Capital Gains Tax

[Bjauck]

Haven't seen much discussion of the most relevant outcome for this forum, which is that CGT will affect all local equity market investors.

It seems like the PIE fund regime will now incorporate a deemed rate of return tax for local equities, much like the FDR regime used for foreign shares.

Meanwhile all shares held on a segregated basis will be subject to a CGT on realised gains.

I guess the implication is you want your growth stocks held in a PIE fund, and dividend stocks held in their own account.

Where did you get that information?

Politically it seems like a CGT will be very unlikely especially given the political and lobbying power of real estate investors.

If a deemed rate of return is applied to NZ equities I am not sure how much more in tax that would raise as many NZ companies have a high dividend yield already. (NZX50 yields about 4.5%)

If tweaks to the tax system or a capital gains tax were introduced which increased tax on share investments (capital gains/ reduced imputation regime/ high deemed rate etc) and investor real estate but exempted owner-occupied main residences, then I think we could expect to see fewer individuals investing in the share market and increased over-capitalisation of owner-occupied real estate. In addition I think we would expect to see the number of listed NZ companies dwindle further....