Irrevocability of herd scheme livestock election

Clauses 28 and 29(1)

As part of the Budget 2012 legislation, section EC 8 of the Income Tax Act 2007 was amended so that, from 18 August 2011 (the date the officials’ issues paper, Herd scheme elections, was released) elections by farmers to use the herd scheme could not be revoked. As a consequential to other livestock valuation amendments proposed in this bill, that legislation has been rewritten.

Submission

(New Zealand Institute of Chartered Accountants, WHK)

The application date of this amendment should be 24 May 2012 when the Budget 2012 amendments were introduced, instead of the retrospective date of 18 August 2011.

Comment

WHK argues that retrospective legislation is inappropriate unless there are exceptional circumstances or a high revenue risk. The Ministers of Finance and Revenue, when they announced this amendment on 28 March 2012, advised that the change was to prevent an estimated $275 million loss in the tax base over the next few years. Any change to the application date would not be appropriate.

Recommendation

That the submission be declined.