As Greenlion explain, the following exclusions and exceptions are proposed for residential investment properties.
Land outside New Zealand would be excluded from the new rule. As mentioned above exemptions are proposed for property developers and for owners of new builds.
New Builds:
A new build for these purposes are proposed to be:
a dwelling added to vacant land
an additional dwelling added to a property, whether stand-alone or attached
a dwelling (or multiple dwellings) replacing an existing dwelling
a dwelling created by renovating an existing one to create 2 or more. For example, turning a 6- bedroom dwelling into 2 3-bedroom dwellings (both with their own bathrooms and kitchens)
a dwelling converted from commercial premises. For example, an office block converted into apartments.
They also deem a new build to be a property that received its code compliance certificate (CCC) on or after 27 March 2020 will be classed as a new build under this legislation. These properties will be eligible to deduct interest for up to 20 years from the time the property’s CCC is issued. The exemption will apply to both the initial purchaser of the new build and any subsequent owner within the 20 year period. In addition, the initial purchaser or early owners of new builds would be subject to a five year bright-line test, rather than the ten year test.
The Supplementary Order Paper also contains a new option for calculating FBT on fringe benefits provided to employees during the 2021–2022 tax year and in future years. Under the proposed new option, employers would pay FBT at the rate of 49.25% for all employees with all-inclusive pay under $129,681. FBT would then be payable at the rate of 63.93% for employees with all-inclusive pay of $129,681 or more. Generally only to those employees earning over $180,000 in (pre-tax) salary or wages or close to that threshold, assuming they do not receive significant fringe benefits.
If you do have any questions about how the proposed changes affect you, Greenlion invite you to get in touch, and with this in mind, please take a moment to find out more about business advisory services,business consultants and Xero accountants by visiting the website at https://www.greenlion.co.nz .
