If National wins ...

[Sgt Pepper]

N 11
I take your point. I have never quite comprehended how the tax system got to the point when you could remortgage the family home, set up a Loss Acquiring Qualifying Company buy another property/properties and claim the interest as a deduction on your wage/salary.
But I suspect there is about as much chance of the government eliminating LAQC tax benefits as growing pineapples in Antartica

[fungus pudding]

i'd be more concerned with the city slicker property renovators with a paintbrush making several 100k tax free after a years work of tv style diy.

That's not easy to do. I'll bet you've never met one.

[fungus pudding]

N 11
I take your point. I have never quite comprehended how the tax system got to the point when you could remortgage the family home, set up a Loss Acquiring Qualifying Company buy another property/properties and claim the interest as a deduction on your wage/salary.

Forget the LAQC stuff. Property investors pay tax on their profit; not on turnover. Interest paid reduces profit. That's how investing and businesses work - worldwide standard accounting. The rules for property investors are exactly the same for share investors, precious metals etc. and all other forms of investing.

[Sgt Pepper]

That's not easy to do. I'll bet you've never met one.

FP
I have, I used to work with one

[Xerof]

'Loss Attributing Qualifying Companies' (and Qualifying Co's for that matter) have been replaced by 'Look Through Companies', and as a consequence, a few less pineapples can be grown in Antarctica. Changes transitioned into effect from April 2011

[Sgt Pepper]

'Loss Attributing Qualifying Companies' (and Qualifying Co's for that matter) have been replaced by 'Look Through Companies', and as a consequence, a few less pineapples can be grown in Antarctica. Changes transitioned into effect from April 2011

Xerof

Fair comment re the Transition to LTC.
A bit of context. I am not a grumpy salary earner who is envious of people who have a high net worth. I am very familiar with rental property, having spent every weekend as a youngster when my hard working parents brought a large property and converted into 4 rental units. painting and renovating. I well recall our first tenants ( two medical students) completely trashed a flat, defaulted on the rent and my mother crying when confronted with what they did.

[fungus pudding]

FP
I have, I used to work with one

So you worked for him? Or did he have a regular job and prattle on about the fortune he was picking up on the side. (There's plenty of them around blowing trumpets) Some make a dollar or two, but there's more burnt fingers in residential property, landlords and traders. than most activities.

[elZorro]

EZ
Do you think that an unfair proportion of tax is paid by middle to upper income earners? Are we an easy source of revenue in that we are are not a complex cohort of individuals, we receive, usually every fortnight, a wage/salary and a formula removes a proportion and transfers it efficiently to inland revenue. There are no complexities to contend with, and no opportunity to off set income against tax liability, the only exception is income protection insurance premium.

Correct, wage and salary earners have no opportunity to defray tax due, unless they get into property or business investments. If these work out, the investor loses immediate cashflow into claimable interest payments and/or costs, but should see a capital gain in the future that is not taxed. The system is set up this way to incentivise people into those investments. My only beef with this is that if a very large chunk of the investments are in rental housing, commercial property and farms, there will be a tiny tax base from those activities, compared to the capital involved. Which means the govt budget deficit has to be picked up by the low-hanging taxpayers, the former group who simply go to work each day.

Labour has a plan to change the levers in this old system that has outlived its usefulness. We'll then line up with most overseas countries. A CGT has to be imposed, fair across the board, and I think that since investors always get special deals here and there, the family home should be exempt below a certain figure, to remove the whole issue for a large chunk of people still making their way up into their first and most important investment. And, R&D tax credits and other superb ideas from Labour will mean that if all businesses are subject to CGT, you may as well have one earning a good annual return, and preferably able to access these credits and incentives as it trades. Small, cheap carrots, but they'll work.

[elZorro]

It was a really interesting weekend as far as political commentators go. The former head of BNZ sounded quite sensible, until we heard the full story fleshed out later. Of course, banks don't need near as many frontline staff anymore, with internet banking being well accepted.

http://tvnz.co.nz/business-news/time...r-says-5968781

As a sideline, the book "The NZ Experiment" states that from 1984, the NZ financial sector was the first to be deregulated, a sea-change that turned one of the more regulated sectors worldwide, into one of the most open. Banks and financial institutions generally embraced this, and money tended to be recklessly made available for fast-returning non-productive investments, and it flowed out of longer-term productive investments. This would have been the start of the rot as far as jobs were concerned, but the govts of the day continued to drop employment in many parts of the public sector and in the new SOEs. This went on for years.

[fungus pudding]

Correct, wage and salary earners have no opportunity to defray tax due, unless they get into property or business investments. If these work out, the investor loses immediate cashflow into claimable interest payments and/or costs, but should see a capital gain in the future that is not taxed. The system is set up this way to incentivise people into those investments. My only beef with this is that if a very large chunk of the investments are in rental housing, commercial property and farms, there will be a tiny tax base from those activities, compared to the capital involved. Which means the govt budget deficit has to be picked up by the low-hanging taxpayers, the former group who simply go to work each day.

Labour has a plan to change the levers in this old system that has outlived its usefulness. We'll then line up with most overseas countries. A CGT has to be imposed, fair across the board, and I think that since investors always get special deals here and there, the family home should be exempt below a certain figure, to remove the whole issue for a large chunk of people still making their way up into their first and most important investment.

Capital gains are mostly the result of inflation. All owners of non-depreciating assets benefit from inflation, so if CGT is a good idea which is debatable, there is no justification for exempting the primary residence.