24 Dec 2015

Seismic Tax Coalition push for change

9:06 am on 24 December 2015

A coalition of local authorities and private landlords that want the cost of strengthening earthquake-prone buildings to be tax deductible may be making some progress.

Christchurch construction.

Christchurch construction. Photo: RNZ / Alexander Robertson

Inland Revenue has put out a [http://www.ird.govt.nz/public-consultation/)

discussion document] on the issue and is asking for submissions on whether businesses should be allowed to write off the costs of strengthening commercial buildings against their income.

Seismic Tax Coalition spokesperson Chris Gudgeon said the government had been ignoring the issue and would not meet with the coalition to talk over the issues.

Mr Gudgeon, who is also the chief executive of listed property company, Kiwi Property, said the issue was important to businesses and local authorities, particularly in provincial towns with a large number of historic buildings.

"They cannot afford for these buildings to fall into disuse because they're not earthquake strengthened," Mr Gudgeon said, adding that the buildings made up a large part of small town New Zealand's rates.

"We've already got an issue with commercial decline and this won't assist, one bit. And that is why Local Government New Zealand is onboard."

He said businesses faced huge costs to strengthen buildings against earthquakes, such as Wellington's Majestic Centre, which cost Kiwi Property $83.5 million to strengthen.

"We have an income tax system that pretends the cost of earthquake strengthening doesn't exist," he said.

"Christchurch was such a big wake-up call for all of us and I think the government needs to get real. The cost of seismic strengthening is a real cost to business and needs to be recognized in the assessment of income tax just like all other costs of doing business are recognised."

The public have until January 29 to provide feedback to Inland Revenue on the discussion document, "Deductibility of Seismic Assessment Costs".

Mr Gudgeon said the document did not directly address the coalition's concerns, but it would be making a submission anyway, hoping it would help open a wider discussion with government.

"We have a new minister, Mr Woodhouse, and I am very hopeful and he will apply some common sense to this issue."

Minister of Revenue Michael Woodhouse was on holiday and not available to comment.

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