Labour, Capital Gains Tax, ‘fairness’, 2020 election

Labour have promoted a more comprehensive Capital Gains tax for years, and set up the Tax Working Group 14 months ago with a CGT as a major focus. However they have ruled out some capital gains from being taxed, particularly ‘family homes’.

Labour seem to be caught between two forces – a stated desire to reform the fax system and make it ‘fairer’ (which in reality means taxing some people less and some people more), but also an obvious wish to get re-elected next year. They have said they will campaign on whatever tax changes they come up with in the 2020 election to get a mandate to implement them.

Labour’s tax policy: https://www.labour.org.nz/tax

Hamish Rutherford (Stuff):  Is capital gains tax a hill that Labour is willing to die on?

National wants Labour to go into the next election proposing a capital gains tax because the Opposition believes such a move will be something close to political suicide.

After close to a decade in the wilderness, during which Labour continuously preached about the inherent unfairness of New Zealand’s tax system, the largest Government party must ask itself: is this a hill worth dying on?

Although supporters tend to oversimplify the case, there is a strong, possibly compelling, argument for capital gains to be taxed.

If a person is taxed for what they earn from their work, it seems only reasonable that they also be taxed for what they receive from their assets.

Equality writer Max Rashbrooke went so far as to suggest capital gains tax should be called a “fairness tax”.

But the problem is, no-one is proposing the type of tax which this implies.

Labour has already ruled out a capital gains tax on the family home, and  an inheritance tax. Both exemptions have massive implications for how much the tax would raise and the extent to which the wealthy can manage to avoid it.

Both are also political promises which have implications for whether the tax is, indeed, fair.

Whatever is promised by the Tax Working Group report will leave Labour in an invidious position.

Capital gains taxes are inherently complicated and New Zealand’s existing tax system is designed around not having one in place.

During the election campaign in 2017, Labour was constantly on the back foot amid an intense campaign by National’s “let’s tax this” attack advertising.

Jacinda Ardern was eventually forced to rule out major changes before the 2020 election, but, according to pollsters, the damage was done.

Unless Ardern and Finance Minister Grant Robertson are ready to continually make the case for whatever changes are proposed, the Government’s proposed capital gains tax will be whatever National says it is.

So far NZ First has remained silent on its policy on capital gains tax, but if Winston Peters can be convinced to support it at all, he is certainly unlikely to do so without extracting some tangible win for the party to promote to his supporters.

All of this comes amid high uncertainty about what a capital gains tax would raise in the coming decade, in an environment where low interest rates have pushed asset valuations to levels which may not be sustainable, especially if the economy slows.

For all of its belief that there is a major problem in the tax system which could be fixed through a change in mindset, the reality is likely to be dawning that the tax will be politically challenging unless major changes are made, which will undermine how much is raised as well as how much “fairer” the tax system will become.

It will also be so easy for its opponents to demonise that the Government must wonder whether it’s worth the risk of trying.

But if Labour decide that progressive tax reform is ‘not a priority’ they will be demonised as well, for talking up tax reform and a CGT and then backing down. They have to come up with something substantive on tax reform.

John Cuthbertson (Stuff) – Capital gains tax: What’s fair for one person may hurt another

In the 14 months since the Tax Working Group terms of reference were published, there has been a lot of talk about fairness, particularly the fairness of a capital gains tax (CGT), but not much talk about balance.

Fairness means different things to different people. It can mean a different thing to an individual at different times depending on their situation.

To keep as many people as possible happy, and tax revenue flowing, over millennia, tax authorities have come up with a number of, often competing, tests of a “good” tax system, including fairness, efficiency, certainty, minimising avoidance and compliance costs, coherence and last, but not least, raising enough cash to meet the Government’s needs.

At the same time, taxpayers have developed one simple principle – not in my backyard. If the tax collector is to reach into my backyard, then the pain and the gains should be equally shared relative to ability to pay.

That expectation gap – as old as tax itself – is one the working group is hoping to balance with its proposal to tax capital gains on assets not already caught by the tax net, what some are calling a new capital gains tax.

