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The Government has introduced a Bill into Parliament that will limit taxpayers’ ability to claim a tax deduction for costs associated with mixed-use assets, i.e. assets that are used both privately and rented to third parties, for example baches and boats. When enacted, the new rules will apply from 1 April 2013. The new rules...

In an effort to reduce uncertainty regarding the tax treatment of employee reimbursements and payments for meals, accommodation, communication and clothing, the IRD released an officials’ issues paper in November 2012. The IRD is seeking feedback on proposals to introduce legislation specifically pertaining to these types of expenditure. Meals Employee meal costs when travelling for...

When a landlord makes a payment in cash to induce a tenant into signing in to a lease, the payment is usually deductible to the landlord. Under the existing rules, a lease inducement payment received by the tenant is non-taxable. This was confirmed in a ruling by the Privy Council case in CIR v Wattie (1998)...

Deductibility of expenses on rental properties is quite clear but not so with properties partially used for private purposes, such as “baches” or holiday homes. Taxpayers often want to claim partial deductions for expenses (interest being the largest) for the period holiday homes are let out. Until recently, the Inland Revenue had allowed the property...

Investment in real estate, especially residential properties, remains a popular choice of investment. One can see why it is attractive to New Zealand taxpayers — For one, there is no capital gains tax on the eventual sale of the property and land tends to appreciate with time; The current rate of after-tax return on fixed-term...

Lease agreements Over the years, leasing of assets has taken on many different names and forms – hire purchase agreements, lease to buy, operating lease, finance lease, multi-lease to name a few. Most times, the variations are used about motor vehicles more than other assets. Financing Options Broadly speaking, there are three financing options when...

Trustees Liability The legal position of a trustee is that they are personally liable for trust transactions. Often, the trust deed has a limitation of liability clause that is included to effectively provide a trustee (usually an independent trustee) with protection against claims by a beneficiary. The trustee, however, may not be protected when transacting...