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715 posts

Ultimate Geek
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Topic # 247760 21-Feb-2019 13:26
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The working group have got back and the report has been published.

 

Interested in the views here, especially as several here own their own business.

 

In short it seems to be:

 

  • excluding Family Home and assets like cars
  • Including sale of investment and holiday houses
  • Including sale of shares
  • Including sales of a business/company
  • Assets are valued at time of implementation of the tax and any gains are taxed from that time on upon sale
  • Initial partial offset with smallish (~$10/wk) broad-based tax reduction via moving a lower tax threshold up
  • Excluded from tax if passing on capital as part of inheritance (death duties) or during divorce  - but family farms value is not reset if sold on later (so not sure yet exactly how that works in all cases) 

Also thrown into the mix are changes/more environmental tax (eg land fill/ carbon tax), reducing tax on some super contributions and a few other things

 

Overall I think a capital gains tax is fair, why should someone get taxed when the invest by putting money in the bank, yet avoid tax if the invest in property or shares.

 

 

 

 

 

 


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1583 posts

Uber Geek
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  Reply # 2184813 21-Feb-2019 13:34
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See assets valued at implantation of tax, deleted rest of post as that makes most of my statements irrelevant.

 

Will hold onto shares if not getting punished for what they've done in past..

 

just wondering how they deal with shares and assets from inheritance, value original purchaser?




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Ultimate Geek
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  Reply # 2184819 21-Feb-2019 13:44
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I've purchased shares in Aussie under there Capital Gains Tax as a small investor. Not sure it would put me off buying shares here personally.

 

Was a little annoying in more paperwork, but since you got to offset losses it seemed fair to me. 

 

If you only had to pay when you sold the shares and realised the gain, you put aside a portion of the profits for the taxman at the end of the year upon sale.

 

The devil will be in the details.


 
 
 
 


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  Reply # 2184820 21-Feb-2019 13:44
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rugrat:

 

I pay tax on dividends on the shares.

 

 

 

 

Yes, but dividends from shares are income, not a capital gain. If those shares went up in price and you sold them, you would pay little or no tax on the profit at the moment.





iPad Pro 11" + iPhone XS + 2degrees 4tw!

 

These comments are my own and do not represent the opinions of 2degrees.


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Uber Geek
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  Reply # 2184824 21-Feb-2019 13:48
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  • Assets are valued at time of implementation of the tax and any gains are taxed from that time on upon sale

If that's the case, then it's different from most implementations of new taxes which avoid being retroactive - ie an asset purchased before introduction of the tax would be fully exempt.

 

This would mean that any people who rushed out to buy investment property before a CGT was introduced to avoid it - just lost a bet - big time. (taking with them foreign resident investors who rushed in to buy before controls on foreign ownership were implemented).

 

OTOH, it's not really "retroactive" in terms of taxing past gains.

 

If you're going to do a CGT, that's the way to do it IMO.


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  Reply # 2184825 21-Feb-2019 13:50
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Does anyone have a plain English explanation of how this would impact managed funds?

 

I always understood that portfolio investment entities currently incur tax on all income, both capital growth and dividends, but am I wrong about that? If I'm right, then surely a capital gains tax would have no impact?


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Uber Geek
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  Reply # 2184826 21-Feb-2019 13:51
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Will we get a tax credit if shares drop in value? I agree about shares for small investors, a CGT will just make it very difficult and expensive to manage, compared to the amount invested. So many people will end up moving their money into houses.

 

I think a CGT is a bad idea, and think our current tax system, is reasonably good and balanced. It isn't perfect, but what is. But CGT on Kiwisaver retirement savings is going to turn a lot of people off it. The money was taxed going in, and the money is locked in till retirement, so it is. I wonder if people will have to pay the CGT if they withdraw it for a first home?

 

We do already have a CGT on all homes at the moment, with a bright line test, and I think this is probably sufficient enough.

