It is widely known that the Government has been considering changes to the taxation of investment property. The Tax Working Group has reported to the Government that there is a gap in the taxation of property investments where income is being earned but, in total, no tax is being paid.

Estimates suggest that in 2008 the value of rental property was more than the value of the entire sharemarket. However, this large asset base generated tax revenue losses for the Government of $150 million.

Property investors play an important role in the economy and meet a real need in the market. The question is whether New Zealand wants people investing in property for taxation reasons. A further question is whether property investment should be taxed on the same basis as other activities.

These are examples of issues being worked on in the lead up to the 2010 Budget.