Queenstown housing trust’s $6m tax break

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Queenstown’s affordable-housing trust is breathing a sigh of relief about the Government relenting on its $6 million tax bill.

“We’re delighted to have this issue behind us at last,” trust chairman David Cole says.

The bill mounted since the trust started seven years ago – the $6m includes “significant penalties” from Inland Revenue, he says. 

“This is a problem between two Crown entities,” Cole maintains. 

IRD says the trust isn’t a charity, yet “other parts of the Crown are saying we nurtured you all the way along, on the basis we thought you were a charity”, he says, adding if the tax hadn’t been wiped, “it wouldn’t have meant the end of the trust”, but its house-building programme would have had cuts. 

The trust’s been working with the Crown on the tax problem for some years and has been confident of a sensible solution, he says. 

Cole stresses the Crown was involved “every step of the way” in the trust’s formation – Housing New Zealand also put up $2m in starting capital, to be matched by community funds. 

The trust was stripped of its tax-free charitable status by the Charities Commission in 2010 and lost its High Court appeal against that blow the following year. The IRD wound the tax clock back even further – to 2007 when the trust was first established, Cole says. 

With the entire “unintended consequence” now over, he says “we’re putting it behind us”. 

“We’re concentrating on putting people into houses.” 

The trust has assisted 85 families into affordable housing. 

Cole says construction is about to begin on another 10 units in Arrowtown for letting at below-market rents. 

Housing Minister Nick Smith told TVNZ it was an arbitrary call and they’ll change the law to ensure other social housing providers aren’t hit too.