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View Poll Results: Should there be a Capital Gains Tax on Property

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  • No

    202 100.00%
  • Yes

    60 58.25%
  • Goff is just an idiot

    2,147,483,655 100.00%
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  1. #316
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    Quote Originally Posted by couta1 View Post
    There is no way they will get this thing through at your marginal tax rate, I'd put money on it.
    The whole thing is going to fail. Too many hurdles to get over. The first being Winston. If it is still proposed by the election then they will be out. The concern is if they say that it won't happen, then get re elected with the kermits, they will just do it anyway.

  2. #317
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    Quote Originally Posted by Bjauck View Post
    There are people who have decided to invest in and build up businesses rather than buying their own homes. Why not give them a tax break too as good as home-owners get?

    If you own a mortgage-free $3m home you are indeed wealthy. Every country that exempts the “family home” applies a CGT exemption. Exempting what can be a multi-million dollar asset, is an exemption for the wealthy.
    Very true. And if you own it with a mortgage, you're probably wealthier. The introduction of a CGT with the glaring omission of the primary home will inevitably lead to an explosion of luxury homes - or 'mansions'.

  3. #318
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    Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
    The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.

  4. #319
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    Quote Originally Posted by RTM View Post
    Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
    The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.
    Correct - its not inflation adjusted. And its not adjusted to reflect the value of your person, un-charged labour, that goes into it.

    Problem with this of course is that government has the job of managing inflation. So coffers get a bit low, just tweak inflation levers to give it a boost.

  5. #320
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    Quote Originally Posted by RTM View Post
    Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
    The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.
    And if it fell below inflation - surely we should get a tax refund.

  6. #321
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    Quote Originally Posted by fungus pudding View Post
    Very true. And if you own it with a mortgage, you're probably wealthier. The introduction of a CGT with the glaring omission of the primary home will inevitably lead to an explosion of luxury homes - or 'mansions'.
    True, If you were able to borrow to leverage yourself into a million Dollar Auckland home some years ago, then being in the right place at the right time, you would have enjoyed handsome returns on the equity you put in

    With the CGT as recommended, it would be even more appealing to leverage yourself into a mansion rather than taking a risk in investing in a income-taxed company or start-up or slogging at building up a business to achieve a similar return on capital - only to have the capital gain then taxed.

  7. #322
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    Quote Originally Posted by RTM View Post
    Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
    The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.
    An “unfairness” in revenue raising. Many countries provide a threshold before there is liability for capital gains tax and then tax capital gains at a lower rate than their income tax rates partly to off-set the inflation effect.

    Fixed interest investments are currently taxed on the “inflation component” of their return. Many fixed interest term investments provide zero return after tax and after inflation.

    Presumably net rental payments should provide return to the investor as well. Perhaps many investors have relied on the expected capital gains returns because they have been tax-free unlike the taxable net rental returns, which they have minimised.

  8. #323
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    Quote Originally Posted by fungus pudding View Post
    And if it fell below inflation - surely we should get a tax refund.
    Your tax bill would be less if you sell at an asset at a loss. Could be handy with some of the dogs in my current share portfolio - might even encourage me to quit them sooner.

  9. #324
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    The thing I found surprising about this Report is there is no mention of Working for Families. Now would have been a good time to look at how to stop this mechanism turning NZ'ers into beneficiaries.

    A "fair" scheme has to include privately held property such as the family home and art.

    A "fair" scheme would have one rate of tax - which would be the lower tax level - 10.5% payable by all. Or alternatively the same as the corporate tax rate of 28%

    To be "fair" Maori entities would pay the same as everyone else, not 17.5%

  10. #325
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    Quote Originally Posted by minimoke View Post
    The thing I found surprising about this Report is there is no mention of Working for Families. Now would have been a good time to look at how to stop this mechanism turning NZ'ers into beneficiaries.

    A "fair" scheme has to include privately held property such as the family home and art.