Its interim report warns that inconsistent taxes on gains from sales of capital assets, which favour the wealthiest, make our tax system less fair and risks undermining public acceptance of the system.

So consistently taxing capital gains will make our tax system fairer, right?

Well, it might not be that clear cut.

A truly fair approach would be to tax all asset classes, however, as the Government has told the working group that the family home must be exempt, this broad approach is hamstrung from the get-go.

Chartered Accountants ANZ’s view is that if introduced, a CGT should include land, residential investment, commercial property and farms, shares and business assets.

The Government has told the working group to have specific regard to housing affordability. If this is the case, we question the outright exemption of the family home given the strong prevalence (65 per cent) of owner-occupied housing in the overall housing market.

An alternative approach would be to include a dollar-value exclusion threshold and only tax gains above this threshold – targeting overcapitalisation. This approach has been used successfully overseas and would minimise distortions.

The working group’s key question is whether “the fairness, integrity, revenue and efficiency benefits outweigh the administrative complexity, compliance costs and efficiency costs” of introducing a CGT.

A CGT is a particularly complex issue and CA ANZ’s recommendation to ministers and to the Tax Working Group is to ensure policy designers have enough time to strike the right balance between what assets are included and what roll over relief is available when the asset changes hands and, at the same time, fully integrating changes with existing income tax legislation and stakeholder systems.

Our tax system has got to be perceived by taxpayers as broadly fair to achieve their buy-in.

It must be easy for people to comply with and difficult to avoid. It also must ensure the tax base is sustained and broad enough to support our health system, national infrastructure, schools and social assistance.

Labour has to try and balance the tax system so that taxpayers see it as broadly fair. But taxpayers are also voters, and next election may come down to how fair they see Labour’s tax proposals, versus National’s.

Leave a comment

69 Comments

  1. Blazer

     /  16th January 2019

    however compelling the case for CGT,one thing you can be sure of…National would never implement one.

    Reply
    • Actually National put in place a bright line test on the tax of capital gains.

      The bright-line test was brought in to more clearly and resolutely determine how much capital gains tax home buyers and sellers would have to pay on the property’s profit, should their sale be within two years of the purchase.

      https://www.loanmarket.co.nz/news/extension-to-brightline-test

      The current Government extended that.

      https://www.ird.govt.nz/news-updates/brightline-extension.html

      Reply
      • Blazer

         /  16th January 2019

        yes the token 2 year brightline test…since extended to 5.

        Reply
      • david in aus

         /  16th January 2019

        The bright-line is not a capital gains tax. The was brought in as trading and investing long-term can be difficult to differentiate.

        Reselling a house in two years is more likely to be trading purposes and it seems to me to be reasonable.

        Capital gains tax is inflation tax. Higher the inflation, the higher the confiscation. People have forgotten about inflation as it had been tamed. Imagine having 10% inflation rates again, the government will tax you despite having no real gains.

        Inflation will eventually come back with a vengeance, there is so much debt in the world, that has been traditional way of getting rid of debt.
        The US and EU are on the precipice of a debt compounding cycle in the next recession which is coming soon. Where they need to borrow money to pay the interest. They will export inflation as everybody would need to competitively devalue their currency.

        Reply
    • Pink David

       /  16th January 2019

      “however compelling the case for CGT,”

      Let’s see your compelling case.

      Reply
      • Blazer

         /  16th January 2019

        I’m waiting for the findings and conclusions of the working group.

        Reply
        • Kitty Catkin

           /  16th January 2019

          Fairness tax be buggered, it’s punishment for daring to own a house when other people don’t.

          Reply
  2. PartisanZ

     /  16th January 2019

    Speaking of hills, Labour-led might take courage from a hill named ‘Little Round Top’ …

    On rare occasions, if the cause is just, impossible odds can be overcome by turning to face the enemy and “CHARGE!!!”

    https://en.wikipedia.org/wiki/Little_Round_Top

    Reply
    • Corky

       /  16th January 2019

      Parti, you have the gift of linking anything in this world, no matter how disparate, to your political agenda.

