As one year ends and the next begins, interest regarding the future of the tax system is natural. In regards to property laws, many of the changes being considered by the Tax Working Group could prove detrimental to those who invest in real estate.
For some time the government has been proposing various modifications that will result in higher taxes being paid by property investors.
It is unlikely that any of the proposals will result in immediate change but it is a good idea to become aware of what's on the table.
As it gets closer to the time when a definite determination will be made - most likely soon after the beginning of the year - it is appropriate to consider how these changes may affect investors.
It is expected that the following revisions will be considered for inclusion in the new tax system:
- While individual tax rates will decrease, the rate of GST will increase in order to make up for the deficit.
Corporate and trustee rates will become more closely aligned. - The tax rates are expected to change drastically but tax laws will most likely remain unchanged in regards to assessments of capital gains and equity.
The government's stance is that it is disinterested in instituting sweeping changes at this time that could negatively impact a strengthening economy. - There should be no surprises in the federal budget, either.
Should any new tax rules be implemented, such as a risk-free rate of return investment property tax which has been bandied about, the legislative process is such that it will take some time before they are enacted.
- Throughout the year of 2010, additional options in the tax rules are likely to be debated and subject to public review. The Tax Working Group will probably propose several options rather than strongly back only one.
This will allow the government to select the most favourable to stand behind and bring to public review.
- Tax changes regarding property investments will most likely be considered at some time in the upcoming year during the budgeting process. It would not come as a surprise if the deduction for building appreciation is denied. Whether or not it would apply retroactively is in question.
The tax program currently under review in Australia will probably influence the decisions for future tax structures in New Zealand. Depending on the results of the Henry review, our tax laws may or may not change as expected.
Author Resource:
Paul Easton works with Matthew Gilligan - an accountant and partner at Gilligan Rowe & Associates Ltd (GRA). GRA is an accounting firm specialising in property and business accounting
![[Valid RSS feed]](http://www.look4articles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
![[Valid RSS feed]](http://www.look4articles.com/images/rss.jpg "XML Feed For RSS")