Housing trust hails tax moves by Government

20:03, Nov 20 2013

Two years after the Queenstown Lakes Community Housing Trust was stripped of its charity status, chairman David Cole has welcomed a Government plan to introduce new legislation ensuring it and similar trusts would remain exempt from income tax.

The trust was the catalyst for the Government move after it was unexpectedly deregistered by the Charities Commission four years ago and lost a bid to have it restored in the High Court in 2011.

Inland Revenue then ruled the trust was a tax-paying business since its inception in 2007 and would be liable.

The substantial bill for the multimillion-dollar trust could have had implications for the trustees, Queenstown Lakes District Council and possibly some of the people helped into 74 homes by the trust.

"We have had one or two concerns expressed by households who have seen the stories and know that there have been some issues and they wanted to be certain they won't be affected by any final ruling. In a tax sense they must be comforted [by this announcement]," Mr Cole said.

Trustees were relieved and delighted to see commonsense prevail, he said. "It's been a long battle, a real distraction for the trust. It's been an agenda item almost every month.


"We have spent a lot of money with specialist tax consultants on the implications and a lot of time and energy with officials in Wellington. It's been quite a taxing time."

However, there were still details to work through.

While Housing Minister Nick Smith gave an assurance the trust would not be facing a tax bill for the past six years, the statement said the Government would be "providing transitional assistance to some community housing providers facing tax liabilities prior to the new law coming into effect on April 14, 2014".

There were also a question over the definition of a "low-income family" with the minister stating the new tax exemption should be limited to providing housing support to low-income families.

Mr Cole said a teacher earning $50,000 in Invercargill would be able to buy a house for $250,000. However, that teacher would earn the same in Queenstown where house prices were double.

"We need to persuade the Government that we need to use a more sophisticated measure than an arbitrary level of income. We regard that as work in progress."

The Southland Times