The taxman has not finished with clamping down on lease-related lump payments.
The latest tax bill, introduced to Parliament last week, contained the already flagged move to tax lease inducements but this was only the start, KPMG tax partner Ross McKinley says.
There were strong indications from Inland Revenue officials that work was under way to extend the approach to other lease-related payments.
“They’re looking at if you assign a lease; key money if you are to sublet, anything like that – all these are now probably going to be brought into the net,” Mr McKinley says.
Some of these had historically been treated as capital account items, he says, but the IRD is gradually moving them to revenue account items and therefore taxable. Some property owners were already treating such payments as revenue, he says, but others were not, and the whole area was seen as untidy.
“The IRD is moving to tidy this whole area up.”
There had been nothing officially announced on this yet but it was likely to see formal proposals circulated sometime in the New Year, he says.
The lease inducement issue itself is controversial, as it changes the law to reverse a long-standing practice which has been endorsed by the courts at the highest level.
The initial introduction also came under fire for taking effect before the legislation was even passed: the IRD released a discussion document earlier this year and said any law change – whenever it actually happened – would take effect from the time that discussion document was released.
That drew heavy criticism, partly because legislation by discussion document was seen as constitutionally dubious and would probably have been overturned if anyone had challenged it in the courts; partly because it was impractical. The government has moved on this issue: the changes will now take effect from April 1 next year.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Paul Brislen discusses the 'snake oil' sales tactics of SalesConcepts
- Fonterra chief executive Theo Spierings reveals his ambitious China plan
- UDC Finance chief executive Wayne Percival talks about the company's profit
- Hamish McNicol discusses the latest court stories
- Trilogy International CEO Angela Buglass reviews another bumper result
- Eroad CEO Steven Newman talks about his company's revenue increase
- What do the latest terrorism attacks in Mali and Israel mean? Nathan Smith discusses the latest foreign affairs news
- NZ Windfarms departing director Michael Stiassny speaks out after board exit
- James Mayo talks about SOS Hydration's growth plans after Snowball offer
- Michael Wood on whether he would run in Mt Roskill
- SAFE's Abi Izzard quizzed over protest of a caged hen operation at Pukekohe
- Nevil Gibson talks about Editor's Insight on the planned $US150 million merger between Pfizer and Allergan