The Canterbury earthquakes of 2010 and 2011 have shone the spotlight on a number of tax issues. These issues, and in particular lessons learned from them, will be relevant for revenue authorities, policymakers and taxpayers alike in the broader context of natural disasters. Issues considered by this paper include the tax treatment of insurance monies. For example, building owners will receive pay-outs for destroyed assets and buildings which have been depreciated. Where the insurance payment is more than the adjusted tax value, there will be a taxable "gain on sale" (or depreciation recovery income). If the building owner uses those insurance proceeds to purchase a replacement asset, legislative amendments specifically enacted following the earthquakes provide that rollover relief of the depreciation recovery income is available. The tax treatment of expenditure to seismically strengthen a building is another significant issue faced by building owners. Case law has determined that this expenditure will usually be capital expenditure. In the past such costs could be capitalised to the building and depreciated accordingly. However, since the 2011-2012 income year owners have been prohibited from claiming depreciation on buildings and therefore currently no deduction is available for such strengthening expenditure (whether immediate or deferred). This has significant potential implications for landlords throughout New Zealand facing significant seismic retrofit costs. Incentives, or some form of financial support, whether delivered through the tax system or some other mechanism may be required. International Financial Reporting Standards (IFRS) require insurance proceeds, including reimbursement for expenditure of a capital nature, be reported as income while expenditure itself is not recorded as a current period expense. This has the effect of overstating current income and creating a larger variation between reported income for accounting and taxation purposes. Businesses have obligations to maintain certain business records for tax purposes. Reconstructing records destroyed by a natural disaster depends on how the information was originally stored. The earthquakes have demonstrated the benefits of ‘off-site’ (outside Canterbury) storage, in particular electronic storage. This paper considers these issues and the Inland Revenue Department (Inland Revenue) Standard Practice Statement which deals with inter alia retention of business records in electronic format and offshore record storage. Employer provided accommodation is treated as income to the benefitting employee. A recent amendment to the Income Tax Act 2007 retrospectively provides that certain employer provided accommodation is exempt from tax. The time aspect of these rules is extended where the employee is involved in the Canterbury rebuild and comes from outside the region.
TODD McCLAY to the Minister of Finance: What reports has he received on the Government's financial position?
DAVID SHEARER to the Prime Minister: Does he stand by all his statements?
METIRIA TUREI to the Prime Minister: Does he stand by his reported statement that "anyone expecting details of a 'cosy sort of little deal' would be disappointed" by the Deputy Auditor-General's report into the SkyCity Convention Centre negotiations.
DENIS O'ROURKE to the Minister for Canterbury Earthquake Recovery: What criteria did he use in deciding that owners of vacant sections in the red zone of Christchurch should only be compensated at half of the sections' most recent rateable value?
KANWALJIT SINGH BAKSHI to the Minister for Economic Development: What economic opportunities will a new convention centre bring for Auckland?
Hon DAVID PARKER to the Prime Minister: Did he or his office receive the 12 November 2009 report from Ministry officials to the Department of Prime Minister and Cabinet, summarising the process with SkyCity for the building of a convention centre; if so, did he read it?
MIKE SABIN to the Associate Minister for Social Development: What steps is the Government taking to reduce welfare fraud?
Hon CLAYTON COSGROVE to the Minister for State Owned Enterprises: What contingency plans, if any, does the Government have in place regarding its asset sale programme should the Tiwai Point aluminium smelter reduce production?
KEVIN HAGUE to the Minister of Trade: Will New Zealand support Australia's objection to signing up to investor-state dispute provisions in the Trans-Pacific Partnership agreement; if not, why not?
Hon LIANNE DALZIEL to the Minister for Canterbury Earthquake Recovery: Why is he offering only 50 percent of rating valuation for commercial or bare land in the residential red zone where the land could not be insured?
MARK MITCHELL to the Minister of Corrections: What announcements has she made on improving prisoner employment training in New Zealand prisons?
CHRIS HIPKINS to the Minister of Education: Does she stand by all her decisions in relation to schools in Christchurch?