    A "fair" scheme would have one rate of tax - which would be the lower tax level - 10.5% payable by all. Or alternatively the same as the corporate tax rate of 28%

    To be "fair" Maori entities would pay the same as everyone else, not 17.5%
    I read somewhere that the TWG suggested benefits should be raised in line with the increase in minimum wages, due to the raising of the 10.5% tax threshold. So WFF and other benefits should rise says Sir Cullen

  11. #326
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    Quote Originally Posted by iceman View Post
    I read somewhere that the TWG suggested benefits should be raised in line with the increase in minimum wages, due to the raising of the 10.5% tax threshold. So WFF and other benefits should rise says Sir Cullen
    Cant see that in the report
    It mentions adjusting WFF if the marginal tax rates are tweaked ("suggests that if this higher tax rate is adopted, the Government consider a reduction of the abatement rate of Working for Families tax credits to offset the impact of the increase.")

    For Minimum wage, the TWG reckons its better to look at lowing marginal tax rates to improve incomes. ("If the Government wishes to improve incomes for certain groups of low- to middle-income earners, such as full-time workers on the minimum wage, the Group considers changes to personal income taxation may be a better option.")

    Other than that I haven't found anything on Benefits

  12. #327
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    Quote Originally Posted by fungus pudding View Post
    And if it fell below inflation - surely we should get a tax refund.
    This is what i've questioned all along. During the public inquiry i've submitted where countries that have CGT, they also allow for 'Capital Losses'. So the gains and losses can be applied to future years (just like a business loss can be claimed in IRD to a future year). But the anti-CGT camp says that's too complicated and will just make the accountants rich.


    Quote Originally Posted by Bjauck View Post
    True, If you were able to borrow to leverage yourself into a million Dollar Auckland home some years ago, then being in the right place at the right time, you would have enjoyed handsome returns on the equity you put in

    With the CGT as recommended, it would be even more appealing to leverage yourself into a mansion rather than taking a risk in investing in a income-taxed company or start-up or slogging at building up a business to achieve a similar return on capital - only to have the capital gain then taxed.
    Providing if there's a market for big expensive mansions? In Vancouver that market has simply collapsed after the CRA has investigated all of them. You can be sure such mansions are owned by overseas non-residents (something that NZ has banned).

    A CGT on the 'book value' of a company is difficult but I would imagine in NZ's case, there will be no CGT if the business itself has been paying taxes (or dividends). Meaning, you don't 'double tax'. You have corporate tax at 28% and when the company issues a dividend, the shareholders get taxed (but the 'dividend credit' is applied to negate any double taxation). I'm pretty certain IRD would not treat CGT on businesses in a double taxed way.

    re: minimoke - unfortunately we don't live in a 'fair' world.

  13. #328
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    Quote Originally Posted by SBQ View Post
    re: minimoke - unfortunately we don't live in a 'fair' world.
    Fairness is supposed to be one of the principles behind tax policy. Something missed by the TWG. Obviously some things are more fair than others.

  14. #329
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    Quote Originally Posted by minimoke View Post
    Fairness is supposed to be one of the principles behind tax policy. Something missed by the TWG. Obviously some things are more fair than others.
    Fairness, like beauty, is in the eyes of the beholder.

    (Apologies for mangling the original quote!)

  15. #330
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    Quote Originally Posted by minimoke View Post
    Correct - its not inflation adjusted. And its not adjusted to reflect the value of your person, un-charged labour, that goes into it.

    Problem with this of course is that government has the job of managing inflation. So coffers get a bit low, just tweak inflation levers to give it a boost.
    Like I said Minimoke as long as you pay income tax on your labour I am sure it could be treated as a deduction from your capital gain.

    Also you are right about inflation. It is a deceptive tool being used to fool everyone and keep them spending and consuming. It runs counter to concerns about climate change and over consumption and it also appears to be playing a big part in the rising inequality between the haves and have nots. Targeted inflation in the current environment is a dumb idea that should be scrapped. Central Banks should provide price stability and certainty. Inflation at 0% would not be a bad thing in my opinion.

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