New rules to commence in October
The New Zealand National Party (National) has slammed the government for leaving Kiwis in the dark with new housing rules related to mortgage interest deductibility, now named Interest Limitation Rules, set to commence on October 01, 2021.
National pointed out that many Kiwis still haven’t received a proper explanation of how the Interest Limitation Rules will work in practice.
National’s Shadow Treasurer Andrew Bayly explained that the only information shared with Kiwis about how the Interest Limitation Rules will work in practice, other than the initial discussion document, is a Press release issued by Revenue Minister Parker (Minister) in June last year.
“Effectively, the government is making a fundamental change to a decades-old policy so that owners cannot deduct interest expenses from their mortgages on residential properties,” Bayly said.
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National’s housing spokesperson Nicola Willis shared that the party questioned the Minister on the bright-line rules that came into force earlier this year to let Kiwis know about the new rules.
“New Zealanders want to know how the new rules will affect parents who purchase a property for their child to rent while at university or what will happen to farm owners who rent out cottages on their property to employees,” Willis said. “Kiwis want clarification from the government, but they aren’t getting any.”
Willis suggested that the government should not introduce major changes to the tax system without going through a proper select committee process and giving New Zealanders a chance to comment on the changes before finalising the legislation.
“We believe the process is flawed, and we’re not alone; many tax experts agree. The proposed decisions are unworkable and pay no heed to decades-old tax principles,” Willis added.
National is calling on the government to move the commencement of the new rules from October 01, 2021, to April 01, 2022.
