29 Apr 2013

Extent of tax change questioned

7:18 am on 29 April 2013

A tax expert says a planned tax on commercial lease payments is just one step away from a capital gains tax.

Revenue Minister Peter Dunne wants to introduce a tax on payments between leaseholders, made typically when businesses are sold or companies move premises.

At present these payments are not taxed, but are tax deductible by the payee.

Tax principal at accounting firm WHK, Craig Macalister, says the change tidies up the rules but also means lease payments will now be classed as revenue, which is taxable, rather than a capital asset.

He says that's a fundamental change and makes it a capital gains tax in all but name.

Mr Dunne rejects the notion and says the move is a rationalisation, and is not symptomatic of a more substantial change.

"The Government is strongly opposed to a capital gains tax on property transactions and we're not going to be moving down that path."

Mr Macalister says the issues paper mechanism, used for changing technical nuances in the law, is not suitable in this case.

"I think they really do need to issue a government discussion paper on it and actually have it raised up and debated at a higher level."

But Mr Dunne says the issues paper mechanism is appropriate and allows for wide consultation.