      Reply
      • PartisanZ

         /  16th January 2019

        Eventually someone will just have to do it Corky … Just do it … and their enemies will no doubt be ‘captured’ in no time … as Johnny Reb was at Little Round Top … The sky won’t fall in … and eventually they’ll realize they were fighting on the wrong side all along …

        It’s really a matter of who has the courage …

        So yeah, Chamberlain’s charge is relevant.

        Reply
  3. David

     /  16th January 2019

    They never raise a lot of money, the government is in surplus already, hideously complex and how many times should you have to pay tax on your own money.
    Personally I would be delighted if they introduced a similar CGT to what happens globally because there are so many exemptions and cutouts it would be far better than now. Just paid my tax bill this week but I pay 28% tax then 15% GST on any capital gains I make and its brutal, my Australian mate pays a lower rate CGT and if he holds for 2 years it only applies to 50% and eventually it whittles down to zero.
    NZ is way too brutal on property developers, there isnt even an inflation deflator.

    Reply
    • Duker

       /  16th January 2019

      “I pay 28% tax then 15% GST on any capital gains I make ”
      Thats a strange way to apply GST , on income like that.

      Reply
      • Trevors_elbow

         /  17th January 2019

        Net GST on the difference between purchase and sale of a property development is what I think David is trying to say…

        Reply
  4. Gerrit

     /  16th January 2019

    It will be the biggest point of difference in 2020 between the parties, that fore sure.

    You never know National may bring in a much more user friendly, easily understood and totally marketable Financial Transaction Tax.

    As the article says, Labour is hang up solely on CGT whilst National have all the options before them.

    Labour will need to do a very good marketing job to sell the CGT in 2020. Especially selling where the very limited CGT revenue will be spent. They also need to show where other taxes will be reduced to keep some spending money in the shrinking numbers of actual tax payers.

    Voters may also question why taxes are going up instead of the state reducing expenditure and overhead costs.

    Reply
    • Blazer

       /  16th January 2019

      what real progressive legislation has National introduced?

      Reply
      • Gerrit

         /  16th January 2019

        Another blazing squirrel…this is about Labour and the CGT they want to introduce, the problems they will encounter in implementation and voters acceptance.

        Reply
        • Blazer

           /  16th January 2019

          ahem…’You never know National may bring in a much more user friendly, easily understood and totally marketable Financial Transaction Tax.’

          Reply
    • High Flying Duck

       /  16th January 2019

      “You never know National may bring in a much more user friendly, easily understood and totally marketable Financial Transaction Tax.”
      As successfully implemented by which countries?

      Reply
  5. Alan Wilkinson

     /  16th January 2019

    Taxed when you earn, again when you save and finally when you spend.

    Slaves to the Labour Government. And if you buy a property the Labour Government still owns that too.

    Reply
    • Blazer

       /  16th January 2019

      death and taxes…no escape Al…suck it…up and try and enjoy life…stay off the bitter lemons.

      Reply
  6. How can exempting the family home be “fair” compared to the family next door who was never able to afford their own home?
    The logic is loopy.

    Reply
    • PartisanZ

       /  16th January 2019

      It’ll skew the market more towards so-called “family homes” … but heck … the market’s skewed to fuck already … Worst case scenario we’d only be exchanging “loony” for “loopy” …

      Reply
  7. PartisanZ

     /  16th January 2019

    Simplify … make it a wealth or asset tax … just call it Tax Reform … and reduce income tax accordingly …

    TOP 1 – https://www.top.org.nz/top1

    Reply
    • Gerrit

       /  16th January 2019

      Very hard to market this to those on fixed incomes with assets.

      Granny tax will not sell easily to the voter.

      You than have a problem of asset valuation. Housing is easy but business (is goodwill an asset in the valuation – it is certain a value not an asset), farm stock, vehicle, artwork, grandad gold watch, etc., etc., valuations are much harder to quantify.

      Values are only truly set a sale date. What a buyer is willing to pay.

      Than the taxation has to deal with the current asset depreciation regime. The value of your car depreciates over time. Who sets the new value? Who enters that value into the national database against your name so taxation can be levied?

