An extension to Canterbury earthquake relief through tax
measures has been welcomed as recognising the rebuild is taking
longer to start than expected, Deloitte Dunedin tax partner
Peter Truman says.
The Government introduced concessions which enabled an
election to be made for the accumulated depreciation of
destroyed buildings to be rolled over into a replacement
That meant no tax was immediately payable when the insurance
proceeds were received. The accumulated depreciation carried
over to the new building and could give rise to a tax
liability when the new building was subsequently sold, Mr
Revenue Minister Todd McClay said people and businesses in
Canterbury were still dealing with challenging circumstances.
The Government proposed extending some temporary measures
introduced after the February earthquakes.
The time limit for tax measures introduced to address
earthquake-specific issues was due to expire at the end of
the 2016 income year. The proposal was to extend it to the
end of the 2019 year.
''Our objective is to help create an environment that will
support people and businesses in Canterbury to get back on
Reinvestment in Canterbury was crucial and the proposals were
tailored towards conditions in Canterbury, he said.
The Government understood reinvestment in Canterbury was
occurring through groups of investors teaming together,
rather than sole investors. To ensure that the roll-over
relief continued to be available in that situation, the
proposal was that the relief continued to benefit the
original property owner, Mr McClay said.
The second feature of the proposals was that in the case of a
building, a commitment to the rebuild in Canterbury must have
been demonstrated by the end of the 2016 year in order to get
the extension, he said.
Mr Truman said there were other transitional measures he
would like to see the Government introduce. They included
roll-over relief on tax depreciation recovery on undamaged
buildings sold to the Government compulsorily or voluntarily
to facilitate the new central city ''master plan''.
The ASB Cantometer, designed to capture the pick-up in
Canterbury activity continued its steady rise in June, to 0.8
on the back of strong construction data, car registrations
and guest nights.
ASB chief economist Nick Tuffley said the index had increased
steadily from 0.1 since the first issue in October.
The June lift was led by construction, largely due to first
quarter building activity estimates.
Construction activity remained a key driver of New Zealand's
economic recovery. Increased building in both Canterbury and
Auckland underpinned most of the economic growth in the March
quarter, offsetting the impact of the drought, he said.