Capital Gains Tax in New Zealand: What you need to know

Capital Gains Tax in New Zealand: What you need to know

Wellington, February 22, 2019

Sir Michael Cullen in Wellington on February 21 (RNZ Photo by Rebekah Parsons-King)

The Coalition Government’s Tax Working Group is recommending a broad extension of taxing Capital Gains.

Here is what you need to know:

The Group, chaired by Sir Michael Cullen, has recommended the following:

  • Tax the Capital Gain on sale of land, shares, business assets, intangible assets such as intellectual property.
  • Tax to be imposed when the asset is sold, and levied at the seller’s marginal tax rate.
  • The tax would NOT apply to the family home, and personal assets such as cars, paintings, jewellery, and household appliances.
  • A holiday home WOULD be taxed on sale.
  • No change to GST and no exemptions for certain types of products, such as food and drink.
  • 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.
  • No changes to income tax rates, but a recommendation to raise the income threshold for low and middle income groups.
  • Environmental taxes: changes to the emissions trading scheme to be more like a carbon tax.
  • Dirty taxes on solid waste to reduce volumes to landfills.
  • Taxes on water pollution and water extraction.
  • Taxation of fertiliser use. Consider congestion charges to tackle traffic issues.
  • The government’s full response, including any planned new taxes, is expected in April.
  • The intention is to have legislation passed ahead of next year’s election, but changes won’t come in until 1 July, 2020.
  • National would have the opportunity to repeal the legislation if it wins the election.

The above Report and Picture have been published by Indian Newslink under a Special Arrangement with www.rnz.co.nz

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