- Accountants doubtful whether housing tax policy changes will improve affordability.
- More consultation is needed to understand the tax, fiscal and economic impacts.
- Planning law reform and removal of greenfield restrictions are better solutions.
One of the world’s largest professional accounting bodies says the New Zealand Government should not abandon established policy development processes to push through new housing tax proposals.
CPA Australia represents more than 2,700 accountants in New Zealand and 168,000 worldwide. In a submission lodged today, we urged the government to take more time to understand the tax, fiscal and economic impacts of the proposed residential housing interest limitation tax rules.
CPA Australia New Zealand Country Head Rick Jones said, “We commend the government for tackling the issue of housing affordability. However, tax policies delivered in haste inevitably create unintended and undesirable outcomes. In this case, we think structural reform of planning laws and the removal of restrictions on greenfield land would provide more sensible and enduring solutions.
“If the policy is implemented in its current form, businesses, investors and owners of many properties will face a difficult time navigating the new rules. What’s more, the changes may not achieve what all of us want – more land for housing and more affordable housing.
“The proposals outlined by the government will impact almost every aspect of New Zealand’s housing market and tax system as a whole. This warrants careful consideration of differing opinions and analyses of the proposed tax policy effects on housing activity and house prices.
“Many questions have yet to be answered, such as the shape of grandfathering clauses for properties bought before the government’s announcement, distinguishing between tenants residing in a main residence or secondary dwelling on a property and providing carve-outs for employee, student and short-stay accommodation.”
In drafting our submission, we consulted our New Zealand membership and experts from our New Zealand Member Tax Committee.
“These proposals will have significant and broad-ranging tax consequences for many New Zealanders. Accountants will play an essential role in advising property investors and others on the tax and financial impacts.
“We encourage the government to reconsider the efficiency and effectiveness of using tax policy to tackle our growing housing crisis. Input from regulatory and external stakeholders is critical to understanding the impact of the proposed tax rules.
CPA Australia and our membership do not think the proposed housing tax policy will achieve the government’s objective of more affordable housing. Instead, we think it will create more tax issues, unintended consequences, be excessively complex and increase compliance costs. Moreover, it will place enormous strain on the relevant regulatory authorities to police compliance with the new rules.
Should the government choose to proceed, our submission outlines several recommendations to improve the application of the current proposals.
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About CPA Australia
CPA Australia is one of the largest professional accounting bodies in the world, with more than 168,000 members in over 100 countries and regions, including more than 2,700 members in New Zealand. CPA Australia has been operating in New Zealand since 1992 and our New Zealand office opened in 2005. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes.
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