Re: Capital Gains Tax

Postby northernmonkey on Thu 14/Jul/11 8:36pm

Good to see both parties setting their stalls out before the election and seeking a mandate, also good to see a genuine policy gap opening up giving the voters a choice. Both national's asset sell of and labours CGT/Higher rate for over $150k's are credible policies which have pro's and cons. Looking forward to the election now to see a good old fashioned left v right political battle unfold.
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Re: Capital Gains Tax

Postby neels on Thu 14/Jul/11 8:51pm

Seems fair enough, if you make money you pay tax.

The interesting thing is adding in farms, glad I haven't bought a 10 acre block and developed it while claiming tax losses against my personal income (it's not only landlords doing it ya know) only to have the govt take 15% of the profit when it's sold

Will create lots more work for accountants and lawyers working on tax avoidance for rich people.
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Re: Capital Gains Tax

Postby happybaboon on Thu 14/Jul/11 9:07pm

I'd just like to point out that it's not really "Labour's" policy... They just took the long-standing Green policy and watered it down slightly... :huh:
http://www.greens.org.nz/policysummary/ ... cy-summary
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Re: Capital Gains Tax

Postby E Dogg Capizzle on Thu 14/Jul/11 9:09pm

happybaboon wrote:I'd just like to point out that it's not really "Labour's" policy... They just took the long-standing Green policy and watered it down slightly... :huh:
http://www.greens.org.nz/policysummary/ ... cy-summary


The Greens invented Capital Gains Tax? You learn something everyday.
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Re: Capital Gains Tax

Postby Oli on Thu 14/Jul/11 9:11pm

:D
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Re: Capital Gains Tax

Postby happybaboon on Thu 14/Jul/11 9:19pm

E Dogg Capizzle wrote:
happybaboon wrote:I'd just like to point out that it's not really "Labour's" policy... They just took the long-standing Green policy and watered it down slightly... :huh:
http://www.greens.org.nz/policysummary/ ... cy-summary


The Greens invented Capital Gains Tax? You learn something everyday.

:P
I mean more a CGT exempting the family home, the tax-free five grand, the 39% top tax rate....
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Re: Capital Gains Tax

Postby Conners on Thu 14/Jul/11 9:23pm

happybaboon wrote:I'd just like to point out that it's not really "Labour's" policy... They just took the long-standing Green policy and watered it down slightly... :huh:
http://www.greens.org.nz/policysummary/ ... cy-summary

There we go, that's the style of babs posting I was referring to the other day :)

What I don't get - is the people who are really jumping up and down about this. Its a proposed policy, from the opposition - not a law change. If you don't like it, don't vote for it. Seems pretty simple to me.
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Re: Capital Gains Tax

Postby hickie on Fri 15/Jul/11 11:48am

A little off topic, but here's my take on the no GST on fruit and veg:

1) Producers will increase their prices to suppliers, because they will still be paying GST on their expenses and not receiving GST from the suppliers to cover.
2) Suppliers will pass on the extra cost from the producer and will add their own small increase to cover their expenses that incur GST used in the sale of the product. They will also probably add a small margin due to the changes they are going to have to make to their systems and processes to handle the GST exception. Lastely they will probably use it as an opportunity to increase/restore their profit margin.

All this I would predict would lead to a reduction in costs of about 2 - 5 % if consumers are lucky and given the seasonal cycle of fruit and veg prices consumers won't even notice.
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Re: Capital Gains Tax

Postby Wobbler on Fri 15/Jul/11 11:51am

I think they should have done gst only off vegetables only and then trolled people about tomatoes
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Re: Capital Gains Tax

Postby thelivo on Fri 15/Jul/11 12:33pm

Meh. Its moot. They arent getting in.
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Re: Capital Gains Tax

Postby Conners on Fri 15/Jul/11 1:04pm

Serious CGT question.
When a slumlord sells a propert currently, shirley this is profit/income, which will need to be declared against his personal tax (in the same way that a loss/expenses are)? Which will end up being taxed at the highest rate available?
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Re: Capital Gains Tax

