Will the government impose a wealth tax to raise capital?

[jr1973]

What could it potentially look like?and what is the best way to protect yourself from this?

That would depend on your ability to move. I recently moved from Australia to NZ post selling a company and shifting assets. That legally saved me 25% in capital gains on a large portion of shares due to trust structures so a) optimise your tax structure b) be willing and able to move to a "lower cost" jurisdiction. There is an overhead however... tax audits are going to come your way because the tax authority will want to validate that what your advisor told you stacks up. That brings me to another point... have a good tax lawyer/advisor and do what they say. You may receive a ruling against you ie "pay the tax they reckon you owe" but you will not get hit with penalties and interest.
Nomad Capitalist on youtube has some interesting idea's on being a 'global citizen'. I have friends in the Philipines that run all funds through Singapore and pay basic wages to his staff in Cebu which by they way is a great lifestyle. Like most things, what do you want from life? 183 days in a foreign jurisdication makes you a non-resident. Most countries have flexible citizenship options for the right level of investment.

[SBQ]

That would depend on your ability to move. I recently moved from Australia to NZ post selling a company and shifting assets. That legally saved me 25% in capital gains on a large portion of shares due to trust structures so a) optimise your tax structure b) be willing and able to move to a "lower cost" jurisdiction. There is an overhead however... tax audits are going to come your way because the tax authority will want to validate that what your advisor told you stacks up. That brings me to another point... have a good tax lawyer/advisor and do what they say. You may receive a ruling against you ie "pay the tax they reckon you owe" but you will not get hit with penalties and interest.
Nomad Capitalist on youtube has some interesting idea's on being a 'global citizen'. I have friends in the Philipines that run all funds through Singapore and pay basic wages to his staff in Cebu which by they way is a great lifestyle. Like most things, what do you want from life? 183 days in a foreign jurisdication makes you a non-resident. Most countries have flexible citizenship options for the right level of investment.

Bravo! yes as i've been hard hitting this forum, taxation is the key but no one seems to question it.

The reason why the wealth tax has not been taken seriously is more to do with NZ's trust structure - any wiff of a wealth tax and you'll see all the lawyers rubbing their hands forming trust left / right / & centre. As I recently conveyed with my accountant, after a long hassle dealing with NZ's FMA, AML, & police checks ; the law does not prevent a person from 'GIFTING' their assets away. However! if the gifting can be proven intentional for the sole purpose of avoiding taxes, then IRD would have a go at you. But as you say, lawyers and tax accountants are much more smarter than that and no one in NZ should get's hit by IRD as long as they DO what they say (equally important, DON'T do the things that gets you in trouble).

I'm quite familiar with Canada's tax residency laws and during my studies, Canada has a well proven reputation internationally at taxing non-residents living abroad. One can not assume 183 days is a rule; it's 'just ONE' of the requirements. In recent years, have a look at the real estate market in Vancouver and question why so many of the rich Chinese have essentially laundered their $ through Vancouver real estate? When Trudeau was elected, he allocated a significant budget to go after these 'tax cheats' and liars claiming tax free capital gains owning Vancouver real estate when they don't live in the country nor, some even claim social benefits, medical care, education, the list goes on. You are correct! it all depends on the person's "ability to move" and for most, they won't meet that criteria of being truly non-resident. You only need a few 'ties' on a list of 20 things the CRA goes after to deem a person a tax resident in Canada. I'm am 100% certain, NZ's IRD follows a similar rule. Dependents like children are usually the easy ones they use to deem a wealthy non-resident to be a tax resident. (it's quite common for Asian families to send their children abroad for schooling, but easily cross the line when they buy a house instead of renting, when the student obtains a driver's license, medical care access, member of a church organisation, various bank accounts, and so many ticks on the list that would 'deem' a person a tax resident.

