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Changes needed to Taxation Bill: Property Council

Proposed changes to investment income taxation are necessary if potential investors are to make choices on the relative merits of investment rather than taxation advantages and disadvantages, says the Property Council.

Friday, September 29th 2006, 9:24AM

by The Landlord

The Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill is designed to standardise taxation treatment across the industry, create a level playing field between individuals and collective investment vehicles, and to encourage savings and investment in New Zealand.

Property investment vehicles are included in the proposed Portfolio Investment Entity (PIE) regime. However Anthony Beverley, chair of the Investments Policy Committee of the Property Council, said if the Bill was passed without amendment, it would knock out the majority of property trusts from being able to elect into the proposed PIE regime.


The proposed PIE regime is effectively a tax pass-through regime. It would allow investors to be taxed at a marginal tax rate, potentially delivering them an improved financial dividend in line with the government’s objective of encouraging savings. However, the investment vehicle first has to elect into the PIE regime.

“The barriers that prevent property trusts from electing into the PIE regime are not insurmountable. If minor changes are made to the bill, the barriers to entry will be removed and property trust investors will be able to enjoy the benefits of tax reform along with everyone else,” Beverley said.

Over 200,000 New Zealanders (the majority of whom are small ‘mum and dad’ investors) invest in property investment vehicles. These vehicles take the form of unit trusts, investment syndicates and listed property vehicles.

The Property Council is seeking amendments to the Bill to enable property investment vehicles to elect into the PIE regime. It will detail specific proposed changes in its submission on the Bill.

The property entities that have had direct input into the Property Council’s submission on the Taxation (Annual Rates, Savings Investment and Miscellaneous Provisions) Bill include: AMP Capital Investors; Dominion Funds; ING Property Trust; Kiwi Income Property Trust; and Macquarie Goodman.

« Property investors refocus on cash flowDeveloper to build 1000 Christchurch apartments in 10 years »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.29 ▼2.59 ▼2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
HSBC Special - 1.99 - -
Lender Flt 1yr 2yr 3yr
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.79 2.79 3.15
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.29 2.29 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.79 2.99 2.80

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