KEY POINTS:
Inland Revenue will get $14.6 million over three years to ensure property speculators pay their fair share of tax.
Finance Minister Michael Cullen said property speculators had played a part in pushing up house prices in recent years and there was a growing perception that it was easy to avoid tax on short-term speculative transactions.
"Giving Inland Revenue further resources to help it enforce existing law more effectively will increase confidence in the tax system and should help dampen the effects of property speculation on the housing market."
Under current law income tax applied on capital gains under a range of circumstances.
Examples were when land was bought to sell, where it had been developed or subdivided, or when the seller was a dealer in land.
"In these circumstances tax should be paid on the profits, just as it should on income from other kinds of investment."
Dr Cullen said Inland Revenue had targeted property transactions in recent years. Revenue from property auditing was currently averaging about $100 million a year.
With the housing market refusing to cool this year, there have been calls from several quarters for Inland Revenue to step up its enforcement activities.
- NZPA
