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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%
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  1. #61
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    Quote Originally Posted by Aaron View Post
    I think that is the issue. Belgarion's friend is making very little income due I assume to borrowing to invest. If he invests well any gains will be tax free. Good on him to for taking the risks and getting the returns.


    If he is regularly realising profit it will be taxed.

  2. #62
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    Quote Originally Posted by fungus pudding View Post
    If he is regularly realising profit it will be taxed.
    True but he also has the choice if he wants to hold long term and not pay tax. Also in the case of investment property he has some leeway regarding intention at time of purchase and with shares some leeway regarding changing investment strategy and portfolio reweighting rather than being taxed on speculation and trading.
    If he is realising investments every two or three years is that trading? Rather than have the half arse system we have now trying to identify when a capital gain is income/revenue just have a CGT. It does also catch the long term investors but again what is so bad about taxing wealth. Why is taxing income and consumption OK but taxing wealth somehow is worse. All taxes are horrible but if we agree they are essential to maintain a soceity like the one we live in, what is the fairest most equitable way to get those tax dollars.

  3. #63
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    Quote Originally Posted by Aaron View Post
    All taxes are horrible but if we agree they are essential to maintain a soceity like the one we live in, what is the fairest most equitable way to get those tax dollars.
    What about abolishing all taxes and just having a Consumption tax payable by everyone at say 25% on all purchases.

  4. #64
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    Quote Originally Posted by Aaron View Post
    True but he also has the choice if he wants to hold long term and not pay tax. Also in the case of investment property he has some leeway regarding intention at time of purchase and with shares some leeway regarding changing investment strategy and portfolio reweighting rather than being taxed on speculation and trading.
    If he is realising investments every two or three years is that trading? Rather than have the half arse system we have now trying to identify when a capital gain is income/revenue just have a CGT.
    That doesn't solve the problem. Is a landlord who now pays income tax on capital gain also to pay the CGT? Or are some only going to pay CGT without income tax? At what stage does a property investor become a trader? Are developers to pay both? No matter how you lookn at it, it's still a line drawing execrcise. The only way to simplify it is to call all capital gained income. Primary residence and repatriated funds should be exempt.

  5. #65
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    Quote Originally Posted by biscuit View Post
    Well, the fairest way is to work out how much we need, divide it by the number of people living here and send everyone a bill.
    Agreeing on what we all need might be a problem and although I don't have any figures to back it up probably over half of NZ won't earn enough to cover their own bill.

    Minimoke its hard to believe you openly favour a regressive tax like GST. I think most people would agree that a regressive tax is the least equitable way for a government to tax the people. Although does National raising GST from 12.5% to 15% mean I am wrong?

  6. #66
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    Minimoke would that include purchasing labour IE a 25% tax for employers on wages paid. And remember that without people with the money to become customers all businesses fail. You could use the Australian idea & abolish tax on trusts . The tax liability flows through to the beneficiaries at their marginal tax rate & if they are non income earners the highest personal tax rate applies to counter tax avoidance by paying it to children or other non earners
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  7. #67
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    Quote Originally Posted by biscuit View Post
    Well, firstly, I don't reckon a CGT would really do much to "broaden" the tax base. If you exclude people's homes, the vast majority of people don't own anything worth taxing, do they? A CGT is really simply going to narrow the tax base even further. I think realistically, you cannot squeeze much more out of most NZers, they just don't have enough anyway. You could probably "effectively broaden" the tax base by getting rid of subsidies such as kiwisaver and working for families, interest-free student loans etc.
    Great policies but no one will vote for you.

    A CGT wont narrow the tax base but I do agree it wont broaden it much if you exclude the family home.

    Quote Originally Posted by fungus pudding View Post

    That doesn't solve the problem. Is a landlord who now pays income tax on capital gain also to pay the CGT? Or are some only going to pay CGT without income tax? At what stage does a property investor become a trader? Are developers to pay both? No matter how you lookn at it, it's still a line drawing execrcise. The only way to simplify it is to call all capital gained income.
    A gain is either income or capital and would be taxed under the appropriate system. by having teh CGT rate at marginal rates, that distinction becomes academic.
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  8. #68
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    Quote Originally Posted by CJ View Post

    A gain is either income or capital and would be taxed under the appropriate system. by having teh CGT rate at marginal rates, that distinction becomes academic.
    So that would mean no CGT tax, but all transactions other than primary residence to be subject to income tax.

  9. #69
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    Quote Originally Posted by fungus pudding View Post

    That doesn't solve the problem. Is a landlord who now pays income tax on capital gain also to pay the CGT? Or are some only going to pay CGT without income tax? At what stage does a property investor become a trader? Are developers to pay both? No matter how you lookn at it, it's still a line drawing execrcise. The only way to simplify it is to call all capital gained income. Primary residence and repatriated funds should be exempt.
    I am not quite sure what you mean, for a landlord to be paying income tax on a capital gain currently he would have to be trading property or a developer etc so the capital gain for him is income and all his property is unfortunately tainted by a trader/developer status.
    But most landlords currently would not be traders/developers and they would not pay any tax on a capital gain if they sold their property. A CGT would mean these landlords would now have to pay tax on a capital gain. The trader/developers would continue to argue with IRD over their status and would be trying to get any gains treated as capital rather than income so the gains would be taxed at the lower CGT rates rather than the higher income tax rates(they would end up paying some tax one way or another). Whether a gain is considered capital or income depends on what your business is.
    Last edited by Aaron; 11-07-2011 at 08:37 PM.

  10. #70
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    Quote Originally Posted by Aaron View Post
    I am not quite sure what you mean, for a landlord to be paying income tax on a capital gain currently he would have to be trading property or a developer etc so the capital gain for him is income and all his property is unfortunately tainted by a trader/developer status.
    But most landlords currently would not be traders/developers and they would not pay any tax on a capital gain if they sold their property. A CGT would mean these landlords would now have to pay tax on a capital gain. The trader/developers would continue to argue with IRD over their status and would be trying to get any gains treated as capital rather than income so the gains would be taxed at the lower CGT rates rather than the higher income tax rates(they would end up paying some tax one way or another). Whether a gain is considered capital or income depends on what your business is.
    Precisely. The point I was trying to make is that it does not address the 'half arse' intention nonsense as suggested in your earlier post. (I should add that I'm not so sure that most landlords are exempt from income tax on exit. The IRD have recently been instructed by govt. to tighten up on this very point. My view is they will look closely at landlords who have not made a profit because of their gearing. If they purchase without a reasonable chance of a profit from the rental activity, then the reason threy bought is obviously for sale one day at a profit. So regardless of what they say is their intention - the IRD will very likely view a profit as income. When I first became a landlord many moons ago the IRD used to apply that test, but then gave up. )

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