Labour / NZ First Government

**artemis** · 20-03-2018, 09:58 AM

House flippers aka speculators would prefer a CGT tax to the current 'trader' regime if it would reduce their marginal tax rate and be set at the previously proposed level of 15%.

What would share traders prefer? They have a lot more flexibility to buy and sell than property purchasers, so more ability to adjust timings and spread CGT impact.

How about a 5 year bright-line test for shares and other assets? And capital losses to be carried forward. That would be fair.

This government has a lot to say about being fair. So why not?

**777** · 20-03-2018, 10:54 AM

I would expect house flippers to pay tax at their marginal rate as they are trading. Capital gain is a different thing altogether. Share trading would be in the same boat.

**artemis** · 20-03-2018, 11:19 AM

Originally Posted by 777

I would expect house flippers to pay tax at their marginal rate as they are trading. Capital gain is a different thing altogether. Share trading would be in the same boat.

Not altogether different, esp with a bright-line test. In all cases there are, or could be, capital gains. Or losses. How would it be determined if a seller is a trader so should be treated differently.

What say the marginal tax rate is less than the CGT rate?

We don't know what the details might be. What we do know if that Labour's previous CGT policy was ill thought out and started to fall apart quickly when questioned (eg baches in then out, some businesses in then out, inherited assets tweaked, assets in trusts out then in or something).

Maybe a new proposed regime will be more robust, what with all those tax experts pontificating.

**fungus pudding** · 20-03-2018, 02:52 PM

Originally Posted by artemis

House flippers aka speculators would prefer a CGT tax to the current 'trader' regime if it would reduce their marginal tax rate and be set at the previously proposed level of 15%.

What would share traders prefer? They have a lot more flexibility to buy and sell than property purchasers, so more ability to adjust timings and spread CGT impact.

How about a 5 year bright-line test for shares and other assets? And capital losses to be carried forward. That would be fair.

This government has a lot to say about being fair. So why not?

Bright line test of five years sounds fair enough provided it applies to prime residence as well - and why should losses be carried forward? Surely they should be claimable in the year they occur. And there's still the question of intent. Perhaps a number of transaction limit might be appropriate. Then again perhaps it's all best forgotten, given the only reason for such taxes is to placate the envious.

**westerly** · 20-03-2018, 05:34 PM

Originally Posted by fungus pudding

Bright line test of five years sounds fair enough provided it applies to prime residence as well - and why should losses be carried forward? Surely they should be claimable in the year they occur. And there's still the question of intent. Perhaps a number of transaction limit might be appropriate. Then again perhaps it's all best forgotten, given the only reason for such taxes is to placate the envious.

"Then there are the deals that are seemingly inexplicable. Mataura Valley Station, which the taxpayer paid $710,000 to privatise, was sold a year later for $9 million; similarly, the taxpayer paid $1.3 million to privatise Bendrose Station, also sold soon afterwards for $9 million. In both cases, the farmer made astronomical, untaxed profit at the expense of the taxpayer." (from a Press article)

Tenure review of high country stations, something the previous Labour Govt. were in the process of stopping before defeat at the next election. John Key's Govt. promptly allowed the process to continue.

From the Nomad Capitalist
"One of only six “free” economies in the world according to the Heritage Foundation (hint: the United States is not one of them), New Zealand offers stability and independence and is a growing “safe haven” jurisdiction for assets. New Zealand does not impose a capital gains tax on the sale of equities or other investments. It does have a formal law stating that real estate purchased for the express'purpose of resale can be made subject to capital gains taxes, however, this law is rarely enforced. "
Placate the envious? They should be marching in the streets
westerly

**RGR367** · 21-03-2018, 06:33 PM

Okay, I'll consider Ardern's move on Jones re AIR a good move aka "Helen Key". https://www.stuff.co.nz/national/pol...ey-of-politics

**elZorro** · 21-03-2018, 06:54 PM

Originally Posted by fungus pudding

Bright line test of five years sounds fair enough provided it applies to prime residence as well - and why should losses be carried forward? Surely they should be claimable in the year they occur. And there's still the question of intent. Perhaps a number of transaction limit might be appropriate. Then again perhaps it's all best forgotten, given the only reason for such taxes is to placate the envious.

As Westerly argues, it's only fair. The 'politics of envy', a line often trotted out by the Nats and people who vote for them. (Yes, FP voted Labour once, when Roger Douglas was controlling the show under the auspices of Treasury boffins).

Any reasonably sane and fair-minded person would surely come to conclusion that if they are lucky enough to find a sideline or business that pays off well for little effort or risk, then they should help with the Crown burden of the infrastructure in the country where that income is generated. If the income is highly unusual or a one-off, or if it is regular, it makes no difference.

FP makes the point that sometimes losses are incurred. Those are now ring-fenced and have to be offset against future income tax due. In the general situation, that won't affect property owners, as FP well knows. Most are in it for the long term and have had little or no risk of that occurring. Those who are trying for short-term gains may dip out on occasion, but they have time to recover from that.

FP also knows that there is absolutely no way that any NZ govt will levy a CGT against the prime residence, unless there are exceptional circumstances perhaps. So there is no point even talking about it.

A CGT would apply to those who have gone out of their way (and perhaps taken on a certain risk) to run a business where a tidy capital gain can be made, and they have been helped in each year through claiming costs and any interest paid, against income for that enterprise, where they legally can. It's easy to see that home occupiers don't have that luxury, so they would be immediately exempt.