Tax working group recommendations was released on 21 Feb 2019.
Chaired by Sir Michael Cullen, it proposes to tax a lot of things (not just real estate)
There are a number of tax implications: the main purpose of that tax is that it wants to act like a Robin Hood tax. To tax the rich to pay those who are on lower incomes.
The main points are:
All assets (other than the main family home, cars, boats and other household durables) will be subject to the capital gains tax without adjusting for inflation.
It is recommended that capital gains be taxed within the current income tax system and taxed at a person’s marginal rates.
Capital gains will only be taxed after implementation date (called Valuation day). So it will only be applied prospectively. The impact of this is that investors are likely to demand higher rental yields (either increasing rents, or decreasing prices paid for properties, or a combination of both) in the near future.
And taxpayers have five years from Valuation Day (or to the time of sale if that is earlier) to determine a value for their included assets as at Valuation Day. Valuation date will be a date where the capital gains tax starts from
Other tax recommendations include:
- Increasing the threshold for provisional tax from $2,500 to $5,000 of residual income tax
- Increase the $10,000 automatic deduction for legal fees and potentially expand the automatic deduction to other types of professional fees.
- Simplifying the number of depreciation rates that are offered
You can read the full report on https://taxworkinggroup.govt.nz/resources/future-tax-final-report