If National wins ...

[westerly]

Oh dear - you sound like the guy who told me once that Kiwis are the best builders in the world - he just never has seen any other place than NZ (and frankly had no clue of what qualifications and skills are required to set up a proper building (but the bungalows dominating the NZ landscape). Ah yes, this was after I showed him that the way he roofed houses inevitably resulted in leaks - but hey, this is why you guys need to even "treat" timber which is used inside of buildings - isn't it?

While we agree that qualifications are important for medical staff, and while I agree that most New Zealand medical staff has been adequately trained (at one time or another) - I have seen in this country as well incompetent but arrogant medical professionals, and none of these black sheep was trained abroad. I have seen as well outstanding medical professionals in other parts of the world - and believe me the chances to get a properly trained and skilled doctor or not just caring but qualified nurses are in many parts of the world at least as good (and some would say better) than here in New Zealand.

The medical training here might be adequate, the attitude and professionality of the staff sometimes is, and sometimes is not. Basic things like hygiene in NZ health facilities (particularly state owned) is often neglected. I have seen New Zealand cleaning staff whizzing though isolation wards without any protection for the (quite sick) patients. The health "professionals" around didn't care or choose not to notice. I have seen acute sick patients in need of isolation due to a break down of their immune system dropped into rooms where still the dishes of the last (infectious) patient were laying around. I have seen cleaning staff disinfecting dirt instead of removing it in hospital wards. Ever wondered why we breed in this remote island that many "superbugs"?

No reason for NZ too be particularly proud of its health system - and the fact that we don't accept often better trained health professionals from other countries has nothing to do with the desire for having a good health system. It is based on ignorance and protectionism.

Just lets take a quite obvious example - a qualified German doctor (or nurse) are for example not allowed to work in their trained profession in New Zealand. Do you really think that their training in Germany is worse than what the health professionals learn around here? Really?

The Medical Council of NZ on it's website says there are 12000 doctors in NZ, 40% of whom were trained overseas and originate from 100 countries.
It cannot be too difficult to practise in NZ
As for your comments, you seem to be an expert on building, health and hygiene and probably many other things but no where did I suggest NZ was superior to other countries in it's health system.
I stand by my comments on the need for competence to be proved before practicing medicine is permitted.
As for treated timber, radiata pine is a soft wood and is generally treated to prevent insect damage .when used internally.

westerly

[fungus pudding]

No, your argument doesn't wash, FP. You're saying that generally the two major figures in the profit/loss accounts for landlords are Rental Income (Cr), and Interest Expense (Dr). As well as inflation and appreciation paying off the asset for landlords over time, the interest cost and maintenance expenses will initially exceed any income, often resulting in a tax refund from the govt. This is normally offset against PAYE or other income tax due by the landlord, from other activities in the same year.

Normally in a trading activity, the taxes and tax refunds carry on through each stage until the end-user, in this case the renter, is stuck with the full cost on their tax-paid income. Yes, it's true that landlords' activities help keep banks afloat and that they, in turn, pay taxes on their substantial profits, if they can be pinned down properly that is.

But is it not also true that the game being played by many landlords is generally to keep overall interest costs close to rental returns, by buying more assets over time, not worrying about any capital repayments, just inflation and appreciation in heady markets sustained by more immigration? This plan works fine when everything is moving up, not so good when it's going the other way. A lot of rental houses came back on the market in the last downturn.

It's a business, sometimes a risky business, but it doesn't employ many in view of the capital used, it doesn't export anything, it sometimes slows the regeneration of housing stock, and the owners of these businesses don't work many hours, or end up paying any tax on their gains, or much tax while they are trading. A normal commercial business can be built from the ground up, will probably employ people (PAYE), and to be successful will need to reward the hardworking owner every year, and pay taxes, (income) plus collect and forward GST unless they are exporting. At the moment any capital gain in the business is also tax-free on sale, but you see the difference? The business will have needed to pay tax all the way through, or offer real potential, to be worth anything to a buyer. Not so with rental properties. They are worth what the market says they are worth, and other entrants to the rental market help set that price at every auction.

The business, just like a property, will pay tax only on trading profit. Both can offset losses against other income. e.g a chemist who also owns the coffee bar down the road will offset losses fron one enterprise against gains from the other. (even within a business a grocer offsets losses on apples against gains on the carrots). I doubt if many business owner's pay tax on capital gained on goodwill.

[Bjauck]

I think it is arguable whether owning a rental property is a business.

"An activity is a business for income tax purposes if the
nature of the activities is business-like, and the actions
of the taxpayer indicate an intention to make a profit.
The fundamental basis of a business is that it is an
activity conducted in an organised and coherent way
towards an end result. It is not necessary to show that
the activity has a reasonable prospect of making a profit.
However, a genuine intention to make a profit must be
present. These principles are established and supported
by the judgment in Grieve v CIR (1984) 6 NZTC
61,682." IRD Tax Information Bulletin: Volume Seven, No.3

It could be said that a landlord (especially in Auckland) can only have a genuine intent to make a profit if you include their expectations of (non-taxable) capital appreciation of the real estate. If you take out that expectation of house price appreciation, then proving a genuine intent to make a profit, based on rental income alone, may be difficult. In that case no expenses(including maintenance and mortgage interest) would be able to be deducted from taxable income.

[fungus pudding]

I think it is arguable whether owning a rental property is a business.

