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  1. #21
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    Quote Originally Posted by Panda-NZ- View Post
    How so? It is a revenue tax that can't be avoided (..which is one of its virtues apparently).
    Surely you know that it is you who pays it.
    Have you never noticed?

  2. #22
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    Quote Originally Posted by Panda-NZ- View Post
    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 equitable even from their own perspective.
    Well if you look at the UK they have VAT at 20%. Many places in Europe have a high import duty rate like 33% (which essentially ends up as a consumption tax). Small businesses aren't stung with the GST (they simply pass it on to IRD as an accounting / auditing measure) ; UNLESS the small business is not GST registered, for which they will be stuck paying the GST; but many unregistered businesses don't bother to do proper account or remit taxes).

    I do believe NZ has lost it's unique tax advantage of the pre 2000 era. (such as no tax on foreign investments and residents could buy / sell houses without pay any tax on the gains more frequently). In recent years (ie with the media exposure of the Panama Papers etc), NZ is no longer a place where one can hide their wealth. So rather than the gov't trying to make NZ unique, they might as well go all in and tax everything like they do in the EU. But will the NZ gov't do so? As you say the wealthy make their earnings from capital gains through real estate and shares.... what repercussions would we see if such assets were hit with CGT at a higher level? Something tells me the NZ gov't is afraid as I think there's already a fine line where the rich start moving their assets abroad. You kill the only investment left for NZ, what incentive would there be left to live in NZ?

  3. #23
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    Quote Originally Posted by SBQ View Post
    what repercussions would we see if such assets were hit with CGT at a higher level? Something tells me the NZ gov't is afraid as I think there's already a fine line where the rich start moving their assets abroad. You kill the only investment left for NZ, what incentive would there be left to live in NZ?
    NZers would probably move in with improved retirement saving policies. Not a small elite, foreigners or US/aussie banks. They are in a small way but not enough. :\
    Last edited by Panda-NZ-; 17-06-2020 at 07:00 PM.

  4. #24
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    Quote Originally Posted by Bjauck View Post
    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.
    Well on income of course, but what is the definition of income. That is what may need to be looked at. I have no problem with a CGT if it is inflation adjusted.

  5. #25
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    Quote Originally Posted by Panda-NZ- View Post
    ...
    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.
    All income is taxable regardless of its source.

  6. #26
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    Quote Originally Posted by blackcap View Post
    Well on income of course, but what is the definition of income. That is what may need to be looked at. I have no problem with a CGT if it is inflation adjusted.
    Definition of 'income' has been spelled out quite easily in the tax books abroad. When I was doing tax courses at uni in Canada, the ITA had all sorts of definitions for incomes / scenarios. But the most interesting aspect i've found was there was no definition for a 'person' in the book. They intentionally left it out to allow for the future trend (as we see today 'virtual bodies'? which can be taxed). It would not take much for IRD to follow similar rules and copy the wording nearly word for word.

    Inflation adjusted CGT has been tried in Australia for many years... it didn't work and was complex - having all sorts of inflation rate tables that could be scrutinized as the inflation rates of certain assets varied from year to year from asset to asset. At the end they simply copied the Canadian method of taxing CGT by simply taking half of the gain as being taxable income. The result overall is still a lot less tax paid as the 1 half of the gain is tax free in the person's pocket. I can't see how this would not work in NZ - it's only a question if the NZ politicians want to pay their fair share too?

  7. #27
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    Quote Originally Posted by blackcap View Post
    Well on income of course, but what is the definition of income. That is what may need to be looked at. I have no problem with a CGT if it is inflation adjusted.
    Me either, a long as it applies to all real property, including the family home, and collectables; e.g art, cars, antiques, jewellery and a few other bits. Currently they fall under the same 'intent' rules. A CGT needs to be comprehensive and well designed or it's useless, or even worse than useless as it redirects activities.

  8. #28
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    Quote Originally Posted by blackcap View Post
    Well on income of course, but what is the definition of income. That is what may need to be looked at. I have no problem with a CGT if it is inflation adjusted.
    All gains, income and capital, should be taxed. If there should be an inflation adjustment, then it would make more sense instead for investment income or fixed interest to have an annual inflation adjustment before income from the investment is taxed. Then any gains should be taxed when the asset is sold.

    The equity in the family home should be included as a taxable asset too, with imputed rent and taxable capital gains with the annual allowance for inflation offset against imputed rent.

    Perhaps there should be a threshold before the flat tax applies.
    Last edited by Bjauck; 18-06-2020 at 06:48 AM.

  9. #29
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    Here's an article I came across today:

    https://www.interest.co.nz/news/1046...rease-spending

  10. #30
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    Quote Originally Posted by Bjauck View Post
    All gains, income and capital, should be taxed. If there should be an inflation adjustment, then it would make more sense instead for investment income or fixed interest to have an annual inflation adjustment before income from the investment is taxed. Then any gains should be taxed when the asset is sold.

    The equity in the family home should be included as a taxable asset too, with imputed rent and taxable capital gains with the annual allowance for inflation offset against imputed rent.

    All gains, income and capital, should be taxed
    "All gains, income and capital, should be taxed"

    So along with that I presume you think all capital losses should be deductible.

    "All gains, income and capital, should be taxed"


    Then it would no longer be a flat tax.
    Last edited by fungus pudding; 24-06-2020 at 01:14 PM.

  11. #31
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    Quote Originally Posted by fungus pudding View Post
    "All gains, income and capital, should be taxed"

    So along with that I presume you think all capital losses should be deductible.

    "All gains, income and capital, should be taxed"


    Then it would no longer be a flat tax.
    All net gains...so yes losses would be deductible or be able to be carried forward...