 

If they are trying to bring in a CGT to help bring house prices, then that has proven not to work in Oz and UK. Personally I think to keep it simple, if they are going to bring in a CGT, that it should apply to the Family home as well, just to keep it simple, and remove all the exclusion stuff. But guessing that would be very unpopular, although a CGT is going to be unpopular anyway. They could also reduce the CGT  taxrate if they did this. I understand it is only if houses sell for a profit anyway that would pay the CGT, so house prices will likely rise to take into account this CGT. This will likely happen across the board , even if it doesn't apply to the fmaily home, becuase it means that some sellers will be paying the CGT, but they will be selling in the same market as people who aren't paying the CGT. So people selling a family home will benefit

 

Often with these things, the devil is in the detail, and often the actual details never come out until it is brought in. I am certainly not voting for a party that brings in new taxes like this. 


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  Reply # 2184832 21-Feb-2019 14:04
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mattwnz:

 

If they are trying to bring in a CGT to help bring house prices, then that has proven not to work in Oz and UK.

 

 

Well to be fair, as far as Aussie goes, the original CGT introduced by Keating/Hawke back in about 1987 was endlessly watered down with loopholes by each successive liberal national coalition government that it became utterly pointless.


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  Reply # 2184836 21-Feb-2019 14:08
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depends how much land you have if your taxed or not

 

 

 

"30. The excluded home should include the land under the house and the land around the house
up to the lesser of 4,500m2 or the amount required for the reasonable occupation and
enjoyment of the house. However, this land area allowance should be monitored and reduced
if necessary."


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  Reply # 2184849 21-Feb-2019 14:14
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CGT is fair. Everyone should pay tax on income. A capital gain is income, deferred till sale time. CGT already exists, this seems to just tidy it up. If we don't want CGT, we need to remove all CGT and all loss writeoffs  How can it be fair if some do and some don't?  If the tax system was fairer there would already be full CGT or zero CGT


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Ultimate Geek
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  Reply # 2184850 21-Feb-2019 14:14
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It discourages investment. Not only in shares but in investment property as well.

 

This is an absolutely dreadful idea, from a government that Peters created. 

 

1) It won't fix the housing crisis

 

2) There will be no capital loss tax credits

 

3) People will still try work around the system

 

4) It discourages development of property (when we are already short of buildings)

 

 

 

At the end of the day it's just another new tax that will go on and probably never come off. Because the government believe the public sector can spend your money better than you can.






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  Reply # 2184853 21-Feb-2019 14:18
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mattwnz:

 

 

 

If they are trying to bring in a CGT to help bring house prices, then that has proven not to work in Oz and UK. I am certainly not voting for a party that brings in new taxes like this. 

 

 

Its about fairness. Would you be annoyed if you paid income tax and some don't? It cant be about houses as most houses are CGT exempt

 

Its not a new tax. If the Govt changes hands the new one wont increase taxes in the first year, what does that say?


613 posts

Ultimate Geek
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  Reply # 2184856 21-Feb-2019 14:21
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Not sure what to think of it.

 

Although, as a renter, I saw a comment (on stuff) from an investor\landlord that would be of a concern.

 

The comment went along the lines of as a landlord\investor he'd pass the future cost of a CGT on to his tenants. Which sort of makes sense, if you've brought a property as a investment, you plan on holding onto it for say 5 years, and hope to make X profit after 5 years, and at that sale time you have to pay a CGT, of course you'd factor this into your costs, which you'll try and recover through the rent.

 

Now, if all landlords do so, it'll make rents even more expensive.


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  Reply # 2184857 21-Feb-2019 14:26
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darylblake:

 

It discourages investment. Not only in shares but in investment property as well.

 

This is an absolutely dreadful idea, from a government that Peters created. 

 

1) It won't fix the housing crisis

 

2) There will be no capital loss tax credits

 

3) People will still try work around the system

 

4) It discourages development of property (when we are already short of buildings)

 

 

 

At the end of the day it's just another new tax that will go on and probably never come off. Because the government believe the public sector can spend your money better than you can.

 

 

Its not a new tax. It will discourage those that want income tax free investments. Its not there to fix the housing crisis. people work around the Income Tax system, should be ban Income Tax? Development of property is the purchase, incur costs, sell at a profit, CGT doesnt affect that

 

Its an existing tax that will reduce my tax as those going tax free now pay their share


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  Reply # 2184860 21-Feb-2019 14:28
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Bottom line is those that are affected don't like it. We sold our last rental so we are not affected, but if we were, we would keep or sell, whichever made the most "cents"


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  Reply # 2184862 21-Feb-2019 14:32
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I expect this thread will be all of us repeating the same old things based on what I just posted

 

 


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