting Our First Responders
By: New Zealand First Party
Report: Stories of Survivors of Surgical Mesh
By: Ministry of Health
National will deliver high-quality care for women
By: New Zealand National Party
Surgical Mesh Restorative Justice Report Finally Released
By: Mesh Down Under
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media