When I left Canada some 20+ years ago, all that was required was to fill out a 2 page form declaration of non-residency, the date when I would leave Canada, and a check list of things that would deem me still a resident ; they never bothered to take the time to verify things and you just filled it and away you go. Typically, giving up a driver's license, medical care card, local memberships, were usually difficult for those wanting to make that declaration. I'm quite certain today, these 'ties' are enforced more closely than ever. Especially with the recent introduction of the CRS (Common Reporting Standard) put out by the OECD where some 110 nations around the world have forced their banks to implemented it. Ironically the USA is not part of the CRS so any non-resident holding a bank account there will have no concerns of their bank sharing information to relevant tax authorities.

As for how will the NZ gov't shore up more funds? My guess would be a rise in GST from 15% to say 18% or even as high as 20%. CGT has been tried last year and because of the 3 way coalition party in gov't, there was no way CGT would pass. Jacinda Ardern even specifically said, "There will be no CGT for as long I am in gov't" Yet her election platform originally said she would bring in CGT.

[Panda-NZ-]

As for how will the NZ gov't shore up more funds? My guess would be a rise in GST from 15% to say 18% or even as high as 20%. CGT has been tried last year and because of the 3 way coalition party in gov't, there was no way CGT would pass. Jacinda Ardern even specifically said, "There will be no CGT for as long I am in gov't" Yet her election platform originally said she would bring in CGT.

It needs to be fair for everyone not just some who pay 0% now.

For a young person they will be paying GST, PAYE, student loan repayments and rents that are very high. They gave up their jobs so others could have a bit more time. It's time to have a relook at something which is fair for everyone across age and other groups.

I'm thinking PAYE cuts bundled in with a CGT, a tax which every country already has in place so you can't go anywhere.

[blackcap]

It needs to be fair for all parties.

What does that actually mean? It needs to be fair? I hear that word bandied about so often, normally by those envious of others. But it is never explained to me what fair actually means in quantifiable terms.
What do you mean, young people gave up their jobs? What bunkum. They did not give up anything so others could have more time.

[fungus pudding]

What does that actually mean? It needs to be fair? I hear that word bandied about so often, normally by those envious of others. But it is never explained to me what fair actually means in quantifiable terms.
What do you mean, young people gave up their jobs? What bunkum. They did not give up anything so others could have more time.

Flat tax would be a step towards fairness: i.e. one percentage rate only, levied on every dollar earned. It is ridiculous that someone may have to earn more to buy a jug of beer than the person she is drinking with.

[blackcap]

Flat tax would be a step towards fairness: i.e. one percentage rate only, levied on every dollar earned. It is ridiculous that someone may have to earn more to buy a jug of beer than the person she is drinking with.

A flat tax has always appealed to me as it is the most equitable. Another fair system would be everyone pays $10,000 in tax irrespective of earnings and post that gets to keep the rest. That way everyone pays the same. That sounds fair to me too.

[Bjauck]

A flat tax has always appealed to me as it is the most equitable. ....

A flat tax on capital or capital gains or transactions or real estate and asset purchases? Otherwise a flat tax just on income or on income and goods and services is arbitrary and inequitable.

[SBQ]

It needs to be fair for everyone not just some who pay 0% now.

For a young person they will be paying GST, PAYE, student loan repayments and rents that are very high. They gave up their jobs so others could have a bit more time. It's time to have a relook at something which is fair for everyone across age and other groups.

I'm thinking PAYE cuts bundled in with a CGT, a tax which every country already has in place so you can't go anywhere.

Need to distinguish what category of tax we're talking about, which are basically 2 camps ; Consumption Tax and Income Tax.

Gov'ts like to increase consumption taxes as it's less hassles, regulations, paperwork etc and most important of all, it captures the underground economy (that is undeclared cash, when it's spent, the GST gets a % of it).

NZ's Income Tax system in it's current state is inequitably fair. We have this "Working For Families Tax Credit" but it's not helping much in getting such families into their own home. I do believe NZ needs to look what other countries have donen to address household income inequality. Note I mention 'household' because it's important that spouses should not be penalised in the same way as individuals living alone. There needs to be consideration for a person that works 40 hrs a week and having to support a spouse that has to take care of their children. The strategy, like most NZ gov't tax initiatives are blunt in that they use few hard figures to determine people's criteria for getting such benefits. This is the problem we constantly see for all occupations across the country. Why is a school teacher's salary not much more living in Auckland than in small rural places where house prices would only be fraction what a house costs in Auckland? In Canada, where you live in regional locations determines the tax take (ie. Northern Living Allowance). Want to live in the big cities? expect to pay more income tax, more insurance, more for everything. So before one can determine what is an equitable tax system, you have to look at the whole picture.

