Tax Working Group final report

The final report from the Tax Working Group has been released. It’s a long report, with a long summary so I won’t post even that.

The bottom line for me seems to be that I would benefit from the tax cuts (about $1000 per year for the household),  the CGT would have little or no effect, but the environment taxes could have an impact.

That is, if the Government adopts the recommendations. Labour seem to be distancing themselves from the report, and Winston Peters has strongly opposed a CGT in the past.

Capital Gains Tax is the big talking point. Stuff: Capital gains tax: Tax Working Group announces support for capital gains tax, cuts to income tax

KEY FACTS

– Capital gains to be taxed through income tax.

– Family home (one per person) to be excluded from tax, within some limits

– Gains to be taxed from date tax comes into effect on assets people already own

– Tax generally to apply when people sell assets, with limited “rollover” relief if proceeds are reinvested

– Rollover relief to apply on death/inheritance

– Capital gains won’t be adjusted for inflation

– Investors to have up to 5 years to have some assets valued.

– Personal possessions, including artworks that may be held as investments, to escape net

– Capital losses could “generally” be offset against other taxable income.

– Income tax breaks worth between $420 and $595 a year to almost all taxpayers

– Low and middle-income KiwiSavers to benefit from reduction in tax on employer contributions

– Wealthier KiwiSavers to lose out from taxation of funds’ Australian and New Zealand shares

Funnily, the pop up video advertisement accompanying this was on ‘How to boil and egg”.

RNZ – Capital gains tax recommendations: What you need to know

The group, chaired by Sir Michael Cullen, has recommended the following:

  • Tax the capital gain on sale of land, shares, business assets, intangible assets such as intellectual property.
  • Tax to be imposed when the asset is sold, and levied at the seller’s marginal tax rate.
  • The tax would NOT apply to the family home, and personal assets such as cars, paintings, jewellery, and household appliances.
  • A holiday home WOULD be taxed on sale.
  • No change to GST and no exemptions for certain types of products, such as food and drink.
  • The capital gain on shares in companies would be taxed but in some circumstances capital losses would also be able to be offset against other income.
  • The capital gain on the sale of a business would be taxed, including the goodwill.
  • No changes to income tax rates, but a recommendation to raise the income threshold for low and middle income groups.
  • Environmental taxes: changes to the emissions trading scheme to be more like a carbon tax.
  • Dirty taxes on solid waste to reduce volumes to landfills.
  • Taxes on water pollution and water extraction.
  • Taxation of fertiliser use. Consider congestion charges to tackle traffic issues.
  • The government’s full response, including any planned new taxes, is expected in April.
  • The intention is to have legislation passed ahead of next year’s election, but changes won’t come in until 1 July, 2020.
  • National would have the opportunity to repeal the legislation if it wins the election.

It is all here:

But these are just TWG recommendations. The Government say they will decide what if anything to implement, and any changes would not take effect until after next year’s election.

Leave a comment

7 Comments

  1. David

     /  22nd February 2019

    I can see the only change will be on residential real estate. The extra cash this will generate will help cover the extra accommodation supplement as rents rise. The government will have to expand it’s current buying of existing houses to plug the gap.

    Reply
  2. This is getting a lot of circulation:

    Reply
  3. NOEL

     /  22nd February 2019

    It’s been ten months since the recommendations on the review of the Veterans legislation were presented and no indication yet of which were accepted.
    That suggest one has plenty of time to clear out the back shed before the substantial increases in dump charges kick in.

    Reply
  4. High Flying Duck

     /  22nd February 2019

    Good comment!:

    Reply
  5. Zedd

     /  22nd February 2019

    look out everyone.. a CGT maybe coming in 2021 or later: ‘Dont panic Mr Mannering’ unless you are a wealthy Tory & may have to finally start paying your fair share 😀

    Reply
    • Zedd

       /  22nd February 2019

      btw: This MMP Govt. made it clear, their mandate; is to implement CHANGE (after 9 looooong years of Natl & co.).. not just the ‘same old same old’.. could it be, that’s what they actually intend to do ?

      “Lets do this !!” 🙂 😀

      Reply
      • Kitty Catkin

         /  22nd February 2019

        Mr Mainwaring; it’s pron. Mannering.

        Labour must be tired of running the country.

        Reply

Leave a Reply to NOEL Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s