It's confirmed - the Tax Working Group (TWG) thinks the Government should introduce a capital gains tax (CGT).
The TWG has also recommended reducing KiwiSaver and personal income taxes, and increasing taxes around protecting the environment.
The CGT would apply to all gains and losses on land and improvements (except the family home), including shares and business assets. It would not apply to personal items, like bikes, boats and art.
The group was split on a broad-based capital gains tax. Not all members agree on the approach to include all land and buildings, business assets, intangible property and shares.
However, group chair Sir Michael Cullen said all members of the TWG agree a CGT should be taxed from the sale of residential rental properties.
Capital gains would be taxed when an asset is sold, the TWG report said. Those gains would be calculated from the date the new law was implemented.
When challenged on compliance costs for businesses, Mr Cullen said his least favourite option is to tax businesses.
He also told Ryan Bridge that this CGT may not be cost neutral after the first five years. In other words, the government could use some capital gains tax money to pay for things like healthcare and New Zealand Super.
Here's a breakdown of what the Tax Working Group (TWG) has recommended.
Capital Gains Tax (CGT)
- TWG recommends a CGT on all gains and losses on land and improvements (except the family home), including shares and business assets
- The tax would not apply to personal items, like bikes, boats and art
- Capital gains would be lumped in with personal income, so gains or losses would be added or subtracted from wages to take a person to their tax bracket
- Gains would be taxed when the asset is sold
- Gains would be calculated from the date the new law was implemented
Take a read of the fact sheets provided to media by the Tax Working Group below.