Capital gains tax expected to raise $8.3 billion
It’s confirmed. You will be hit in the pocket with a capital gains tax.
A report released today by The Tax Working Group is recommending a broad-based tax on capital gains expected to raise $8.3 billion over five years.
Among the recommendations are that capital gains tax to apply after the sale of residential property, businesses, shares, all land and buildings except the family home.
Tax rate to be set at the income-earner's top tax rate, likely to be 33 per cent for most.
Assets to be valued from when the tax is imposed.
The tax will not apply to the family home, and personal assets such as cars, paintings, jewellery and household appliances.
But a holiday home would be taxed on sale.
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.
Exemptions from capital gains to be granted for some "life events" such as relationship breakup and death.
A family farm passed on to a family member would be covered by a rollover and there would be no tax on the capital gain.
But if the family member then sells to a third party the capital gain would be taxed.
There’s no changes to income tax rates, but a recommendation to raise the income threshold for low and middle income groups.
The Group has recommended increasing the bottom taxation threshold from $14,000 a year to between $20,000 and $22,500.
Tauranga MP and National Party leader Simon Bridges says The Tax Working Group has gone much further than a Capital Gains Tax, with a raft of new taxes targeting hard-working New Zealanders.
“There are eight new taxes including; an agriculture tax, a tax on empty residential land, a water tax, a fertiliser tax, an environmental footprint tax, a natural capital enhancement tax, a waste levy and a capital gains tax,” says Simon
“This is an attack on the Kiwi way of life. This would hit every New Zealander with a Kiwisaver, shares, investment property, a small business, a lifestyle block, a bach or even an empty section.
“For farmers, who are the backbone of our economy, this is a declaration of war on their businesses and way of life.
“They would pay to water their stock, feed their crops and even when they sell up for retirement.”
Simon says The Tax Working Group has recommended one of the highest rates of capital gains Tax in the world.
He says National will repeal a capital gains tax, index tax thresholds to the cost of living and let Kiwis keep more of what they earn.