However If you bend over backwards to try to appeal to the globalised rich business people, who are prepared to travel from country to country, you may well end up with a backlash from the general population - and Brexit and Trump situations.
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However If you bend over backwards to try to appeal to the globalised rich business people, who are prepared to travel from country to country, you may well end up with a backlash from the general population - and Brexit and Trump situations.
There are far fewer eateries and restaurants in downtown Chch today than pre-earthquake era. Far fewer businesses in the downtown core too = less workers = less meal plates and coffees to dish out.
I know this may be a bit off topic but what is exactly the cause of Brexit? From what I recall it's the mass invasion of migrants destabilizing the general population? Perhaps UK wanted to avoid the issues that Greece, Spain, & Italy experienced? In Trump's case, as Munger mentioned you have pro-democrat states in the US that have failed by turning their backs against wealthy businesses that create jobs. I mean you don't need a lot of common sense to see who generates the employment? or perhaps would the economy (and country) be in a more healthy state if the only jobs available was from the gov't?Quote:
However If you bend over backwards to try to appeal to the globalised rich business people, who are prepared to travel from country to country, you may well end up with a backlash from the general population - and Brexit and Trump situations.
‘Mass invasion?”....’destabilisation” only if you believe the screaming tabloid headlines. Lots of causes and there are separate threads for those topics. Briefly many of the poorer people and communities who had been promised ‘Trickle down’” benefits from giving tax breaks to the wealthy, were left further behind by government policies. Many consequently were encouraged by populist politicians who urged the disaffected to vote for them with beguiling slogans such as “make America great again” and “bring back control”.
First homes in Auckland only for wealthy buyers or from wealthy families who can contribute toward deposits?
Would exempting the family home from a CGT amount to a tax break for the wealthier?
Why not boost income tax thresholds, KiwiSaver tax breaks or introduce a tax break for those who earn up to a certain level of fixed interest?
https://www.nzherald.co.nz/business/...ectid=12205655
Fixed interest, as a class of income, does tend to be the investment income that is earned by a broader cross-section of people.
However I do agree with you that all investment income and capital gains should be treated the same. If the family home is exempt from a CGT (and income tax as currently) then why shouldn’t there be tax free thresholds for business and investment income and capital gains - especially for those who do not want to own their own home.
For those who do not own (or cannot own) a family home, then they should have an exemption for their investments (up to a certain threshold?) For those that have a low value family home, then they should be given a CGT and Income tax allowance for other investments. Family home exemption (without a value limit) from a CGT could lead to a mansion effect in NZ.
Perhaps one way to replace the family home exemption from a CGT would be to give all adult taxpayers an annual CGT exemption allowance equivalent to say 5% of the average house price at the start of the year. This could accumulate if unused in a particular year. The exemption could then off-set taxable realised capital gains whether they be from the family home, investment real estate or other investments.
Winston has now told farmers that they should be exempted as CGT is only to stop short term speculation. This is getting better by the day !!
Might be time to sell the shares and buy the second family home.
Will a licence to occupy be subject to a CGT? If not, and hard to see if it will, expect the retirement village sector to explode as homeowners sell up sooner rather than later.
I wouldn't expect it to as it isn't "capital" its just a right to live somewhere. You might be right - with a flight to retirement villages. The thing there is to, if you buy into them you know you are going to sell at a loss. So that loss would be a tax benefit to your estate. So lock in capital gain prior to V Day and reap a tax benefit later.
You're missing the MAJOR distinction between taxing of necessities vs taxing of large size wealth. After all, pretty much EVERY OECD nation treats CGT differently to income tax rates. Why? Show me a country that applies CGT exemption limits each year? How would that be particularly useful to the person that owns no assets? Therefore, I don't see your argument that the principal resident should not be exempt as it would be the single source of asset a person can hold, and more importantly, not having to worry about selling for a capital LOSS (consider those that move from place to place every 5 or 10 years?) and then pay another round of CGT when the market rebounds.
I also do not buy into the argument about those choosing NOT to buy a house and instead, invest their savings elsewhere (ie managed funds). The fact is simple, those that can't afford to buy a house simply do NOT have the $ to save ; what % of those on minimum wage actually contribute to Kiwi Saver? Very few because that 3% they lose off their total annual income would be better spent in putting food on the table. The approach of CGT by other wealthy nations is aimed none other than the wealthy ; the NZ top 5% of the population that has parked their $ in real estate, banking it without having to worry about paying tax on the gain.