Questions to Ministers 1. TODD McCLAY to the Minister of Finance: What reports has he received on the Government's financial position? 2. DAVID SHEARER to the Prime Minister: Does he stand by all his statements? 3. METIRIA TUREI to the Prime Minister: Does he stand by his reported statement that "anyone expecting details of a 'cosy sort of little deal' would be disappointed" by the Deputy Auditor-General's report into the SkyCity Convention Centre negotiations. 4. DENIS O'ROURKE to the Minister for Canterbury Earthquake Recovery: What criteria did he use in deciding that owners of vacant sections in the red zone of Christchurch should only be compensated at half of the sections' most recent rateable value? 5. KANWALJIT SINGH BAKSHI to the Minister for Economic Development: What economic opportunities will a new convention centre bring for Auckland? 6. Hon DAVID PARKER to the Prime Minister: Did he or his office receive the 12 November 2009 report from Ministry officials to the Department of Prime Minister and Cabinet, summarising the process with SkyCity for the building of a convention centre; if so, did he read it? 7. MIKE SABIN to the Associate Minister for Social Development: What steps is the Government taking to reduce welfare fraud? 8. Hon CLAYTON COSGROVE to the Minister for State Owned Enterprises: What contingency plans, if any, does the Government have in place regarding its asset sale programme should the Tiwai Point aluminium smelter reduce production? 9. KEVIN HAGUE to the Minister of Trade: Will New Zealand support Australia's objection to signing up to investor-state dispute provisions in the Trans-Pacific Partnership agreement; if not, why not? 10. Hon LIANNE DALZIEL to the Minister for Canterbury Earthquake Recovery: Why is he offering only 50 percent of rating valuation for commercial or bare land in the residential red zone where the land could not be insured? 11. MARK MITCHELL to the Minister of Corrections: What announcements has she made on improving prisoner employment training in New Zealand prisons? 12. CHRIS HIPKINS to the Minister of Education: Does she stand by all her decisions in relation to schools in Christchurch?
Questions to Ministers 1. TODD McCLAY to the Minister of Finance: What reports has he received on the Government's financial position? 2. DAVID SHEARER to the Prime Minister: Does he stand by all his statements? 3. METIRIA TUREI to the Prime Minister: Does he stand by his reported statement that "anyone expecting details of a 'cosy sort of little deal' would be disappointed" by the Deputy Auditor-General's report into the SkyCity Convention Centre negotiations. 4. DENIS O'ROURKE to the Minister for Canterbury Earthquake Recovery: What criteria did he use in deciding that owners of vacant sections in the red zone of Christchurch should only be compensated at half of the sections' most recent rateable value? 5. KANWALJIT SINGH BAKSHI to the Minister for Economic Development: What economic opportunities will a new convention centre bring for Auckland? 6. Hon DAVID PARKER to the Prime Minister: Did he or his office receive the 12 November 2009 report from Ministry officials to the Department of Prime Minister and Cabinet, summarising the process with SkyCity for the building of a convention centre; if so, did he read it? 7. MIKE SABIN to the Associate Minister for Social Development: What steps is the Government taking to reduce welfare fraud? 8. Hon CLAYTON COSGROVE to the Minister for State Owned Enterprises: What contingency plans, if any, does the Government have in place regarding its asset sale programme should the Tiwai Point aluminium smelter reduce production? 9. KEVIN HAGUE to the Minister of Trade: Will New Zealand support Australia's objection to signing up to investor-state dispute provisions in the Trans-Pacific Partnership agreement; if not, why not? 10. Hon LIANNE DALZIEL to the Minister for Canterbury Earthquake Recovery: Why is he offering only 50 percent of rating valuation for commercial or bare land in the residential red zone where the land could not be insured? 11. MARK MITCHELL to the Minister of Corrections: What announcements has she made on improving prisoner employment training in New Zealand prisons? 12. CHRIS HIPKINS to the Minister of Education: Does she stand by all her decisions in relation to schools in Christchurch?