Postby philstar on Fri 15/Jul/11 1:14pm

happybaboon wrote:http://www.stuff.co.nz/national/politics/5284832/Labour-confirms-capital-gains-tax-new-rate
No big surprises... But I like it :thumbsup:


as expected they went soft, on not backdating it :( it is going to produce a lot of problems with the valuation of property on the day it is introduced :(.
the no GST on fruit and vegetables while a good idea in principal but compliance cost are going to out way any benefits, it would be much better to say “we would like to do this but the compliance is too much, so we are going to spend the $X that we get form GST on fruits and vegetables and spend it on advertising for healthy eatin, and school food programs” or something like that. and as for the $5K free of tax, there will be a lot more kids with taxable incomes of $5K.

these are the types of poorly thought out economic policy that I expect form the greens ( as happybaboon mentioned). labour the bad economic of the greens with out any of the annoying caring about the environment.
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Re: Capital Gains Tax

Postby northernmonkey on Fri 15/Jul/11 1:34pm

Conners wrote:Serious CGT question.
When a slumlord sells a propert currently, shirley this is profit/income, which will need to be declared against his personal tax (in the same way that a loss/expenses are)? Which will end up being taxed at the highest rate available?


It doesn't works that way, slumlord P&L is basically: rental income - repairs (not improvements) and interest payments = profit/loss. the house is an asset that allows that trading activity to take place, not part of the trading activity itself.

the losses claimed against personal tax are operational losses and income tax is paid on operational gains (profit). Capital repayments on a mortgage are not an allowable expense for tax purposes, only the interest component is. So a landlord has never claimed a tax rebate or discount on any portion of the actual mortgage, only the expenses asociated with servicing it.

The economics of it are fundamentally correct but it still hacks me of that if your wealthy enough to afford a mortage on a second home, you can get the taxpayer to fund a good chunk of it esp if your a high rate tax payer. You still have to pay all the capital back yourself but the servicing costs are divided amount everyone. Thats just wrong.
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Re: Capital Gains Tax

Postby Spyder on Fri 15/Jul/11 1:41pm

Conners wrote:Serious CGT question.
When a slumlord sells a propert currently, shirley this is profit/income, which will need to be declared against his personal tax (in the same way that a loss/expenses are)? Which will end up being taxed at the highest rate available?


Doesn't it depend on "intent" - which is quite a broad/vague definition. If the intent was to buy something for the purpose of on-selling, then it should be declared as income.

The IRD have huge powers to dig into records to determine this intent. This includes looking at past history (ie no pattern of long-term asset holding) as well as getting records from your accountant/bank. So when you're sitting at the bank asking for $300k to buy a doer-upperer and only want the money for 4-6months (for example), those records can be accessed by the IRD to show intent.

Similar situation to shares, if you're a long-time accumulator of shares and you buy a few and sell a few each year, you're probably safe. If you're very active in the market, then you'll appear on the IRD's "person of interest" log :)

Another point is that if you haven't been audited and cleared by the IRD - you've got away with nothing!
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Re: Capital Gains Tax

Postby neels on Fri 15/Jul/11 1:57pm

northernmonkey wrote:The economics of it are fundamentally correct but it still hacks me of that if your wealthy enough to afford a mortage on a second home, you can get the taxpayer to fund a good chunk of it esp if your a high rate tax payer. You still have to pay all the capital back yourself but the servicing costs are divided amount everyone. Thats just wrong.

Good to see the politics of envy is alive and well. :p

The taxpayer is not funding the mortgage on the home, the tenant is through paying rent. The landlord is able to offset the operating loss of the property against income, until it reaches a point where it becomes an income producing asset, at which time that income is taxable.

The alternative is for the government (i.e. the taxpayer) to spend the capital to buy the property, and then cover any expenses over and above the income from rent.

If a tax refund to a landlord is roughly the value of rates and insurance, and there is no cost to the taxpayer to administer and maintain the property, I would have thought that the taxpayer is getting pretty good value for money.
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