On 10 June 2021, the Labour Government opened up a five-week consultation period on the new interest deductibility rules.
They have released a Design of the interest limitation rule and additional bright-line rules discussion document which is lengthy and quite detailed, and reveals some interesting thinking, some of which I think is surprisingly taxpayer friendly.
On first look through the document, the following points are worthy of mentioning. Before going on, I stress that these are all proposals subject to feedback and finalisation (i.e. things could yet — and probably will — change).
Interest limitations will not apply to property…
New Tax Changes
I’m seething about these tax changes and it’s not just the fact that Labour lied to us; it’s the whole bigger picture and the implications for ordinary New Zealanders.
This Government is attacking middle New Zealand with all these housing initiatives and tax reforms — it’s mums and dads being hit, not property oligarchs. According to February 2021 stats from MBIE, 80% of landlords in New Zealand own just one rental property. And 96% own four or less.
In other words, six out of seven properties are provided by private landlords and NGOs. …
As part of the Government’s property policy announcements today (23 March 2021), there are two significant changes to tax rules that will impact residential property investors.
Extension of the bright-line period
Currently the bright-line period for residential property is five years. For residential properties acquired on or after 27 March 2021 that period will increase to 10 years. There is a a significant exception to this rule for ‘new builds’, which will continue to be subject to a 5-year period. …
When the 2022 income year commences on April 1 2021, the government’s new highest personal marginal tax rate of 39% will be in effect. This rate of income tax applies to individuals on income that they earn in excess of $180,000. It is likely that the implementation of this new tax bracket will lead to a flurry of taxpayers seeking advice around their structure. But before you jump into restructuring, it always pays to “look before you leap”.
The reason why there may well be a flurry of restructuring is because the government have decided not to increase the trust…
TELSTRA (TLS:ASX / TLS:NZX) BUY: Yield Stable
Telstra shares have reacted favourably after reporting its 2021 half year result. The telco giant reported a -0.4% decline in total income to $12 billion and a 14.2% reduction in underlying operating earnings (EBITDA) to $3.3 billion. The latter was largely due to an estimated in-year NBN headwind of $370m and an estimated $170 million impact from COVID-19.
Positively, Telstra’s free cash flow was strong, allowing the board to maintain its 8 cents per share dividend, also confirming that it plans to maintain its fully franked full year dividend of 16 cents per…
New Zealand Housing Markets
Growth Supporting Factors
We have probably seen the lows this “cycle” for wholesale borrowing costs a month or so ago. Rises from here are more likely than declines, but those rises will be capped by central banks around the world adopting a deliberate risk preference.
A number of central banks have stated that they prefer to take the risk of taking interest rates too low and leaving them low for too long — thus eventually over-stimulating growth, inflation, and asset prices — than not easing by enough. …
Stock Market Update
Global markets were mixed overnight (S&P 500 Index +0.5%) as US stimulus talks, jobless claims and a surge in coronavirus cases across Europe kept financial markets cautious.
The number of Americans filing for state unemployment benefits last week dropped more than expected to 787,000, but remained stubbornly high. The market rebounded off its earlier lows after House Speaker Nancy Pelosi reportedly said a stimulus deal was “just about there”.
In stock news, Tesla shares were higher after reporting its fifth consecutivee quarterly profit and record revenue of US$8.8bn.
Auckland Airport (AIA) shares bounced yesterday after its AGM…