Capital Gains Tax

[GTM 3442]

Maybe post above your post didn't ring any bells. How exactly will a CGT be implemented when investment such as Kiwi Saver, buying & selling shares in say Amazon or NVDIA, are already taxed under FIF? Are you claiming double taxation is perfectly acceptable ?

FIF arose from the lack of information available about individual’s investments in other jurisdictions.

It’s no longer needed, it’s inefficient, costs a fortune in both administration and compliance. Officially mandated EoI makes it redundant, and so a CGT as above rides in straight over the top.

[SBQ]

FIF arose from the lack of information available about individual’s investments in other jurisdictions.

It’s no longer needed, it’s inefficient, costs a fortune in both administration and compliance. Officially mandated EoI makes it redundant, and so a CGT as above rides in straight over the top.

I highly doubt it's a lack of information. The key reason being, (from what a Parliamentary spokesperson explained to me at the time of FIFs introduction), was entirely around the difference in taxation. Most companies on the NZX you have an expectation that dividends should be paid, whereas most companies listed on the Nasdaq, focus less on dividends and instead, higher appreciation of the share price. Because NZ doesn't have a formal CGT, the NZ investor would achieved untaxed returns on such investments.

Why has the media not picked up on this issue that if CGT were to be introduced in NZ, the issue of FIF needs to be removed ; and why no politicians has mentioned this before? Maybe because IRD is already getting more tax take under the current regime than if under a CGT model.

[Aaron]

I highly doubt it's a lack of information. The key reason being, (from what a Parliamentary spokesperson explained to me at the time of FIFs introduction), was entirely around the difference in taxation. Most companies on the NZX you have an expectation that dividends should be paid, whereas most companies listed on the Nasdaq, focus less on dividends and instead, higher appreciation of the share price. Because NZ doesn't have a formal CGT, the NZ investor would achieved untaxed returns on such investments.

Why has the media not picked up on this issue that if CGT were to be introduced in NZ, the issue of FIF needs to be removed ; and why no politicians has mentioned this before? Maybe because IRD is already getting more tax take under the current regime than if under a CGT model.

Agreed my understanding for the FIF regime is that overseas companies tend to reinvest earnings into growth (esp. USA) and NZ investors could invest in US shares basically tax free (unless they were traders of course). We also have imputation credits which stops the double taxation when a company pays a dividend from tax paid earnings.

Why would the media worry about the scrapping of the FIF regime and the bright line test etc. when a comprehensive capital gains tax has no chance of being implemented. Last three prime ministers have had to explicitly rule out its implementation and ones previous to that did not have to as you would get your head bitten of for even discussing such a thing.

[Aaron]

Rob Campbell has a view as do we all.

https://www.newsroom.co.nz/how-to-st...society-add-up

I'll pick the bits I like.

Major party discussion on this has become bizarrely focused on who will reduce which tax. This at a time when there is widespread acceptance that we face huge infrastructure deficits in everything from housing to hospitals, transport to training, flood protection to food security. When the big problem is how can we afford to face these deficits, we talk about how we can escape paying.

30 years of avoidance has been successful so far, kick the can down the road, use debt and print money?? People don't notice an inflation tax so much, not asset owners anyway.

Taxes on wealth in various forms are declared off limits by several political parties. There are different versions of these – land, capital gains, asset, inheritance. We are an outlier tax haven on all these matters.

Any party not facing the facts of social and infrastructure deficits, the urgent need to address them, and getting the money to do that, does not deserve your time or your vote.

If we exclude ACT, National and Labour as Rob suggests the choices are getting limited.

[Aaron]

Interesting view on capital gains tax from treasury.

https://www.stuff.co.nz/business/350...books-treasury

Current govt not likely to implement one, gutless Hipkins has already exposed himself by pandering to the selfish morons that make up a significant portion of the voting public.

[Balance]

Rob Campbell has a view as do we all.

https://www.newsroom.co.nz/how-to-st...society-add-up

I'll pick the bits I like.

Major party discussion on this has become bizarrely focused on who will reduce which tax. This at a time when there is widespread acceptance that we face huge infrastructure deficits in everything from housing to hospitals, transport to training, flood protection to food security. When the big problem is how can we afford to face these deficits, we talk about how we can escape paying.

30 years of avoidance has been successful so far, kick the can down the road, use debt and print money?? People don't notice an inflation tax so much, not asset owners anyway.

Taxes on wealth in various forms are declared off limits by several political parties. There are different versions of these – land, capital gains, asset, inheritance. We are an outlier tax haven on all these matters.

Any party not facing the facts of social and infrastructure deficits, the urgent need to address them, and getting the money to do that, does not deserve your time or your vote.

If we exclude ACT, National and Labour as Rob suggests the choices are getting limited.

Interesting and very telling that Rob Campbell has never ever mentioned wasteful spending and the $90 billion in debt piled up by Ardern, Hipkins and Robertson.

Hence, he has zero credibility imo.

[Bjauck]

Interesting view on capital gains tax from treasury.

https://www.stuff.co.nz/business/350...books-treasury

Current govt not likely to implement one, gutless Hipkins has already exposed himself by pandering to the selfish morons that make up a significant portion of the voting public.

Mind you, if a cgt scheme were introduced, the family home would probably be exempt from both the new CGT and income tax (as currently). This would make home ownership even more appealing for overcapitalising and accumulating wealth. Any government would have to beef up the KiwiSaver with decent tax concessions to offset the increased attraction of further overcapitalising the exempt home. How likely would that be?

[777]

A capital gains tax would not need to be at marginal rates. It could be a set rate. Somewhere between 15c and 25c in the dollar.

[blackcap]

We don't need a capital gains tax. The government needs to spend less or spend more efficiently.

If there was to be a capital gains tax, (I would like to see a reduction in income tax or a reduction in GST). In addition you will need to have an inflation adjuster to account for artificial price increases.

[Daytr]

Mind you, if a cgt scheme were introduced, the family home would probably be exempt from both the new CGT and income tax (as currently). This would make home ownership even more appealing for overcapitalising and accumulating wealth. Any government would have to beef up the KiwiSaver with decent tax concessions to offset the increased attraction of further overcapitalising the exempt home. How likely would that be?

We already tend to over capitalise our homes now, new kitchen every 10 years, I know people that have put in $100K & $200K kitchens.
Everyone has butler's pantries, walk wardrobes, mud rooms etc you name it.

Although I think a CGT is an essential tax tool, it won't be enough to fund the massive infrastructure deficit.

Where NZ goes wrong is we leave land development in the hands of developers. In the past the Government used to develop subdivisions or entire towns.

The Government should buy land for redevelopment, rezone it for development & then either sell it to a developer and take the huge increase in value, or even complete the development & sell it on to residential buyers.

At the moment landbankers, farmers & developers get a huge windfall when land is rezoned. It's money for nothing that the Government or Local Council could be benefitting from to fund infrastructure.