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Tax relief proposed for community housing

The Government has announced that it will introduce legislation to Parliament to provide that assisting low-income families into home ownership will be exempt from income tax.

The law change is considered necessary after the Charities Commission (the functions of which have been taken over by the Department of Internal Affairs – Charities) decided that assisting people into home ownership was not always charitable. These decisions, which have been confirmed by the High Court have resulted in a charitable trust being deregistered (Queenstown Lakes Community Housing Trust) another having its registration re-instated (Liberty Trust); and have left a number of trusts uncertain about their tax status or facing unexpected tax liabilities.

The proposed law change will also enable people to claim a tax refund for donations to qualifying community housing providers.

The Government has also announced that it will be providing transitional assistance to some community housing providers facing tax liabilities prior to the new law coming into effect.

References:

Liberty Trust v Charities Commission (2011) 3 NZTR 21-004
Queenstown Lakes Community Housing Trust v Charities Commission (2011) 3 NZTR 21-015
www.charities.govt.nz

http://www.beehive.govt.nz/release/tax-exemption-help-community-organisations-assist-home-ownership

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