sharetrader

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

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  • No

    204 100.00%
  • Yes

    62 57.94%
  • Goff is just an idiot

    2,147,483,656 100.00%
  • Epic fail for Labour

    1,931 100.00%
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  1. #241
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    Quote Originally Posted by Lego_Man View Post
    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....

  2. #242
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    Quote Originally Posted by Bjauck View Post



    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....
    I agree entirely
    Last edited by Brovendell; 23-01-2019 at 07:56 AM.

  3. #243
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    Quote Originally Posted by greater fool View Post
    Yikes...No word yet of any threshold however Wouldn’t Taxing all capital gains as income at the taxpayers marginal income tax rate see a flight from investment across the board? A government that creates an inflationary environment would have less incentive to reduce inflation as it would be earning taxes gathered merely from the impact of inflation on asset prices. This is in addition to income tax bracket creep as a result of inflation.

    I imagine a tax-concessionary investment plan and a boost to KiwiSaver would also have to be introduced to encourage NZ investment into businesses and share investments. Otherwise households would have greater incentive to boost the investment in their own homes (excluded from a tax on capital gains) to the detriment of investment in the share market and businesses.

  4. #244
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    Quote Originally Posted by Bjauck View Post
    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....
    It came out in one of Cullen's "previews".

    Probably wouldn't raise much extra money as you say, but it's more a convenience way of including shares in the regime while aligning with existing approaches on foreign shares.

    But it looks like all we need to do anyway is put the word "family" in front of something to make it sacred and untaxable. How about the "family share portfolio"??

  5. #245
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    I'm curious how this 'broad-base' CGT would impact share investments that are under the FIF & Fair Dividend Rate rules? CGT is a tax on the gain by a SALE of the asset. The FIF / FDR is a tax paid EVERY YEAR on the GAIN of the assets / shares regardless if the shares have been sold or not.

    Surely IRD wouldn't go about having BOTH schemes of taxation for foreign shares? If CGT is brought in, i'm hoping the FIF /FDR will be abolished.

  6. #246
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    Quote Originally Posted by Bjauck View Post
    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....
    The CGT would be 'broad based' meaning everything from real estate to shares on the stock exchange. Investors resident in NZ have no choice and the issue of CGT has been discussed at the WTG that there's a clear tax (err absence of paying any tax) on the gains of real estate if held long term enough. While a person that holds certain investments in a managed fund / PIE etc will be exposed to tax. (by either the fund paying the tax on the gain or the individual investor holding the shares directly). Anotherwords, it wouldn't matter to the domestic NZ resident where they put their investment because it will be taxed regardless and on a world wide basis.

    My concern would be a flight of capital from NZ, that is large $ leaving NZ to more tax friendlier nations like US, Canada, or Australia (all these nations have concessions on their CGT). The proposal in NZ by the WTG is a tax at the highest marginal tax bracket across the board, no consideration of the rate of inflation, no exemption limit like Canada where only half of the gain is income taxable).

  7. #247
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    Quote Originally Posted by Lego_Man View Post
    ...

    But it looks like all we need to do anyway is put the word "family" in front of something to make it sacred and untaxable. How about the "family share portfolio"??
    A cunning idea but Unfortunately due to the current system there are very few directly owned share portfolios owned by families - but there are many families owning investment real estate.

    NZ is already a net importer of business and equity capital. NZ households just tend to invest in NZ real estate (land). With the mooted capital gains regimes NZers may just stuff even more of their capital into their housing and other real estate (perhaps unless KiwiSaver is beefed up and made compulsory).

