Media Release – Housing Reform Bill and Tax Treatment of Community Housing Providers

Nov 26, 2013 | News

Community Housing Aotearoa is cautiously optimistic about the Governments multiple announcements on the passage of the Housing Reform Bill and the introduction of legislation to give community housing providers and donors certainty that assisting low income families into home ownership will be exempt from income tax. “We look forward to learning more about how these initiatives will roll out seamlessly for our members” said Scott Figenshow, Director of Community Housing Aotearoa, “as there is so much housing need across the country, stabilizing the working environment for the NGO housing sector is a good thing to help organisations meet that need”.

CHA welcomes these solutions as they should enable the sector to grow and meet a wide range of housing need across the housing continuum, from social housing, affordable rental and paths to homeownership. “These announcements do support growth for our members to deliver 20% of the social and affordable housing across NZ- yet at the current time our members are only able to access 3% of the available funding. We await further announcements on how that gap will be rectified. The Bill has many components which we’re still studying.” Mr Figenshow said.

With regard to the charitable status issue, Charities Services has indicated to CHA that it will be conducting a review of housing providers which are currently registered charities as government needs to fulfill its obligations as a result of the High Court decision in Queenstown Lakes Community Housing Trust [2011] 3 NLCR 50. As an alternative, many in the sector had pushed for a review of the Charities Act which we understand Government was not willing to do.

One of the features of the new Housing Reform Bill is the establishment of a Regulatory Authority for Community Housing providers. CHA’s members generally support the need for regulation, so long as it incorporates the current Best Practice guide as the New Zealand National Community Housing Standards. “We’re unclear at this point how we can achieve that and what connection there may need to be with the charitable status reviews” Mr Figenshow said.

CHA understands that the Charities Services review will apply consistent guidelines, based in charity law, to the purposes and activities of community housing providers which are presently registered charities. The review will determine whether organisations can be considered charitable. A targeted tax-exemption, under new rules that have yet to be finalized, will provide an opportunity for eligible community housing providers to remain tax-exempt should they lose charitable status. It is expected that an income and asset test of households served by community housing providers will be used to determine eligibility for the proposed tax-exemption. “CHA would expect this solution to resolve the uncertainty that the Queenstown Trust has faced for nearly four years, yet we await further announcements of those specifics and would want to hear from our Queenstown member that this is truly resolved” Mr Figenshow said.

“We need a flexible solution that will enable groups to meet the diverse range of need in their communities without causing new problems or uncertainty” said CHA Co-Chair Alison Cadman. Four CHA members are among those who operate path to homeownership programmes as well as affordable rentals. “It appears the government announcement is a positive step away from tenure as the indicator of charity status, and signals a more sophisticated understanding of the positive role CHO’s play in their local communities”, Ms Cadman said.

CHA has questions about how the regional variation will work in practice, and suggests that a transition period of 2 years be provided for in legislation, to allow community housing organisations to adapt to the new environment. For example, what is affordable in Invercargill to a family on $40,000 pa isn’t affordable in Auckland, and whether the new provisions resolve that issue is yet unknown. “It is critical that these announcements be followed with a robust implementation project to make sure that organisations who may no longer be considered charities, can move seamlessly to the new requirements for tax exemption without penalty while still retaining their donee status.” said CHA Co-Chair Warren.

“Over the forthcoming months, CHA looks forward to working with our members and Government agencies as the details are worked out. A common thread among our members is their governance clauses that preclude private pecuniary profit, and reinvestment of all proceeds into their core mission of delivering social and affordable housing. We would expect those provisions to be included as part of the testing. There is a lot we don’t know at this stage, yet we welcome the positive signs toward resolving this complicated issue.” Mr Figenshow said.

Community Housing Aotearoa is the Peak Body for New Zealand Community Housing Providers and has a membership of 62 organizations throughout the country who are providing quality, affordable and sustainable rental and ownership housing in their communities.

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