CGT certainly needs to be addressed in NZ. While many say IRD already has a system in place for taxing those that 'frequently speculate on an asset / albeit shares or rental properties', the vast majority of them pay no tax.

Over in America i'm a big fan of their "Earned Income Tax Credit". It may be similar to NZ's Working for Families Tax Credit but it differs in that it's more effective in reducing income inequality. What did the NZ Labour Party do to address income inequality? Well they raised minimum wage. Why doesn't the NZ gov't consider the other approach of keeping wages low but tax credit the low income earner in other ways? We know labour costs are a big issue for employment in any industry so elevating the cost would just simply deter more businesses to operate and encourages more of the behaviour where workers are 'contracted' on a B2B basis.
If you want to increase productivity, don't tax it out of the entrepreneurs or businesses. How about start taking it from those that have the assets, such as the many many politicians that own real estate and wanting that tax free capital gain?

As for a 'flat tax' system on income? Well that doesn't work so well if there's a high % of unproductive labour force. It's also far from being equitable as it does not address the 'haves and the have nots'. The 'have nots' are rioting in America for this simple reason, as Warren Buffet has said, a person merely being born from a wealthy family has all the advantages than the minorities that have a culture of low unproductive habits.

https://finance.yahoo.com/news/warre...134650421.html

“If you go back to 1800 and 80% of the people were farmers, and you were the best farmer in Omaha and I was the worst, the difference in our value might be two to one,” he says. “You might be worth twice as much if we're out there picking corn, or whatever we might be doing or planting.”

Today? “If you're in the top 1/10 of 1% in basketball ability, or football ability, or baseball ability, you aren't worth anything,” Buffett says by way of example. “If you're in the top 100th of 1%, now you're worth millions. Sports is an easy example, because we all like to watch them. We don't want to watch a bunch of guys like you and me play basketball. So that's where the money is. But that didn't exist 200 years ago.

“And so you get this pushing of extreme rewards to people who are very, very good at something the market demands. And people demand entertainment. They demand people apparently that arbitrage securities. There's certain specialties.”

So what Buffet is saying, there needs to be more taxes for those on the extreme end of the income. This is not what i'm seeing in NZ. It maxes out at 33% on over $70K of income. Perhaps we need to start seeing a 60% or 70% take for those earning over $1M per year like all these executive CEOs we have in NZ? Canada has similar tax rates for those earning nearly $500K / year and certainly, those CEOs or high income folk aren't complaining about that high tax take.

[Panda-NZ-]

Need to distinguish what category of tax we're talking about, which are basically 2 camps ; Consumption Tax and Income Tax.

It is slightly bad for small business though (tax on every $1 of revenue). Imagine how quickly it would be cut if it was applied to all property income. Though I like the fact that it catches more overseas services now whereas that was mostly being avoided (another loophole in GST) until recently.

The high end earn currently non-taxed income from shares/property and not so much wages so subjecting that to tax will be better. They would get to keep all of the existing gains presemuably since it can't be applied retrospectively which is highly fair even from their own perspective.

[blackcap]

It is slightly bad for small business though (tax on every $1 of revenue). Imagine how quickly it would be cut if it was applied to all property income. Though I like the fact that it catches more overseas services now whereas that was mostly being avoided (another loophole in GST) until recently.

The high end earn currently non-taxed income from shares/property and not so much wages so subjecting that to tax will be better. They would get to keep all existing gains presemuably since it can't be applied retrospectively which is highly equitable even from their own perspective.

Is it GST you are talking about? GST does not affect small business at all. Small business does not pay the tax. The consumer does. All business does is act as the collection agency for the government.