    Of course it would still be a flat tax if all gains were taxed at say 20%. It is an arbitrary decision to tax all income and not all capital gains.

    However you may be talking about a poll tax? Every person (or adult?) taxed the same dollar amount? Which of course takes no account of career progression and would end up with a gerontocracy with most young adults and families in tenements owned by the one percenters?
    Last edited by Bjauck; 24-06-2020 at 03:19 PM.

  12. #32
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    [QUOTE=SBQ;822988]Need to distinguish what category of tax we're talking about, which are basically 2 camps ; Consumption Tax and Income Tax.

    If Labour should be returned to office after this coming election, more than likely there will be an increase and additional taxes applied. Call what ever you wish, but in the end it's just another tax.








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  13. #33
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    [QUOTE=waikare;824753]
    Quote Originally Posted by SBQ View Post
    Need to distinguish what category of tax we're talking about, which are basically 2 camps ; Consumption Tax and Income Tax.
    If Labour should be returned to office after this coming election, more than likely there will be an increase and additional taxes applied. Call what ever you wish, but in the end it's just another tax.

    Yep and in the grand of schemes... how much taxes is enough we should be paying? That's why when I look at an investment, I need to understand how much tax the corporation pays, how much tax the managed fund pays, how much tax the client pays and their income tax they pay. Then you go on to the consumption side like GST, rates, wow too many to list.... Is there a point where taxes are too high already? As I told my wife this morning, there needs to be another level of tax on the ultra high income earners - those around $70K / year income pay the same level of tax on an extra $1 earned than those CEOs earning $500K to $5M a year !!

  14. #34
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    [QUOTE=SBQ;824842]
    Quote Originally Posted by waikare View Post

    If Labour should be returned to office after this coming election, more than likely there will be an increase and additional taxes applied. Call what ever you wish, but in the end it's just another tax.

    Yep and in the grand of schemes... how much taxes is enough we should be paying? That's why when I look at an investment, I need to understand how much tax the corporation pays, how much tax the managed fund pays, how much tax the client pays and their income tax they pay. Then you go on to the consumption side like GST, rates, wow too many to list.... Is there a point where taxes are too high already? As I told my wife this morning, there needs to be another level of tax on the ultra high income earners - those around $70K / year income pay the same level of tax on an extra $1 earned than those CEOs earning $500K to $5M a year !!
    I agree ....could bring one it @ $125K>> 39% tax.......that along with reducing Council-Govt wages and numbers + cutting back on wasting of Tax payers funds would help ..
    People don't have ideas, ideas have people

  15. #35
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    [QUOTE=JBmurc;825215]
    Quote Originally Posted by SBQ View Post

    I agree ....could bring one it @ $125K>> 39% tax.......that along with reducing Council-Govt wages and numbers + cutting back on wasting of Tax payers funds would help ..
    Increasing income tax rates for higher incomes will make investing in those assets that earn little income but potentially tax free capital gains even more tax efficient and appealing.

    Some people say that capital gains taxes are iniquitous if they do not allow for the inflationary aspect of maintaining the capital asset. So why shouldn’t an individual (income earning personal capital if you like) be allowed to earn a minimum tax-free income that is necessary for maintaining that individual. If for example $35000 is the current annual amount needed for an individual adult to subsist (food, shelter and nutrition) in NZ, then there should be a threshold of $35,000 before the tax rate is applied. That would help avoid the double taxation of income tax and GST on non-discretionary subsistence expenditure. Of course different areas if NZ have different costs of living, so maybe a regional subsistence threshold would be needed.

  16. #36
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    [QUOTE=Bjauck;828461]
    Quote Originally Posted by JBmurc View Post
    Increasing income tax rates for higher incomes will make investing in those assets that earn little income but potentially tax free capital gains even more tax efficient and appealing.

    Some people say that capital gains taxes are iniquitous if they do not allow for the inflationary aspect of maintaining the capital asset. So why shouldn’t an individual (income earning personal capital if you like) be allowed to earn a minimum tax-free income that is necessary for maintaining that individual. If for example $35000 is the current annual amount needed for an individual adult to subsist (food, shelter and nutrition) in NZ, then there should be a threshold of $35,000 before the tax rate is applied. That would help avoid the double taxation of income tax and GST on non-discretionary subsistence expenditure. Of course different areas if NZ have different costs of living, so maybe a regional subsistence threshold would be needed.
    If you look at places like Australia & Canada & the US, you'll find their tax system has address all these issues.

    Canada as a personal 'exemption' limit of around $10K a year before ANY income tax is paid (in NZ? nope). Canada also has a comprehensive tax credit scheme for the disadvantaged / those on disabilities / those that endured hardship (in NZ? this is done though WINZ with limited success).

    Australia's original method for determining CGT had an inflation factor table. As I mentioned before, it was grossly inaccurate as so many different asset classes have different inflation rates (ie. house price inflation is different than shares). At the end, Australia just copied the Canadian tax method of CGT which is 50% of the gain is in your pocket (you don't declare), and the other 50% is what you put down as taxable income. That 50% free bee gain pretty much accounts for inflation without the complex inflation tables that they had before.

    Despite NZ's existing no tax on share price gains, there still is the expectation by NZ investors to have 'dividends' paid for their investment. Basic accounting shows that once the profits of the company is paid out in dividends, the book value (equity) of the company remains the same and therefore.. the share price will remain the same, netting NO share price appreciation and thus no capital gain on sale of the shares. If you believe higher income tax brackets would change people's approach to investing into more assets with capital gains - i'm afraid there are not many in NZ (buy more residential properites?). What has to be done to bring a more fair tax system in NZ is BOTH CGT (specifically at multiple ownership of houses) and more income taxes on the higher end brackets. This is the way it's done in Canada.

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