Capital Gains Tax

[Bjauck]

Labour clearly dont want people to own their own homes

Au contraire - A big part of the reason for investigating a CGT was because home ownership rates have been falling due to rising prices. One of the big reasons for that is that investors have been prepared to receive low taxable net rent returns in the expectation that they will receive untaxed capiital gains.

[minimoke]

Au contraire - A big part of the reason for investigating a CGT was because home ownership rates have been falling due to rising prices. One of the big reasons for that is that investors have been prepared to receive low taxable net rent returns in the expectation that they will receive untaxed capiital gains.

Which is why the Brightline test was bought in. If IRD couldn't enforce it, that hardly seems to be the fault of every other taxpayer who may be faced with a CGT.

[iceman]

Au contraire - A big part of the reason for investigating a CGT was because home ownership rates have been falling due to rising prices. One of the big reasons for that is that investors have been prepared to receive low taxable net rent returns in the expectation that they will receive untaxed capiital gains.

We are the only country in the OECD that does not have a formal CGT although we have the Brightline tax which of course is CGT in disguise. Most of other OECD have a CGT with many exemptions and lower rates than normal income tax. But it has not stopped them from having exactly the same issues as NZ with run away house prices and high rents. The idea that CGT will be a guarantee to lower house prices and lower rent is simply not supported by any evidence

[macduffy]

I've probably missed something here but do the TWG recommendations include allowing tax deductions in respect of capital losses? Tax loss selling of doggy shares in the weeks leading up to the end of the financial year is a feature of the Aussie market.

[minimoke]

We are the only country in the OECD that does not have a formal CGT although we have the Brightline tax which of course is CGT in disguise.

We dont have stamp duty either, or inheritance tax. There musty be loads of taxes we don't have in NZ. Doesn't make introducing new one right.

There is only thing to consider. Does the current tax regime raise enough revenue to cover govt expenditure. If so then no change required.

From there you ask how efficiently you can raise those taxes and look for improvements (whole also trying to reduce govt expenditure)

And then from there you try to figure out a relatively fair scheme where each person pays there fair share. This is where it gets hard because nothing in life is fair. No point trying to make it dead fair cos such a thing is impossible.

In any tax system there will be winners and losers. Is it fair that those on minimum incomes and pay less tax get to enjoy most of the government expenditure. No. But that's the way it is.

Is it fair that people work hard and invest in the hope of bettering themselves (and paying taxes along the way) reap some capital gain (when times are good). No. but that helps offset the other unfairnesses.

[Bjauck]

We are the only country in the OECD that does not have a formal CGT although we have the Brightline tax which of course is CGT in disguise. Most of other OECD have a CGT with many exemptions and lower rates than normal income tax. But it has not stopped them from having exactly the same issues as NZ with run away house prices and high rents. The idea that CGT will be a guarantee to lower house prices and lower rent is simply not supported by any evidence

yep there are ways in which capital gains are already captured. Brightline is one such way if you buy and sell within five years.

Of course a cgt will not guarantee affordable housing especially since the family home did not form part of the review and NZ does not have the stamp duties that other countries have.

NZ has amongst the most unaffordable housing in The OECD with residential property comprising a very large share of household wealth. So I would think it would make sense to try to encourage the diversification of household wealth away from residential housing. As a Sharetrader poster, It would be nice if NZ shares featured more prominently as household investment and helped stop the exodus of NZ listings...

However the point I was responding to was that “Labour clearly do not want people to own their own homes”. I have yet to know why that accusation was made.

Of course the same wild accusation could have been made of previous governments that allowed the housing shortage to get out of hand and sat on their hands as home ownership rates dropped and unaffordability climbed.

[SBQ]

We are the only country in the OECD that does not have a formal CGT although we have the Brightline tax which of course is CGT in disguise. Most of other OECD have a CGT with many exemptions and lower rates than normal income tax. But it has not stopped them from having exactly the same issues as NZ with run away house prices and high rents. The idea that CGT will be a guarantee to lower house prices and lower rent is simply not supported by any evidence

John Key (National) during his time when CGT was talked about, he said "I'm not convinced CGT would prevent housing prices from sky rocketing". He made references to places like Sydney where housing prices had gone out of control in the past.

The brightline 5 year hold for real estate is a wash. I know of no person with a real estate portfolio having the intent of selling a house they've just purchased within 5 years. I would not be surprised if IRD gets much revenue from those that buy & sell within 5 years. It's similar to investing in equities or the ETF, the emphasis is long term holds.

My stance has kinda changed on the view of CGT in NZ. I think NZ is too small of a country to have such equitable policies as our larger brother (Aus) or elsewhere. Accountants have told me when I 1st came to NZ about 20 years ago that NZ needed these "perks" for wealthy investors to keep $ in NZ. I questioned back then why a NZ resident didn't have to declare the gains from their overseas stock trading (of course that's changed now with FIF) but the trend i'm seeing is simple:

More and more tax incentive BENEFITS that NZ had (which attracted many wealthy investors from abroad ; and don't forget, preventing local wealthy investors from moving their wealth abroad) is vanishing.

I'm not buying the statement by Jacinda Ardern that NZ needs a "Fair tax system". Like what the hell was the tax system like for the past 20 or 50 years? Is she saying NZ's tax system was never fair to begin with? C'mon Labour Gov't. It reminds me the argument by the tax auditor told me when we were being audited back in Canada, "It's about paying your fair share...." And Canada has plenty of politicians with offshore trusts in numbered Swiss bank accounts.

I'm more concerned that people get brain washed thinking that it's ok for NZ to have most of it's wealth dashed away abroad as they assume taxing those that can invest = not paying their fair share.

[westerly]

We are the only country in the OECD that does not have a formal CGT although we have the Brightline tax which of course is CGT in disguise. Most of other OECD have a CGT with many exemptions and lower rates than normal income tax. But it has not stopped them from having exactly the same issues as NZ with run away house prices and high rents. The idea that CGT will be a guarantee to lower house prices and lower rent is simply not supported by any evidence

Maximum Tax Rates

NZ 33% +15% gst
Australia 45% +10% gst
USA 50% (37% Fed 13% State)
UK 47% + 20% vat

All of these countries except NZ have CGT plus death and property taxes of some sort.

Their share markets are thriving yet NZ with low taxes is excited because a locally owned port may list some of its shares. The wealthy immigrants buying sheep stations which are then run at a loss for taxation purposes are sure doing a lot for NZ.

Seems to me the top 20% who supposedly own 80% of the assets have little to complain about in NZ.

westerly

[Baa_Baa]

How can it be "fair" if it excludes certain parts of the community?

Seems t me it is now an attack on high income earners, and about re-distributing the wealth to non-earners.

Classic Robin Hood tax from the “no more taxes” lying thieves.

[couta1]

If this thing goes ahead it will be only a shadow of the current recommendations put forward by the tax working group, I think the current Govt has underestimated the resistance to a CGT.