      So many loopholes on what is a true valuation for a given asset. Sale, depreciated or market value?

      Reply
      • Blazer

         /  16th January 2019

        answered your own query…

        So many loopholes on what is a true valuation for a given asset. Sale, depreciated or market value?

        ‘ What a buyer is willing to pay.’=mkt value.

        Reply
        • Pink David

           /  16th January 2019

          “‘ What a buyer is willing to pay.’=mkt value.”

          How do you establish a market value for something that is not on the market?

          Reply
          • Blazer

             /  16th January 2019

            by comparison with like for like .historical and current valuations.

            Reply
            • Pink David

               /  16th January 2019

              That’s a great way to run a tax system. You do realise the potential more for dispute this causes don’t you? There is no ‘like for like’ in property.

          • Duker

             /  16th January 2019

            “How do you establish a market value for something that is not on the market?”

            Well thats been done for over a 100 years, its the basis of council rates . They value the property AND ITS DONE EVERY 3 YEARS.
            Hint its based on market values …husssh no more giving away of secrets.
            Human ingenuity knows no bounds !

            Reply
            • Pink David

               /  16th January 2019

              ” They value the property AND ITS DONE EVERY 3 YEARS.”

              Will you be happy paying a capital gains tax on the relative changes in the valuation provided by the council? This is an important point. You are establishing a system of taxation based on an estimate.

              “Hint its based on market values …husssh no more giving away of secrets.”

              Hint, it is not the market value. It is an estimation of what that market value would be at the time of valuation. Those are different things.

            • High Flying Duck

               /  16th January 2019

              Councils values?
              “Colliers International investment sales Auckland director Gareth Fraser said entry-level investors often expected commercial property CVs to be indicative of the market price.

              However, in some recent sales the capital value has exceeded the sale price by 30 to 70 per cent, he said.”

              CV’s are very broad brush and can be significantly different to actual market values.

            • Gerrit

               /  16th January 2019

              That is property, how about capital plant? Valuation of the asset (say a new very large screw air compressor) is set at purchase. it is depreciated every year by the current taxation scheme and ends up with a salvage (scrap) value on the books over a set period of years.

              How will that asset be valued once it has reached it salvage (scrap) value on the books?

              Many many profitable assets have a book value only what it is worth as salvage (scrap).

              Tax take will be impossible to predict or maintain as assets depreciate.

              Worth a read

              https://www.accountingtools.com/articles/2017/5/12/net-book-value

              “The depreciation, depletion, or amortization associated with an asset is the process by which the original cost of the asset is ratably charged to expense over its useful life, less any estimated salvage value. Thus, the net book value of an asset should decline at a continuous and predictable rate over its useful life. At the end of its useful life, the net book value of an asset should approximately equal its salvage value.”

              One can see foresee some arguments with the IRD on what a
              “useful life” span any asset will have. IRD wants a long useful life span, the owner a short one.

              More bureaucrats to sit in rented space in one of Bob Jones tower blocks to calculate every asset class “useful life” span.

              More taxation required for non productive pencil pushers.

            • Duker

               /  16th January 2019

              “. You are establishing a system of taxation based on an estimate.”

              Understanding not up to scratch this morning.?
              This was exactly point – its already established, well established. The world doesnt end when the ‘estimate’ differs from an actual market value. No one runs around flapping their arms, Ive underpaid/overpaid.
              The system is so good its used as a check on ‘asking prices’ for homes on the market.
              a suburb may have 5 -10 sales to establish a market value. A council value will be for every house in the street. Websites even offer CV plus with a further estimate of the increase sinnce the council CV was calculated
              Try it out on homes.co.nz

              To be honest the cunning aussies have both capital gains tax ( except family home) AND quite steep stamp duties on the value of the transaction.
              https://www.iselect.com.au/home-loans/stamp-duty/nsw/

              For a $3 mill home its $150k

              Bring back stamp duty I say.

