Grosvenor seeks property trusts

Press, 19 August 1981, Page 25

Grosvenor seeks property trusts

PA Auckland The Government had been urged to allow the formation of property trusts in which small and medium-sized savings could be accumulated for long-term investment in property as a hedge against inflation, said the chairman of Grosvenor Properties. Ltd. (Mr H. J. Radford) at the annual meeting. It seemed unfair that the biggest investors in property — the life offices and pension and superannuation funds — have significant tax advantages over individual shareholders in Grosvenor or any other property investment company, whose voluntary savings were invested in property.

Life offices paid tax only on the bonuses they. distributed, and approved superannuation schemes paid no tax. he said.

“But the shareholders in Grosvenor pay virtually double taxation."

“First on the company 1 income at 45 per cent, and

then at their own personal rate on the dividend distributed to them from the remaining 55 per cent. “While one does not wish to advocate changing the tax laws for superannuation funds, it does seem highly unfair that there should be such a discrepancy in treatment between the compulsory savings of superannuation funds and life offices, and the voluntary savings of individuals, invested in property,” Mr Radford said. The best answer could be for the Government to allow the formation of general property trusts, as in Britain, Australia, and elsewhere. Small investors there had an incentive to accumulate their , savings for. long term investment in property, as a hedge against inflation. . “But for such trusts to be viable, the trust itself should not be liable for tax and the unit holders should be taxed at'their personal rates only on the amount of income ’ distributed."

The present tax position of such a trust was directly contrary to that. The merit of property trusts would be to provide an avenue for investment in property by people who could not accumulate sufficient funds in one block, or at one time, to buy a property for lease or renting. They included working people saving for the future, retired people receiving cash payments on retirement, through to small pension funds and individuals who could make sizeable investments but preferred they be managed by expert hands.

There was a definite need for this kind of investment in New Zealand, and it was disappointing that successive governments had done nothing about it. as a move to encourage and increase savings. he said.

“If such trusts could be formed, Grosvenor would take steps, to convert into one. " ■■■"