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

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  • No

    213 100.00%
  • Yes

    74 56.49%
  • Goff is just an idiot

    2,147,483,658 100.00%
  • Epic fail for Labour

    1,935 100.00%
Multiple Choice Poll.
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  1. #441
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    Quote Originally Posted by SBQ View Post
    Definitely No. If you didn't understand my last question, the issue is somebody has to be in the top 20%. When gov't policy erodes the incentive to perform because said left population says it's unfair, then what do you think will happen? You don't have to be a rocket scientist to realise that all the extra effort and stress to run a business, or make investments, for the sake of being rewarded will no longer apply - people will just simply give up, and then you would end up with a top the 20% that doesn't have anything to tax.

    Don't be concerned about the wealthy people moving $ around, they've already done so. Be concerned about the hard working businesses that employ people - when these owners are fed up and realise the gov't has slaved them with no reward, then watch out. It doesn't take much to go on the dole.
    If you have a profitable business then you are already paying tax. If there is a cgt, and the cgt is neutral for total tax raised, then you and your business may not end up paying more in taxes. If company tax and income tax is adjusted down.

    Start-ups may have bigger gripe, where it takes some time to establish the company. The first years may see the company building up good will whilst not earning any net income. In the TWG scenario income tax rates would apply to the increase in capital value, probably due to the build up of goodwill. I would be surprised if any political party policy would not include some sort of an time-limited exemption for start-ups.
    Last edited by Bjauck; 03-03-2019 at 02:35 PM.

  2. #442
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    Quote Originally Posted by BlackPeter View Post
    Any facts you could contribute? What statement they made was wrong?

    But I than I suppose anything you don't like you seem to call biased. Doesn't matter whether the facts are on their side, it is just about pushing your view - isn't it?

    Labelling a publication "biassed" or worse just because you don't like the message is destroying any fruitful political discussion. Trumpesk.
    it is a comprehensive list of whose assets will be subject to the TWG’s CGT.

    After paring it to the minimum, They have only just kept the “family home” out of the list of assets subject to a cgt.

    The last 20 years or so has seen a boom in non-commercial lifestyle sections > 0.45 ha on the edge of cities. Many of these lifestyle areas provide towns with a de facto “green belt”. Many of those owners will be surprised that only part of their property will be deemed to be their family home. Valuers and solicitors will have a field day!
    Last edited by Bjauck; 03-03-2019 at 02:40 PM.

  3. #443
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    Quote Originally Posted by fungus pudding View Post
    ...
    A CGT that is poorly designed is no good to anyone. Properly designed and it would be hard to argue against, provided the revenue was used to lower income tax - the worst tax of all.
    I agree it makes no sense to exempt the owner occupied primary residence. There is already no stamp tax in NZ. And it already has a tax-preferred status anyway.

    The TWG has squeezed down the definition of the primary residence. So they may well have substantially scrapped the exemption of the primary residence for many people anyway.

    The government insisted on the exclusion in the first place because it would have been political annihilation for them if it had been included. So Cullen made exceptions to the exclusion!
    Last edited by Bjauck; 03-03-2019 at 02:44 PM.

  4. #444
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    Quote Originally Posted by westerly View Post

    For SBQ https://www.mileiq.com/en-ca/blog/20...-tax-brackets/ Add on the provincial tax and NZ rates are low. Add on the state taxes in the USA also. The banks do exceedingly well as far as profits go in NZ
    I also doubt there will be a rush exodus to overseas tax havens. NZ has relatively low tax rates for higher earners.
    I don’t agree a farmer or business owner should be taxed on profits from selling but I prefer to wait and see the Govt. proposals.
    Most of the discussion on CGT seems to be politically motivated which is to be expected.
    There is a need for CGT particularly in the property area.

    westerly
    Actually the tax take is pretty much the same for both places. For $150K income i've used:

    https://brc1.ird.govt.nz/opa12/web-d...lobal%24global

    and

    https://simpletax.ca/calculator

    Average tax rate for NZ you have to factor the ACC levy which is not added in the IRD's calculator. So factor a 3% would put the average tax at 30% vs 30.83% for Canada. However, in Canada that 30.83 comprises CPP/EI pension contribution / insurance coverage which NZ doesn't have. Higher rates may show NZ is slightly less but that won't be the deciding factor for one wanting to live in Canada vs NZ. Cdn residents also have ways to lower their taxable income such as investing in a pension fund (up to 18% of income which is nothing to ignore). The NZ approach of taxation is to pay the tax before you can invest vs Canada, delay the tax pay and collect it at retirement (for tax free compounding). This is why CGT in NZ is so messed up. You've got a scheme that has taxed the earnings, and if that's not good enough, IRD will also want the capital gains tax off the investments.

  5. #445
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    Quote Originally Posted by Bjauck View Post
    If you have a profitable business then you are already paying tax. If there is a cgt, and the cgt is neutral for total tax raised, then you and your business may not end up paying more in taxes. If company tax and income tax is adjusted down.

