19 Aug 2011

New tax rules could take in bach, yacht rentals

11:00 am on 19 August 2011

Baches, yachts and other property that is occasionally rented out could fall under tough new tax rules.

The Inland Revenue Department is seeking public feedback on proposed rules to impose further restrictions on tax deductions for mixed use assets - those which have a private and business use.

Revenue Minister Peter Dunne says the proposal addresses unfairness in the tax system.

Mr Dunne says people who rent their baches for a few weeks each year could be stopped from claiming tax deductions for expenses incurred when the property is empty.

A partner at PricewaterhouseCoopers, Geof Nightingale, says thousands of people who let their holiday homes and other assets like yachts could be affected.

The tax department is also proposing tighter rules for valuing livestock, to stop farmers gaining a tax advantage by switching between valuation methods.

Submissions close at the end of September.