"An activity is a business for income tax purposes if the
nature of the activities is business-like, and the actions
of the taxpayer indicate an intention to make a profit.
The fundamental basis of a business is that it is an
activity conducted in an organised and coherent way
towards an end result. It is not necessary to show that
the activity has a reasonable prospect of making a profit.
However, a genuine intention to make a profit must be
present. These principles are established and supported
by the judgment in Grieve v CIR (1984) 6 NZTC
61,682." IRD Tax Information Bulletin: Volume Seven, No.3

It could be said that a landlord (especially in Auckland) can only have a genuine intent to make a profit if you include their expectations of (non-taxable) capital appreciation of the real estate. If you take out that expectation of house price appreciation, then proving a genuine intent to make a profit, based on rental income alone, may be difficult. In that case no expenses(including maintenance and mortgage interest) would be able to be deducted from taxable income.

You are right, and the IRD used to send standard letter to landlords asking how and when they would show a profit, whether property was let to relatives etc, but they no longer bother. That's the way they should view purchases, getting to the purchasers' intentions, rather than talk of CGT.

[Daytr]

Fungus, I assume you are an ACT supporter. i.e. minimalist government & market forces will level things out over time?
This is along the lines of Randism that Greenspan was a follower of & advocated throughout his reign as Fed chair & convinced the likes of Clinton to have less regulation & the market will balance itself. What it doesn't cater for is human nature. In market where you can have substantial leverage this creates bubbles & crashes.

Although Gareth Morgan is against a CGT on investment property he is promoting a far more comprehensive form of CGT on all property.
So Iceman to say he against is CGT is not correct, he wants a more comprehensive CGT to ensure there isn't tax avoidance.

[fungus pudding]

Fungus, I assume you are an ACT supporter. i.e. minimalist government & market forces will level things out over time?
This is along the lines of Randism that Greenspan was a follower of & advocated throughout his reign as Fed chair & convinced the likes of Clinton to have less regulation & the market will balance itself. What it doesn't cater for is human nature. In market where you can have substantial leverage this creates bubbles & crashes.

I was quite a fan for the original ACT proposals promoted by Quigley and Douglas; not so much now although I see them as necessary for National to have a coalition partner. I support policies rather than parties. As far as bubbles and crashes go: run a mile from any system that tries to avoid them. It's the natural steam-letting of a healthy market. Gareth Morgan doesn't live in the real world. He promotes all sorts of ideas that would not gain one vote. Not much point in that.

[Bjauck]

I was quite a fan for the original ACT proposals promoted by Quigley and Douglas; not so much now although I see them as necessary for National to have a coalition partner. I support policies rather than parties. As far as bubbles and crashes go: run a mile from any system that tries to avoid them. It's the natural steam-letting of a healthy market. Gareth Morgan doesn't live in the real world. He promotes all sorts of ideas that would not gain one vote. Not much point in that.

I agree. I think Politics involves "horse trading" and compromising ideals so that they can have a chance of being voted for. A cost of democracy, if you will. As a result, a less than ideal situation may be the result. Maybe what is "best" is not necessarily popular with the electorate at the time. Maybe a comprehensive tax on all gain, from income profit and capital profit, without an exception for owner-occupied housing is the way to go to try and smooth out bubbles and collapses. However it would probably not be within the "comfort zone" of the majority of the voting electorate.

I think a market collapse is like a physical collapse - it indicates a point where stresses reach such a point that the mechanism cannot continue its normal function. True, it is a natural reaction but it can cause discomfort to those involved.

[Sgt Pepper]

I was quite a fan for the original ACT proposals promoted by Quigley and Douglas; not so much now although I see them as necessary for National to have a coalition partner. I support policies rather than parties. As far as bubbles and crashes go: run a mile from any system that tries to avoid them. It's the natural steam-letting of a healthy market. Gareth Morgan doesn't live in the real world. He promotes all sorts of ideas that would not gain one vote. Not much point in that.

FP

For someone who doesn't live in the real world Gareth has done quite well for himself do you not think?

[Daytr]

Well you can have good policy which tries to contain bubbles in the first place. I agree if they happen its best to let the correction happen, something that will come back to haunt the US & Europe eventually. That doesn't mean however you allow holes in the tax system or massive increases in immigration or reductions in migration to create a housing bubble. What you are saying as we may as well not bother adjusting interest rates either, no mater what the economy is doing. Alan Greenspan thought the same thing, let the market sort it out & that didn't work out too well & globally 6 - 7 years later we are still paying the price & in the likes of Europe they could be for decades to come.

I don't agree with everything Gareth Morgan comes out with, but his policies are forward thinking & usually for the greater good.
So just to dispel what he offers by saying he doesn't live in the real world is trite at best.
John Key hardly lives in the 'real world' either.
Most leaders don't.

[Sgt Pepper]

Well you can have good policy which tries to contain bubbles in the first place. I agree if they happen its best to let the correction happen, something that will come back to haunt the US & Europe eventually. That doesn't mean however you allow holes in the tax system or massive increases in immigration or reductions in migration to create a housing bubble. What you are saying as we may as well not bother adjusting interest rates either, no mater what the economy is doing. Alan Greenspan thought the same thing, let the market sort it out & that didn't work out too well & globally 6 - 7 years later we are still paying the price & in the likes of Europe they could be for decades to come.

I don't agree with everything Gareth Morgan comes out with, but his policies are forward thinking & usually for the greater good.
So just dispel what he offers by saying he doesn't live in the real world is trite at best.
John Key hardly lives in the 'real world' either.
Most leaders don't.

Daytr

I agree. What you find is that some right of centre posters are especially harsh and dismissive of any economist, high net worth individuals who are critical of any of Nationals policies. That such people, with sound economic credentials or personal wealth would dare to be critical is deemed as threatening.