#Budget $@%^**(


@ajamesgreen @10PARK Pssst: What impact budget for stadium, predicated on tax savings, with change to company interest rate and depreciation?

@ajamesgreen @10PARK Actually seems neutral. Stadium costs a little more but cancelled by overall lower DHCL tax bill

Post by Elizabeth Kerr


Filed under Stadiums

8 responses to “#Budget $@%^**(

  1. James

    Actually, I tell a lie (actually, I typed the wrong number into the calculator). If the changes to depreciation do impact the stadium, then the impact could be quite big.

  2. anon

    Doesn’t the building have to have a lifespan of more than 50 years?

  3. James

    Yes that’s correct. However, according to what I’ve read, if the building has an expected life of less than 50 years, you can apply to IRD for a depreciation rate.

  4. Phil

    Excellent. So you can actually claim a reward from a government agency for constructing a building that breaches the Building Act ? That sounds about right.

  5. James

    Phil — As long as you demolish it within 50 years, it would comply with the Building Act. The university has a few such buildings.

    However, having seen that definition, it would then seem that the stadium is not to be demolished within 50 years, which means that it cannot be depreciated. There will be some room to depreciate fit-out. However, as a range for the impact, the removal of $3.554m depreciation would remove about $1m of tax savings. Because any increase in ratepayer burden also incurs no tax, then this would amount to perhaps $700,000 per annum as an upper bound. Assuming that a reasonable proportion is allocated to fit-out, this may well be lower, and DCHL as a whole will benefit from the lower tax rate.

    As a serious caveat though, no media coverage that I’ve seen has extended beyond the impact on landlords and commercial landlords to what it might possibly mean for companies engaged in other businesses. Thus, I could be entirely wrong.

    • Elizabeth

      Hate to say it – stadium aside, since it’s not a stadium yet – so few large buildings are built for 50 years. They tend to carry onnnnnnn. For better or worse. The New Zealand Building Act 2004 was never a very bright document.

  6. Phil

    The quoted clause is a discretionary one which MAY be invoked when a building requiring a consent is erected for a specific event. A rugby club building a timber shelter for a jubilee weekend party would be accepted, a shed to house their lawnmowing equipment would not. Bit of a no brainer really.

  7. James

    The building act is a sideshow to my point, which is that the DCC (and by extension ratepayers) may have been caught by the same change in depreciation rules as residential landlords.

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