NZ tax law Which of the following is a taxable activity? Only one is correct (a) ...

NZ tax law

Which of the following is a taxable activity? Only one is correct

(a) Renting out a small commercial building in Napier for $52,000 per annum.

(b) Renting out a residential house in Ponsonby, Auckland for $62,400 per annum.

(c) Lending $500,000 on a mortgage on a house for $27,000 interest per annum.

(d) Selling a house which you have inherited from your mother’s estate for $800,000

Expert Solution

The correct answer which involve taxable activity is

(C) Lending $5,00,000 on a mortgage on a house for $27,000 interest per anum.

Explanation and its taxibility as per taxation rules

Cases	Taxability	Reasons
(a) Renting out a small commercial building in Napier for $52,000 per anum.	Not Taxable	As per income tax Rules any income earned in abroad country shall be taxed in that country only.
(b) Renting out a residential house in ponsonby, Auckland for $62,400 per anum	Not Taxable	As per income tax Rules any income earned in abroad country shall be taxed in that country only.
(c) Lending $500,000 on a mortgage on a house for $27,000 interest per anum	Taxable	As per income tax rules the lender on a mortgage, Must include the interest Received of $27,000 in total taxable income under head income from other sources.
(d) Selling a house which you have inherited from your mother's estate for $800,000	Not taxable	As per income tax rule any inherited property sold then it is taxable after adjusting Previous property value at the time of inherited this is known as stepped-up basis. But in our question the previous value at the time inherted from mother is not given So we assumed as same value so there is no gain and loss on sell of such inherited house and not taxable.

ekkarill92 answered 1 year ago

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