MIL-OSI New Zealand: Government releases interest limitation proposals

1

Source: Inland Revenue Department –

The Government has today released draft legislative proposals aimed at limiting the deductibility of interest incurred for residential property investments. The proposals are contained in Supplementary Order Paper No 64.

In summary, residential investment properties capable of being used for long term accommodation would be subject to the proposed rules. However, the following exclusions and exemptions are proposed:

  • an exclusion for the main family home
  • exclusions for several types of residential property, and
  • exemptions for new builds and for property development.

A set of information sheets is available providing general information about how the proposed rules are intended to work.

The Supplementary Order Paper also contains a proposed five-year new build bright-line test, a new option for calculating fringe benefit tax and a proposal to clarify the application of the business continuity test for carrying forward losses.

Parliament’s Finance and Expenditure Select Committee will consider the proposals and is expected to call for public submissions. The proposals will generally have application from 1 October.

For more information on the proposals, see the Ministers’ media statement, Supplementary Order Paper, supplementary departmental disclosure statement, regulatory impact statement, and the information sheets. A supplementary commentary providing more detailed information on the proposed amendments included in the SOP will be published in early October.

MIL OSI New Zealand News