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Originally posted by speights boy View PostApparently not any more.
Therefore perhaps it was seen as an unnecessary taxpayer funded
subsidy and was abolished.
building on the quite possibly engineered TWG report. Engineered
by the government - as usual - setting the terms of reference to
ensure it avoided any embarrassing results.
Why were other business assets not also stripped of depreciation
on the basis that it is a taxpayer funded subsidy?
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Or simply a political expedience? Perish the though that there should be some consistency.
The government believes what it wants to. Never let the facts get in the way of a bigger tax take.
Ponder the question:
The deputy CIR tells a Select Committee that there are not only no tax advantages to property
investment, but that the rules are stricter/tighter than for other investments.
The TWG tells the government that the residential rental sector not only pays no tax, but is a tax
taker and that this is caused by a gaping loophole in tax law. Blenglish uses that flawed TWG result
and conclusion to take away a normal business expense - depreciation. The TWG report and re-
commendation on that matter is later shown to be perversion, based on selective statistics. Will
the government say sorry and reverse the decision made on that TWG calumny?
I'm not going to hold my breath.
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You have to have some sympathy for the government - any government. They expect IRD to collect tax from business income and yet, there is this identifiable group who act irrationally by buying business assets which produce negative income.
No wo/man in the street would do that. Its completely illogical.
A simple comparison is those misled individuals who register and claim for buying and operating their farmlets. IRD frown on this and unless a taxable income eventuates, IRD cancel the registration and require any refunds to be repaid.
The new treatment of property investors is no surprise and entirely consistent.
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Originally posted by Perry View PostJust what it is: depreciation.
Where it went wrong is in the 1960s businesses no longer built up sinking funds and spent the depreciation money instead.
Fortunately there are still some businesses, local authorities, govt agencies, and sports clubs etc which build up sinking funds but it's little understood by the general public.
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Originally posted by Perry View PostSo investing in xero, which makes no profit, and never has done, would
be completely illogical and no one in their right mind would do that? Of
course, such investors hope to make a profit some day. As do PIs.
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Yes - it was in response to your comment. My mention of xero and PIs
was in relation to early-years profits. Not depreciation.
Winston posited:
No wo/man in the street would act irrationally by buying business assets
which produce negative income. Nothing to do with depreciation, in that.
Ansett NZ never made a profit and was claiming back GST, the whole time
it was operating in NZ. Irrationality is not the sole prerogative of street folks.
Many, many businesses start up with losses in the inception years. That's
done with the hope of future profits. Many PIs do the same.
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Originally posted by Perry View PostSo investing in xero, which makes no profit, and never has done, would
be completely illogical and no one in their right mind would do that? Of
course, such investors hope to make a profit some day. As do PIs.
I can't see why housing is any different.
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