Mitigating the effects of a potential new capital gains tax

[kiwico]

To me the first to go after would be the rentals with interest only loans. Given the borrowing process is based on not paying off the loan then the assumption can be that the intent is for an increase in value (although I realise that this will not be the only reason as the cost of the loan can also be a factor).

[kiwico]

But that then leads us on to shares that don't pay a dividend. There can always be the argument that a dividend is expected but how does one start they are not purchasing with the intent of capital gain where there is no other income? If you think of the likes of Berkshire Hathaway it has long been said there will never be a dividend (as WB knows better how to spend the money than us). [Although this is caught by FIF of course.]

[Ggcc]

But that then leads us on to shares that don't pay a dividend. There can always be the argument that a dividend is expected but how does one start they are not purchasing with the intent of capital gain where there is no other income? If you think of the likes of Berkshire Hathaway it has long been said there will never be a dividend (as WB knows better how to spend the money than us). [Although this is caught by FIF of course.]

I believe we would work similar to Australians would. They tend to love investing in growth stocks that produce no income ie Xero and they rise quickly. I would rather invest in stocks with Percy’s ideas hold and sell very little. If CGT gets introduced, having a great accountant to help reduce tax will be my next port of call.

[Rep]

I believe we would work similar to Australians would. They tend to love investing in growth stocks that produce no income ie Xero and they rise quickly. I would rather invest in stocks with Percy’s ideas hold and sell very little. If CGT gets introduced, having a great accountant to help reduce tax will be my next port of call.

And therein lies both problems with the proposed CGT, it changes investment criteria for taxation rather than underlying economic reasons - some companies will hoard cash or use it in investments elsewhere for diminishing marginal benefit rather than paying a dividend - secondly, tax advisors are going to be hatching schemes everywhere designed with large compliance costs that are merely to diminish tax than of productive benefit (the same dead weight loss we had around gifting duty).

Observation - John Russell possibly thought he was a clever and great accountant, and the orthopods Penny and Hooper thought they had a great one too - and I'm sure Hadlee rued the day he assigned partnership units to his family members to try to stream income to reduce his tax burden. The IRD has 7 years to serve a notice of assessment and what appears to be bottomless pit to wrestle with you in court.

[Bjauck]

Just something to keep an eye on - and thats definition.

Two phrases are coming to light: "family home" and "Owner occupied house". Assuming both are free from CGT I may vacate my "family home" and move into an "owner occupied house" do-oer upper thought that might depend on cost involved in the doing up

Good point I think CGT regimes allow just one exempt "family home."

With any new tax there is a hidden extra "extra tax" - namely taxpayers having to pay more in acountant fees! It will be interesting to see what the recommended threshhold levels for annual tax-free realised capital gains will be before a cgt is levied.

[traineeinvestor]

Depending on circumstances, leaving the country is an option.

[traineeinvestor]

FWIW, there is a list of the Austrian CGT exemptions here: https://www.ato.gov.au/general/capit...nd-exemptions/

[Cricketfan]

With any new tax there is a hidden extra "extra tax" - namely taxpayers having to pay more in acountant fees! It will be interesting to see what the recommended threshhold levels for annual tax-free realised capital gains will be before a cgt is levied.

The extra costs and general hassle might put a lot of people off shares altogether. I wonder if/when such a CGT is announced, what effect it'll have overnight. I can imagine a lot of people getting out just to avoid the hassle.

[captainigloo]

There's a lot of talk about creating a "fairer tax system". Which presumably means "the wealthy should pay more and others should pay less" . If that's what they mean, fine, but they should just say so.

[Cricketfan]

There's a lot of talk about creating a "fairer tax system". Which presumably means "the wealthy should pay more and others should pay less" . If that's what they mean, fine, but they should just say so.

This would affect Kiwisaver too though, wouldn't it? Or is that exempt?