    Start-ups may have bigger gripe, where it takes some time to establish the company. The first years may see the company building up good will whilst not earning any net income. In the TWG scenario income tax rates would apply to the increase in capital value, probably due to the build up of goodwill. I would be surprised if any political party policy would not include some sort of an time-limited exemption for start-ups.
    Be more specific? Generally in accounting practices, GAAP rules, the after tax income of a business goes to retained earnings or shareholder's earnings. That amount gets reflected on the "Book Value" of the company. CGT is not an issue if the book value (which translates to share price of the company) does not go up. How do you determine goodwill for NZ companies? I would not expect for the vast majority of small businesses, goodwill would NOT even be part of their accounting because most of these businesses, when they get sold, they basically get sold at "book value" or basically what the asset side of the balance sheet is worth. Things like equipment in a restaurant, but for good will??? If no one is interested in buying the restaurant, then there is basically no good will. They might as well close up and no one would remember.

    NZ has a practice to pay dividends. So when the after tax income of a company pays those disbursements, it keeps the retained earnings section the same (no change in book value and no change in share price). Since the gov't is looking for capital gains, there would be a clear incentive for all listed NZX companies to be cash poor (from paying out the dividends). When book values go up, so does the share price, which could mean IRD would double dip in tax on the company.

    Of course in a proprietorship or partnership business, the after tax earnings are simply shared or kept on the books. The owner can withdraw the funds and pay no dividend tax or CGT.

    Would be interesting to see the details on what kind of CGT Labout Gov't is really talking about.

  6. #446
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    Quote Originally Posted by fungus pudding View Post
    Their real capital gain has hardly been minimal. You know as well as I do that it would be political suicide to tax the prime residence - that's the only reason to exclude it. You also know that home owners have a massive advantage over those who rent over time. Of course they face costs while they have the tax free benefit of a roof over their heads, while landlords receive an income, but are taxed on their profits.
    A CGT that is poorly designed is no good to anyone. Properly designed and it would be hard to argue against, provided the revenue was used to lower income tax - the worst tax of all.
    Pretty disingenuous of you to constantly say that private dwellings should be subject to CGT when you realise it's not politically possible, and for good reason. Here's a discussion on the benefits of home ownership vs renting.

    https://www.nzherald.co.nz/personal-...ectid=12019370

    The point being made is that if a renter used the extra cash surplus each week to invest elsewhere, like in the stockmarket, they'd probably come out at the end in a better position than if they'd paid interest and capital, and have flexibility in their living arrangements the whole time. I think many of us follow the old thinking and buy a home if we can, because we're not especially good at saving. That's what I did, anyway. It doesn't mean that I made a massive capital gain on any property, I'm sure I didn't, unless money earned elsewhere paid it off quickly, saving interest. But equally I could have invested that surplus elsewhere. Inflation, interest, rates, insurance, upkeep and renovation expenses would surely take away most of the gains, without even adding in your own time upkeeping the property, which also has a value.

    The example above doesn't look at it from the rentier's side, but on average I would expect most rentiers take a long time to get to cashflow positive situations, so they don't pay a lot of income tax as you imply, unless they are also paying off capital in their costs. There would be no need in most cycles, as inflation will pay it off. If, in the end, tenants have covered all ongoing costs from the bank and external costs associated with the property, there would be the difference between the original capital and the current capital value, less an allowance for inflation, which would be the true profit from the whole exercise, if any.

    However the interesting point is that the risk of the borrowed money was held by the property as security, and covered ultimately by the tenant(s). If the rentier paid off no effective capital over the duration, their profit in this case is on a paper transaction that involved no real expense on their part to start with (leveraged against other property). So maybe Dr Cullen's idea of the CGT rate being the marginal rate, wasn't such a crazy idea.

  7. #447
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    @elZorro

    The issue of CGT and banning foreign non-residents from buying NZ real estate, wouldn't be on the radar if the Auckland housing boom didn't get so out of control. Too many NZ people wanting their 1st home have been left behind; at what cost? - so only the rich & wealthy to make the gains? Now the gov't is targeting those that made massive gains in real estate, YET, can't discriminate between different asset classes so they would include sharemarket gains.

    One thing certain with real estate is the banks have no quarrels at lending on those assets. But go and try to borrow the same amount (by going margin) in a brokerage account ? to invest in shares? Not a chance.

  8. #448
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    Quote Originally Posted by SBQ View Post
    One thing certain with real estate is the banks have no quarrels at lending on those assets. But go and try to borrow the same amount (by going margin) in a brokerage account ? to invest in shares? Not a chance.
    Ya reckon
    I can easily leverage in shares , maybe not 95% as many would with property , but certainly enough to lose it all haha
    For clarity, nothing I say is advice....

  9. #449
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    Quote Originally Posted by peat View Post
    Ya reckon
    I can easily leverage in shares , maybe not 95% as many would with property , but certainly enough to lose it all haha
    Yes but as an asset to leverage off NZ RES homes Property just about as good as cash in the bank 80%+ ... aka why the property is priced so high to average to low yields now.. and asking prices well over GV-RV

    commercial property around 50% prices much closer to RV

    Shares / Bullion 5% (even if you own shares in the bank your trying to lend from)
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  10. #450
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    Quote Originally Posted by peat View Post
    Ya reckon
    I can easily leverage in shares , maybe not 95% as many would with property , but certainly enough to lose it all haha
    I've had an interest only loan at 80% of our house value for many years now to use in the market, can't get a margin call either.PS-Would not use a margin account for the share market, too risky IMO.

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