Quake tax relief update hailed

Peter Truman
Peter Truman
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 building.

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 Truman said.

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 their feet.''

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.

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