Capital Gains Tax? Keep related posts in this thread, please.

[flyernzl]

Frankly, if you don't have a property as security for the small business loan, you won't get the loan.
If you give a personal guarantee for the business loan, it is implict that your property is up for grabs.

Very few (if any) public servants understand this.

[Perry]

Irrespective of all the what-if and what-about complications / distractions, the pre-eminent questions
remain unanswered.

1) What (exactly and specifically and how) does the promoter believe a CGT is going to achieve?

2) Where is the evidence that shows other countries' CGT has achieved that, (or some similar purpose)?

Those are the questions that should trump all the fiddly detail distraction queries.

[artemis]

Irrespective of all the what-if and what-about complications / distractions, the pre-eminent questions
remain unanswered.

1) What (exactly and specifically and how) does the promoter believe a CGT is going to achieve?

2) Where is the evidence that shows other countries' CGT has achieved that, (or some similar purpose)?

Those are the questions that should trump all the fiddly detail distraction queries.

I don't disagree with your questions. But unanswered or fudged answers on 'inheritance tax' and other aspects of the proposed CGT which will affect hundreds of thousands of people over time are not what I would call fiddly details.

[artemis]

The CGT Fact Check article in the NBR is worth a look, also the comments. It is in front of the paywall, but probably only for the weekend.

http://www.nbr.co.nz/article/election-fact-check-capital-gains-tax-rh-p-161825

[speights boy]

The CGT Fact Check article in the NBR is worth a look,........

As previously posted I do not support Labour's CGT proposal.
However, as a 'fact check' this is not correct.

So an Auckland property bought for $750,000 last year, which saw a 20% rise in value and was sold this year would have that $150,000 increase in value added to the seller’s income for the current tax year, and taxed according to that taxpayer’s marginal rate – probably 33%.

In other words, this “property speculator” to use Mr Cunliffe’s words, would pay $49,500 in tax on the sale under the current law.
Under Mr Cunliffe’s capital gains tax, the taxpayer would actually pay less than half of what they are paying now: at 15%, that $49,500 drops to $22,500.

A bit like the misinformation posted here about inheritance yesterday.
Hmmm.

[artemis]

Might need a nationwide rental register after all:

"A family inheriting a house are not making an investment decision unless they let it for rent. At that point its value could be registered for tax on the gain in value if it is sold. A register of rental property may be necessary to the administration of a capital gains tax."

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11319207

[Perry]

More bureaucrat employ-
ment opportunities, eh?

[DazRaz]

Tenancy services have a register of rentals. They collect all the bond info.

[artemis]

Tenancy services have a register of rentals. They collect all the bond info.

To be sure, but it is not publicly available. It is possible it could be made available IRD for data matching, but at the moment most of the information on bond lodgement forms is not checked. Actually I don't know that for sure, but I cannot see the Bond Centre checking up on, for example, tenancy start date unless perhaps there was a later dispute. If IRD were to take the start date of the tenancy as the record date for CGT, that is a whole different kettle of fish.

And it would likely be cheaper for heirs renting out the deceased's family home to take no bond than take on liability for CGT. Taking a bond is not mandatory so not hard to stay under the radar.

The guy from Christchurch City Council who wants a nationwide register of tenancies has an even worse problem if bond info is used. Maybe not so bad if IRD has access to the information - they have robust privacy processes - but imagine if it as available to say all territorial authorities.

Mind you, IRD data matching on bond info would bring in a significant amount of tax on rental income not declared.

[Perry]

Irrespective of all the what-if and what-about complications / distractions, the pre-eminent questions
remain unanswered.

1) What (exactly and specifically and how) does the promoter believe a CGT is going to achieve?

2) Where is the evidence that shows other countries' CGT has achieved that, (or some similar purpose)?

Those are the questions that should trump all the fiddly detail distraction queries.

I don't disagree with your questions. But unanswered or fudged answers on 'inheritance tax'
and other aspects of the proposed CGT which will affect hundreds of thousands of people
over time are not what I would call fiddly details.

The dilemma seems to me to be simple. Don't get distracted by details and endless
to and fro discussions on the devilish details. It's just brush fire fighting. Get to the
nub of the matter, as posited by my questions. Keeping people diverted by (what
I refer to as) fiddly details is par for the political course. As always. Especially in any
election year.

[Winston001]

Irrespective of all the what-if and what-about complications / distractions, the pre-eminent questions remain unanswered.

1) What (exactly and specifically and how) does the promoter believe a CGT is going to achieve?

CGT is a tax. It will achieve revenue for the government to spend.

Why a CGT? Capital increases in wealth (shares, bonds, business goodwill, farms etc) are mostly not taxed in New Zealand. Wages, dividends, and interest are. Ergo the tax net has a gaping hole in it where one type of wealth is untouchable.

2) Where is the evidence that shows other countries' CGT has achieved that, (or some similar purpose)?

I've read that NZ is one of the few countries not to have a CGT. If we looked at those other countries I'd guess the main achievement would be increased revenue for the government. And not much else.

[Winston001]

Just remembered this earlier post which gives an historical example of when a type of CGT was imposed in New Zealand:


"Just a reality check - in the late 19th century the government introduced reform legislation to deliberately break up the Great Estates. A few land owners up to that point held most of the land.

If that had not occurred, you would today own leasehold estates for your rental properties because the underlying land would continue to be held by wealthy British families.

If you think that is unlikely, research land ownership in the UK where some of the great estates survived and today own tracts of central London yielding billions of dollars of rents. Plus the farms still held if fee tail for Charles and his successors.

Its not wrong but capital ownership through generations accumulates without effort. The French and the Russians, indeed the Americans too revolted against that."


No fan of CGT but there are logical arguments both ways.

[Perry]

If it's presented as a money grab - so be it. That
might be the honest thing to do. So long as there
is a gain and not the fools' gold digits of inflation.

But if it's touted as making new homes somehow
more affordable or like hogwash, then it's a lie,
plain and simple.

And death duties was the major weapon in the
"great estates" break up, if I recall aright.

[Bob Kane]

CGT is a tax. It will achieve revenue for the government to spend.

But no-one is saying there isn't enough tax - no-one is requesting to pay more tax.
The people calling for CGT are pointing their fingers at landlords and saying landlords are making house prices go up and that has to stop. This in where the "envy tax" originates.
A CGT will not fix that.
If there really isn't enough revenue for the govt then simply increase gst.
CGT will be hard to implement, hard to administer and raise such a small amount that I'd question the wisdom of implementing it. Especially as we already have a tax on people buying and selling houses.

[Keys]

The gain to be taxed is the net difference between value at valuation date (EG April 2015) and the date the property is sold.
What happens to values between those two dates has no relevance.

Until legislation has been passed nobody can say definitively what will or will not be relevant.