A Government bill to reduce the bright-line test to two years and restore interest deductibility for residential investment properties has passed its third reading today.
The legislative changes will become law before April 1.
The bill restores interest deductibility for residential investment property, reduces the bright-line test for residential property to two years and removes depreciation deductions for commercial and industrial buildings that the previous government reinstated as part of the response to Covid-19.
Finance Minister Nicola Willis said: “Returning the rules for commercial and industrial buildings to the way they were between 2010 and 2020 is expected to save $2.31 billion over the next four years.”
The bill also “provides for parents to receive government contributions to KiwiSaver contributions while they are on paid parental leave so long as they continue to make contributions themselves”.
“I am particularly delighted by this measure because it will ensure people’s KiwiSaver accounts continue to grow while they are on parental leave and will benefit women who typically retire with smaller savings nest eggs than men,” Willis said.
Revenue Minister Simon Watts said the bill also adjusts the tax treatment of trading stock disposed of by businesses, imposes gaming duty on offshore online casino operators and introduces a transitional provision for the new GST rules for short-term accommodation.
“This will make it easier for businesses to donate surplus stock to charities, close a loophole that enables offshore online casino operators to pay less tax than New Zealand operators, and ensure short-term rental accommodation hosts and marketplace operators are not unfairly disadvantaged by timing issues associated with changes to the GST rules for short term accommodation.”
Watts said the bill also aligns the trustee tax rate with the top personal tax rate of 39%.
“Aligning the trustee tax rate with the top personal rate will ensure that people pay the same rate of tax regardless of whether they earn income directly or through a trust.
“To avoid the over-taxation of lower-income trusts, a $10,000 de minimis has been introduced that means only around 13% of trusts in New Zealand are likely to be impacted by the change to the top rate.”
The bill also makes several other changes to the tax system, including “enacting an OECD-led global tax initiative aimed at ensuring large multinationals pay a minimum tax rate of 15% in participating countries and making adjustments to the tax treatment of back-dated lump sum payments from ACC and MSD to ensure they are taxed fairly”.