Quote Originally Posted by davflaws View Post
The way I understand it from Michael Cullen's explanation is that they are widening the definition of income to include income derived from capital. The following illustration is simplistic - but I can't see what is wrong with it - either in theory or in practice. Allan is in IT. His salary is $100k. Bryan is a semi retired accountant. His Personal Drawings from his small practice are $50k and his shares and bonds provide dividends and interest totalling $50k.
A fair tax system would see Allan and Bryan paying the same tax.
Income from capital is already taxed at 33% for dividends and at your elected rate for interest. It is the capital gains they are after.

For example A earns 100k from their job and is currently taxed.
B has no taxable income but sold their Auckland investment rental for a $600k capital profit on their equity. B is not currently taxed, except where it is within bright line.