  8. #248
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    I haven't read the CGT proposal from the tax working group yet but you have to wonder why stuff.co.nz allows this sort of bull**it to be put on their website. Wish washy emotion based opinions not based on anything factual don't help reasoned debate.
    https://www.stuff.co.nz/business/110...-by-the-middle

    Although it is stuffs senior journalist that refutes Troy's claims
    https://www.stuff.co.nz/business/ind...ital-gains-tax

    Possibly stuff.co set Troy Bowker up to look like a total moron.
    I guess Troy could argue he meant that a lot more middle income NZers would pay CGT not that they pay more in total, just more middle income people would pay although that doesn't equate with "Lions Share".
    Using the figures in the other article the richest 20 per cent of households own 82 per cent of the assets that would be subject to a CGT, while the middle 20 per cent own only 4 per cent. It is hard to know where Troy gets his numbers from if this statistic is even vaguely right.
    Taking this one step further the bottom 60% own 14% of the rest. (edit) thinking about this I guess he means the middle 20% splitting the population into bands of 20%. Not sure, I should read the report. but at a guess the bottom 40% would have a bit over 0%.(edit)

    I see it is being rushed through and personally believe this could be a bad idea depending on the proposal as bringing in a capital gains tax at what could be the height of the cycle would set up the wealthy for a large tax loss.
    Last edited by Aaron; 08-02-2019 at 12:56 PM. Reason: Poor understanding on my part

  9. #249
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    re Aaron quote:

    The articles on Stuff are vague at best and don't tell the whole picture or impact of CGT. The TWG made no recommendation for tax concessions on CGT while most OECD nations that have a CGT do (in the form of inflation adjusted, or half the gain is only income taxable, etc.). The tricky part is if you apply an extreme point of CGT at the high end with no concessions, then you will see a flight of capital in NZ. Don't think $ moves freely out of NZ? Look at what has happened with the NZD / USD in the past year (I highly suspect over the Panama Papers fiasco, IRD has forced NZ "foreign trusts" to comply by having a tax # of the account holder where they reside. NZ banks have already sent notices to non-resident account holders to confirm the account tax status. From what I recall over 2/3rds of these foreign trust accounts did not comply and simply, closed up and sent the $ out of NZ to more tax friendlier nations.

    At the business peak cycle or not, I don't think the TWG was aware of what investments are at stake in NZ by foreigners. Capital outflows of currency is a serious issue and in the past few years, we've seen the USD gain strength with mass $ inflows to the US. Conversely, we've seen mass capital outflows of the GBP over the Brexit in the past 2 years.

  10. #250
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    No doubt a CGT would be huge and the effects of introducing one may not be fully appreciated but as long as the reasons behind it are valid I say go for it. The reasons for a CGT would be to broaden the tax base. Reduce tax on labour, hard work and entrepreneurship (except when you sell the business for a capital gain).

    Does NZ really want to encourage people with foreign trusts, on the whole they sound like a bunch of rotten, selfish self-centred scumbags should we really be helping them. Let them flee somewhere else.

    Foreign capital investing that involves building or improving industry/assets in NZ is no doubt good for the country, not so sure if buying existing businesses and farms and taking the dividend offshore is a good idea or even worse thin capitalisation(see link below).
    http://www.stuff.co.nz/business/opin...carpet-rollout

    Also came across a bit of history regarding this company while looking for the chalkie article.
    http://www.stuff.co.nz/dominion-post...lingtons-power

    I don't buy the capital flight threat, worst case scenario income generating assets and land become more affordable to NZers and a declining NZ dollar makes our productive exporters more competitive.

    I think you can always put a negative or positive spin on something.
    Last edited by Aaron; 11-02-2019 at 10:14 AM.

  11. #251
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    Quote Originally Posted by SBQ View Post
    re Aaron quote:
    The articles on Stuff are vague at best and don't tell the whole picture or impact of CGT. The TWG made no recommendation for tax concessions on CGT while most OECD nations that have a CGT do (in the form of inflation adjusted, or half the gain is only income taxable, etc.). The tricky part is if you apply an extreme point of CGT at the high end with no concessions, then you will see a flight of capital in NZ.
    I haven't read the recommendations of the TWG so probably shouldn't be debating it until I do but, most other countries made concessions when they brought in goods and services tax to alleviate the regressive nature of the tax. NZ didn't which in my view makes it more unfair but this is outweighed by its simplicity which is great. I was disappointed to hear about proposals for exemptions for fresh veges, don't dick around complicating things, it may not be fair (what is?) but at least it is easy to understand. Just make sure it doesn't rise above 15%.

