Housing charity hit by tax bill

MICHAEL FOX
Last updated 11:50 28/05/2014

Relevant offers

Politics

Defence Force chief slams 'major inaccuracies' in SAS Afghanistan allegations Dave Armstrong: Where was the caution at time of raid? Chinese Premier Li Keqiang arrives in New Zealand for visit and trade talks ACT leader David Seymour says party can't afford any 'screw-ups' Labour accuses Government of planning to 'asset-strip' state houses from regions Ratings agency Moody's gives NZ economy highest possible rating Stacey Kirk: lessons applicable to life, as taught by John Key Alison Mau: I'm a republican, yet now, we need the Queen more than ever Oscar Kightley: My brother served in the army, I nearly served – but nobody signed up to kill civilians David Slack: Nothing says vomit like an Air New Zealand sickbag

The Government's social housing reforms have hit a major snag with a charity stung by a $6 million tax bill for helping poor families to buy homes.

The Government has been forced to pay the Queenstown Lakes Housing Trust's bill and has introduced a bill to ensure the ruling does not ruin other charities, with potential liabilities of tens of millions, or slow down moves to boost the supply of social housing.

Housing Minister Nick Smith revealed today they had been blindsided by the Charities Commission's ruling last year.

"A number of our community housing organisations have got into the business of assisting people into home ownership. The tax department and Charities Commission has ruled that that is outside the domain, they need to pay tax on that."

The Charities Commission had ruled that providing cheap rent was charitable but helping people to buy was not.

Smith described the ruling as "arbitrary" and said he did not agree with it but could not overrule it.

"That's causing real nervousness for our community housing sector who could literally have bills of many tens of millions of dollars that could wipe them out.

"That is why the Government has firstly provided the $6 million for Queenstown to pay its tax and why we have a bill before Parliament to change the law to make it plain where we have community housing organisations helping people to own their own home that that activity is not taxable and that those trusts can continue to do that."

The Income Tax Amendment Bill would retrospectively reverse that decision and provide community housing providers with the certainty they would not be hit with big tax bills for similar activities.

"I'm confident providing that bill is passed there will be no further difficulty and any need for a further tax grant to any other community housing provider," Smith said.

Ad Feedback

- Fairfax Media

Special offers
Opinion poll

Should the speed limit be raised to 110kmh on some roads?

Yes

No

Vote Result

Related story: 110kmh limit moves closer

Featured Promotions

Sponsored Content