National Party finance spokesperson Nicola Willis and party leader Christopher Luxon unveiled the party's tax plan on Wednesday.
photograph: RNZ / Katie Scotcher
The KMT's pre-election tax policy represents major changes to the tax system, but it will be difficult to implement within the proposed deadline.
Rachel Piper, tax partner at KPMG, said the policy would require significant changes to the tax system.
The changes, which will take effect from July next year, include a review of the tax threshold, which will keep the top 39% tax rate for people earning more than $180,000 a year.
Mr Piper said this was a positive change as the current tax brackets had not been reviewed for several years.
A number of additional measures were also created to provide tax relief to families, including a child tax credit of up to $150 a fortnight for households with annual incomes of $140,000 or less.
For rental property owners, the brightline test will be postponed to two years, while interest deductions on income will be phased back over the next few years.
Piper said the phase-in approach was unexpected as many investors thought the interest tax deduction would be fully reinstated next year.
National also confirmed it would reinstate the Brightline exemption for principal residences.
National's plans to scrap tax deductions for the depreciation of commercial buildings are in line with Labour's policies but have disappointed property councils.
The policy was expected to save the Treasury around $525 million a year, but the council's chief executive Leonie Freeman said it was a short-sighted policy.
“The proposed depreciation policy would rob New Zealand's buildings of long-term maintenance funding and risk leaving buildings across the country in disrepair or even dereliction,” Mr Freeman said. said.
“If depreciation is abolished, property owners say they will have to reprioritize their spending, which is compounded by rising costs such as insurance, mortgages and rising property rates. , which is likely to cause rent increases for businesses.”
Piper said both major political parties are using commercial building tax depreciation as a cash cow.
“This does nothing for investment certainty,” she said, adding that the policy, announced in March, would make build-to-rent developments eligible for depreciation deductions like other commercial buildings. It added that this appears to be inconsistent with National's position of guaranteeing that the
“Especially for commercial buildings. It's a long-term investment, it's a significant investment, so that certainty spans the entire life of the investment, not just a year or two,” Piper said.
He said the new 15% foreign buyer tax on properties over $2 million seems similar to stamp duty.
He said there are various design considerations that need to be considered, including who will pay the taxes, the buyer or the seller.
National's plan to close gambling tax loopholes for online casino gambling operators will require some complex issues to be resolved and will also require policy efforts.
“If this (tax) policy were fully implemented, it would be a major change in our tax system,” Piper said.
“The rules for rented housing are set to change, rolling back some of the changes made under the Labor government.
“There are so many things that people have to wrap their heads around as to whether or not this is actually going to show up.”
