As the political football of a capital gains tax continues to be thrown around, we thought we would take a step back and have a look at what the Tax Working Group actually recommended. Obviously any change to taxes which may affect a huge numbers of kiwis will face some opposition on it's way to becoming law, but below is a summary of the major takeaways the Tax Working Group has suggested for New Zealand.
Tax the capital gain on sale of land, shares, business assets, intangible assets such as intellectual property when the asset is sold.
The tax would NOT apply to the family home, and most personal assets. However, a holiday home WOULD be taxed.
The capital gain on shares in companies would be taxed but some capital losses may be used to be offset against other income.
The capital gain on the sale of a business would be taxed.
Exemptions from capital gains to be granted for some "life events" such as relationship breakup or death.
No changes to the income tax rates, but a recommendation to raise the income threshold for low and middle income groups.
No change to GST.
Changes to the emissions trading scheme to be more like a carbon tax - ie pollution is tax, while carbon reducing activities are rewarded.
No changes to current taxation of Maori assets and companies.
Review taxation of charities (ie making sure funds are being used for charitable purposes).
Extra resources for Inland Revenue for administration and enforcement.
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Nothing in this blog should be construed as legal advice - if you have a legal question, please get in touch with us directly so one of our lawyers can give you that advice.