I've mentioned before in the case of real estate, all properties have a "rates valuation" by the local city council. If you feel the assessment is not accurate (because of some fancy irrigation or building accessory installed), you can always get an independent valuation and the city will reflect that on your rates bill.
By the way, i've been working on my Mini Moke today re-adjusting the carburetor (needle jet air/fuel mixture). Next job is to readjust the valve tappet clearances. :)
One good thing about a CGT against the real estate market is it will reduce the demand of houses. I mean does NZ really need 10,000 houses to be built 'right away' ? Also the idea of retirement villages does not sound appealing to me. But many choose to do reverse mortgages on their home.
There in lies the problem. There is a huge difference between a "rating" valuation and capital valuation. Eg when I renovated Council stuffed up. My rates valuation went up a smidge but not near the $300k of actual value. Needless to say I've kept quiet on that one. Then there's my Insurance Valuation. Somewhere in there will be a market value which is when the witch doctors come in and stir the ashes to value land and the improvements.
Pretty weird that in a "fair" scheme they exclude family home - that's where so much capital is tied up and used for other money making purposes.
Isnt it great having a car you can actually work on. Sadly I open my bonnet now and haven't a clue where to start.
I guess the NZ sharemarket will have a 25% spike up on V day, on record low volume.?
Then the paper war will start in ernest.
At this stage I am wondering what's the point of saving to invest.
Well.. looks like house prices will continue to rise since this will be the only tax free place to park capital, such a stupid recommendation. Why save to invest in shares, you’d do better leveraging up and buying a bigger “family home”.
Well it will take the argument out of whether you are an investor or a trader.
FP, thought you'd like the idea of a rollover being mooted (perhaps have to reinvest in a similar area). Can't see how they'll ever collect any CGT if that is the case. Maybe you'd be allowed to buy a vintage car or other asset that is likely to still increase in value. Or even put the capital gain into a savings account? Labour must be worried about having National undo it all. Sounds to me like the tax accountants will be happy to provide answers here.
Personally, I have concerns about IRD's capacity to administer a CGT.
And if, as p17 of the executive summary suggests, it will be necessary to undertake a series of test cases, then adequate clarity might well lie some distance in the future.
As far as I know the roll over tax so far is only suggested for business sales.(I think the common term where it exists is 'a repatriation clause') It should apply to all assert classes where CGT is proposed in my opinion, so CGT would only apply on exiting that class of investment. There are good reasons for that, but that's covering old ground. I don't think National would ever undo CGT if it gets established as evidenced by their about turn on their hinted intention of undoing Labour's GST. No doubt you remember Bolger waffling about a transfer tax. Fortunately that's long forgotten, and I for one hope our GST remains in its current simple form. Govt's don't abandon tax schemes - they just try and find better ways to spend it. Forget vintage cars, art and similar nonsense - rest assured it will only apply to income earning assets with the one exemption being a holiday or second home)
Plenty of people pay income tax on shares they sell now, and of course that's at marginal tax rates. If you are deemed to be a trader you will pay tax on profits, whether it's cars, houses, shares, second hand furniture, holes to put in swiss-cheese, or widgets you're selling.
Fair comment, re dividends tax, but you cleverly avoided the investor who didn't intend to sell (when they bought) but for some some reason they eventually were sold. Boom .. CGT rips a massive 'marginal tax rate' hole in your/their capital gains.
Interested in what investors think about this. If you take for example a high capital growth share like XRO or ATM, and say you put $50k in the early days and make a few millions out of it, how do you feel about a tax bill of a few $ hundred thousands or a million or so when you or your estate sell it?
There are people who have decided to invest in and build up businesses rather than buying their own homes. Why not give them a tax break too as good as home-owners get?
If you own a mortgage-free $3m home you are indeed wealthy. Every country that exempts the “family home” applies a CGT exemption. Exempting what can be a multi-million dollar asset, is an exemption for the wealthy.
The whole thing is going to fail. Too many hurdles to get over. The first being Winston. If it is still proposed by the election then they will be out. The concern is if they say that it won't happen, then get re elected with the kermits, they will just do it anyway.
Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.
Correct - its not inflation adjusted. And its not adjusted to reflect the value of your person, un-charged labour, that goes into it.
Problem with this of course is that government has the job of managing inflation. So coffers get a bit low, just tweak inflation levers to give it a boost.