            • Duker

               /  16th January 2019

              Gerrit raised the point on depreciation.
              Thats another estimate of the loss of value for tax purposes, sometimes its meaningless ie a fixed loss % per year.
              For political purposes they can offer ‘instant writeoffs’ which means for tax purposes you can take the whole value in that year. Doesnt mean its true , as every one understands its just a game.
              Sure computer gear can devalue quite quickly and thats allowed for . But other things last for 30 years, and so is that.

            • Pink David

               /  16th January 2019

              “Understanding not up to scratch this morning.?
              This was exactly point – its already established, well established. The world doesnt end when the ‘estimate’ differs from an actual market value. No one runs around flapping their arms, Ive underpaid/overpaid.”

              You really are not getting this.

              The variation in these estimates for the purposes of capital gains can easily mean a difference in tax of tens of thousands, on a fairly typical Auckland house. The current CV on one of my properties is $250,000 more than it would like get., do you think I’m just going to pay capital gains tax on that without comment?

              If you don’t think that level of variation is going to cause major issues, you are blind.

            • Pink David

               /  16th January 2019

              “Bring back stamp duty I say.”

              For what purpose? The claimed justification for a capital gains tax on housing is some vague notion of “fairness’, what is the reason for a stamp duty, other than to make houses more expensive?

            • Duker

               /  16th January 2019

              Fairness- its fair that property is taxed and not become a tax loophole.

              Even if a yearly capital gains tax was passed, the amounts would be small , like rates.
              Any unders and overs ‘could’ be corrected when its sold . Much like depreciation on assets is a paper figure until its sold and then previous claims can be corrected.
              No one expects it to be an exact science.

              Yo0u may as well give up this , as you have your head in the sand and ignore working examples of estimates tax or deductions from tax all around you.

    • Pink David

       /  16th January 2019

      “make it a wealth or asset tax … just call it Tax Reform … and reduce income tax accordingly …”

      What are you going to do when the house price bubble bursts and everyone starts claiming tax losses?

      Reply
      • High Flying Duck

         /  16th January 2019

        Ring fence them – it’s only fair!

        Reply
      • Duker

         /  16th January 2019

        “you going to do when the house price bubble bursts and everyone starts claiming tax losses?”

        Ever heard of the share market , they have bubbles too and traders who pay tax on gains clearly claim a ‘loss’ on falls in share price.

        I hear IRD even requires business to pay tax on increases in value on stock, even the farm kind. IRD sets the value on cows . Who knew

        Reply
        • High Flying Duck

           /  16th January 2019

          Beef cows are trading stock Duker – very different from a capital asset.
          Dairy cows are usually valued differently and the change in values – up or down – from year to year is…tax free.

          Reply
        • Pink David

           /  16th January 2019

          “Ever heard of the share market , they have bubbles too and traders who pay tax on gains clearly claim a ‘loss’ on falls in share price.”

          Correct, however this is a difference in scale.. Are you sure the politics of this work when property investors start getting a billion dollars in tax refunds?

          Reply
          • Duker

             /  16th January 2019

            It would be like GST and Income tax , one is not mixable with the other.
            This is how Australia works , capital tax losses can only be carried forward and offset against capital gains.
            They even further categorise it , ie capital losses from collectables can only be offset against other collectables, not say property or shares
            ttps://www.ato.gov.au/General/Capital-gains-tax/Working-out-your-capital-gain-or-loss/Working-out-your-net-capital-gain-or-loss/

            Surely from your background you knew this and wouldnt make nonsense statements like ‘billion dollars in tax refunds’

            Reply
            • Pink David

               /  16th January 2019

              Lets see how it play’s out in Aussie, they are going through this cycle right now.

            • Duker

               /  16th January 2019

              Cycle ?
              The Liberals /nationals will lose , no matter what election sweetner they will offer …and consigned to dustbin of history.

              Thats beside the point they have had the CGT gains and looses since the mid 80s.
              Is that your main point – cycles ?

  8. Corky

     /  16th January 2019

    ”If a person is taxed for what they earn from their work, it seems only reasonable that they also be taxed for what they receive from their assets.”

    Why?