    Make a capital gains tax as simple as possible too that way people will no where they stand and there is less wiggle room for the people wanting to avoid paying it.

  12. #252
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    Quote Originally Posted by Aaron View Post
    I haven't read the recommendations of the TWG so probably shouldn't be debating it until I do but, most other countries made concessions when they brought in goods and services tax to alleviate the regressive nature of the tax. NZ didn't which in my view makes it more unfair but this is outweighed by its simplicity which is great. I was disappointed to hear about proposals for exemptions for fresh veges, don't dick around complicating things, it may not be fair (what is?) but at least it is easy to understand. Just make sure it doesn't rise above 15%.

    Make a capital gains tax as simple as possible too that way people will no where they stand and there is less wiggle room for the people wanting to avoid paying it.

    What rubbish. When GST was introduced, probably before you were born, most(if not all) the sales taxes that used to apply were removed. On top of that the marginal income tax rates decreased substantially. The top rate down to 33c/$. At some later stage that top rate was raised to 39c/$ before being once again reduced to 33c/$ when GST was increased.

  13. #253
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    Quote Originally Posted by 777 View Post
    What rubbish. When GST was introduced, probably before you were born, most(if not all) the sales taxes that used to apply were removed. On top of that the marginal income tax rates decreased substantially. The top rate down to 33c/$. At some later stage that top rate was raised to 39c/$ before being once again reduced to 33c/$ when GST was increased.
    Quite right. The sales taxes that were removed were the most higgeldy-piggeldy bunch of varying rates, inclusions and exclusions imaginable. All replaced with the simple and effective no exclusion GST system we have in NZ. Possibly the most sensible thing Labour has ever done.
    Last edited by fungus pudding; 11-02-2019 at 11:30 AM.

  14. #254
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    Quote Originally Posted by 777 View Post
    What rubbish. When GST was introduced, probably before you were born, most(if not all) the sales taxes that used to apply were removed. On top of that the marginal income tax rates decreased substantially. The top rate down to 33c/$. At some later stage that top rate was raised to 39c/$ before being once again reduced to 33c/$ when GST was increased.
    What is rubbish?? I am agreeing that GST is great for its simplicity. Make a capital gains tax as simple as possible as well.

    I appreciate that agreeing with you can sometimes be rubbish but not in this case.

  15. #255
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    Quote Originally Posted by fungus pudding View Post
    Quite right. The sales taxes that were removed were the most higgeldy-piggeldy bunch of varying rates, inclusions and exclusions imaginable. All replaced with the simple and effective no exclusion GST system we have in NZ. Possibly the most sensible thing Labour has ever done.
    read my post again.
    I think what you and 777 would like to say is that you don't think GST is a regressive tax. We have been over this before and will agree to disagree. What about capital gains tax. Would this be a progressive tax? Personally I believe it would be.

  16. #256
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    "most other countries made concessions when they brought in goods and services tax to alleviate the regressive nature of the tax NZ didn't which in my view makes it more unfair "

    Just as you typed.

  17. #257
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    Quote Originally Posted by Aaron View Post
    read my post again.
    I think what you and 777 would like to say is that you don't think GST is a regressive tax. We have been over this before and will agree to disagree. What about capital gains tax. Would this be a progressive tax? Personally I believe it would be.
    That never entered my mind.

  18. #258
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    Quote Originally Posted by 777 View Post
    That never entered my mind.
    Sorry about making assumptions. What was rubbish then?

  19. #259
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    Do I have to spell it out then. Read the whole of the re quote of your post I copied in post #256. Simple comprehension exercise. You stated NZ didn't make any concessions when GST was introduced and in fact they did as explained in my original reply and confirmed by FP.

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    Quote Originally Posted by 777 View Post
    Do I have to spell it out then. Read the whole of the re quote of your post I copied in post #256. Simple comprehension exercise. You stated NZ didn't make any concessions when GST was introduced and in fact they did as explained in my original reply and confirmed by FP.
    Thanks for that. Maybe I should have said exemptions rather than concessions. NZ has one of the most pure GST regimes because we made very few exemptions to the tax. Most other countries exclude basic food stuffs and other essentials.

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