    Reply
    • Blazer

       /  16th January 2019

      becauseits still revenue/earnings thats why…

      Reply
      • Corky

         /  16th January 2019

        So, assuming these assets have been bought with already taxed money from employment, they should be taxed again if they start producing a fresh revenue stream?

        Reply
        • Blazer

           /  16th January 2019

          thats how tax works.

          If you work and end up with after tax income of say $300k and start a business with that capital…do you think you should therefore not be taxed on any revenue produced ?

          Reply
          • Corky

             /  16th January 2019

            Depends on how you view assets. A business, I can understand. That’s new employment. I would expect to pay tax.

            What about shares, real estate speculation, gold etc?

            Reply
  9. PDB

     /  16th January 2019

    Will be interesting to see what they come up with, impossible to critique until we see the detail however if you do go to the extent of introducing a CGT then the family home shouldn’t be exempt – to do so means the tax is doomed to fail before you begin. There will also likely be major issues for small businesses. A CGT by nature is complex and costly to implement and administer. By excluding the family home one wonders if all the effort is worth the reduced reward.

    Reply
    • High Flying Duck

       /  16th January 2019

      Yes – even the “family home” exemption is tricky with trust & other ownership structures, work from home businesses, farm houses etc.
      The devil is very much in the details with CGT, and if you look beyond the nebulous “fairness” argument to pragmatism and consequences, the reasoning for CGT falls flat very quickly.

      Reply
      • Blazer

         /  16th January 2019

        Many other countries that have CGT have managed to address issues raised here.No reason NZ cannot either.

        Reply
        • PDB

           /  16th January 2019

          Countries like Australia implemented a CGT some time ago (1985) and it hasn’t been without problems. In fact a mooted change to the CGT might be a big political issue in Australia during the lead up to their next election.

          Being a much smaller economy a CGT should have a bigger effect here depending how comprehensive it is. How it deals with inflation, losses in asset value, valuation requirements and how the rate of CGT is calculated will be key. If (as rumoured) the suggested NZ CGT is the same as normal tax rates then that would be a major departure from Australia for instance.

          We do have unique issues like treaty settlement assets that would need addressing. Also our current tax revenue going into the govt coffers is already high so what is this tax trying to achieve? Wealth redistribution? Especially as due to tax bracket creep we are already paying more tax than we should be.

          Reply
          • Duker

             /  16th January 2019

            Implement a sales/transaction tax on the family home when its sold . But just call it a stamp duty. Australia has both , CGT and Stamp Duty.

            Reply
            • Pink David

               /  16th January 2019

              Why do you want houses to be more expensive?

            • Duker

               /  16th January 2019

              More expensive ? How can that be when the payee is the seller.

              Its only a tax when the value of the asset has exceeded inflation value over the period, and then its only a (%) of that.
              The house has ALREADY BECOME MORE EXPENSIVE, thats why its eligible to pay GCT

        • Pink David

           /  16th January 2019

          “Many other countries that have CGT have managed to address issues raised here.No reason NZ cannot either.”

          What makes you think they actually addressed them?

          Reply
  10. Pink David

     /  16th January 2019

    “The devil is very much in the details with CGT, and if you look beyond the nebulous “fairness” argument to pragmatism and consequences, the reasoning for CGT falls flat very quickly.”

    What’s the bet the compliance costs far exceed the amount of actual tax raised?

    Reply
  11. Gerrit

     /  16th January 2019

    Interesting to read this in full;

    https://www.anao.gov.au/work/performance-audit/administration-capital-gains-tax-individual-and-small-business-taxpayers

    “In 2012–13, the estimated tax payable on net capital gains ($6.2 billion) represented two per cent of the total net tax collected by the ATO ($311.7 billion) in that year. In the 2015–16 Federal Budget, CGT receipts for 2013–14 were reported as $7.2 billion49 (some 2.2 per cent of the $321.7 billion total net tax collected by the ATO).”

    So a huge contentious and costly to implement and administer raises the Australian tax take by 2.2 %.

    The ATO has a separate department solely used to collect CGT.

    “At the beginning of 2014–15, SB/IT had 2077 full-time equivalent (FTE) staff located across Australia and the BSL received a budget allocation of $173.1 million. An overview of SB/IT’s organisation structure is provided in Figure 2.1 and outlines the seven administrative streams, which are each managed by an Assistant Commissioner. An annual SB/IT Line Plan is developed to support the delivery of ATO corporate activities and programs and is underpinned by further detailed plans at the stream and local team level.”

    So to collect $6.2 billion cost $173 million. This is off course is yearly running expenses, no initial set up capital costs.

    Worthwhile?

    Collection demographics;

    “The latest available tax statistics (2010–11 to 2012–13) show that most CGT was paid by individuals (58 per cent) during this period, with companies contributing around 37 per cent of the estimated total tax payable on capital gains (Table 1.1). Of CGT paid by companies, most was paid by small business (over 45 per cent in 2011–12), with 36 per cent from large and international businesses in the same year, and the remainder from medium-sized businesses (18 per cent).”

    So the greatest payers are individuals and SME’s.

    Reply
    • Blazer

       /  16th January 2019

      great return…’So to collect $6.2 billion cost $173 million.

      Reply
      • Gerrit

         /  16th January 2019

        Depends if you take into account those 2077 people sole used is to collect taxes, would be better off in the productive sector paying taxes.

        Whilst it seems all good from an expense view the fact that;

        “The cost to operate the CGT system, particularly for taxpayers, is of concern to the ATO. For taxpayers, the requirements for complying with CGT can add substantially to the cost of managing their tax affairs. Record keeping can be more extensive for CGT purposes due to both the extent and length of time records are required to be retained for CGT events. In 2014–15, the ATO’s focus on voluntary compliance activities is intended to support taxpayers by engaging earlier and informing them about their CGT obligations prior to their lodging an income tax return. The ATO expects these activities to reduce costs for taxpayers.”

        much of the cost is pushed back to the tax payer. More unproductive time spent by the tax payer on the filling out tax returns instead of working to increase the tax take.

        That $173M is an expenses cost only. Compliance costs falls to the tax payer.

        Basically it is up to the tax payer to be compliant (and pay for being compliant) whilst the big bogan ATO sits back with minimal expenses but clobbers you hard if you get it wrong.

        Reply
    • Duker

       /  16th January 2019

      Old numbers. Treasury figures give 2017/18 Budget figures of $12.7 bill.

      cute diversion there gerrit, to give very old numbers and say its not worth it.

      $12.7bill is worth it as its about the same as the medicare and NDIS levy revenue.
      https://www.budget.gov.au/2017-18/content/bp1/download/bp1_bs5.pdf

      Also consider its mostly paid by those of high net worth , a bonus

      Reply
      • Gerrit

         /  16th January 2019

        Duker, you looking at the same figures as me? From your link on page 5 of the document.

        “Capital gains tax’ is part of gross other individuals, company tax and superannuation fund taxes.”

        They have buried CGT returns under a blanket of other taxes. Please show me where you get the $12.7B figure from as being solely CGT.

        Reply
        • Duker

           /  16th January 2019

          Yes they were cunning to hide it, not like some other much smaller ‘taxes’.
          Its virtually a footnote on 5-16.

          Australia has had CGT for quite a while now , so they havent allowed it to become the investment tax loophole that it has in NZ, even Aussies have been buyers in NZ because of this

          Reply
  12. PartisanZ

     /  16th January 2019

    Hot topic this ‘Capital Gains Tax’ …

    I’m not surprised, ‘property in the soil’ is the bogus foundation of our Greco-Roman, Judeo-Christian, Western industrial colonist civilization … The source of its fraudulent ‘wealth’ … and its only too real poverty …

    Reply
  13. Mefrostate

     /  16th January 2019

    Labour have made a complete bollocks of this entire process, tying the hands of the experts by restricting their ability to consider taxing the family home.

    New Zealand needs to transition from taxing work to taxing land values.

    Reply
  1. Labour, Capital Gains Tax, ‘fairness’, 2020 election — Your NZ – NZ Conservative Coalition

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