Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Capital gains tax plan not geared for capital losses

The fact that the Tax Working Group wants to ring-fence capital losses shows that they haven’t come to grips with how a proposed capital gains tax would work when assets are losing value, Tenancies War spokesman Mike Butler said today.

“Property values have been increasing for a relatively long time so that the proposals released today appear to have assumed that prices will continue to increase forever, creating a goldmine for the Government”, Mr Butler said.

But the golden weather for investors is ending. The proposed capital gains tax comes on top of a raft of punitive changes for rental property owners which make property investment no longer attractive, driving property values down, he said.

Talk to any accountant. Now, many owners are unloading rental properties that have become loss-making liabilities and the Tax Working Group appears to have resorted to loss ring-fencing to avoid giving capital loss refunds to investors, Mr Butler said.

“It won’t be a matter of investors timing the sale of assets to their advantage,” he said.

“It will simply be a matter of investors selling for whatever they can to stop haemorrhaging cash to a loss-making investment,” he said.

We already have 116,000 negatively geared rental property owners who declare an average annual loss of $7138 who will sell if losses are ring-fenced if and when the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill becomes law.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Without those 116,000 owners, by the time a capital gains tax may become law the property investment environment will be vastly different than it is now with many selling at a loss, he said.

Weakness on capital losses is just one of the many problems with the proposal.

Capital gains will be charged at 33 percent for the majority of taxpayers one of the most punitive capital gains tax regimes in the world, and more than twice the rate proposed by the Labour Party at the 2011 and 2014 elections.

The announcement of the proposed new tax was badly timed and coincided with news that more than 10,000 people are now waiting for a state house when under the previous government it was around 4000, he said.

Where will renters live when rental properties will be even harder to find than now? Mr Butler said.

Stop the War on Tenancies is a group that since last October has been highlighting the evidence that successive governments have ignored while creating rental property policy.


© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines



Gordon Campbell: On Dune 2, And Images Of Islam


Depictions of Islam in Western popular culture have rarely been positive, even before 9/11. Five years on from the mosque shootings, this is one of the cultural headwinds that the Muslim community has to battle against. Whatever messages of tolerance and inclusion are offered in daylight, much of our culture tends to be hostile to Islam when we’re sitting in the dark, with popcorn.
Any number of movie examples come to mind, beginning with Rudolf Valentino’s role (over a century ago) as the romantic Arab hero in The Sheik...
More


 
 


Government: One-stop Shop Major Projects On The Fast Track

The Coalition Government’s new one-stop-shop fast track consenting regime for regional and national projects of significance will cut red tape and make it easier for New Zealand to build the infrastructure and major projects needed to get the country moving again... More

ALSO:


Government: GPS 2024: Over $20 Billion To Get Transport Back On Track
Transport Minister Simeon Brown has released the draft Government Policy Statement (GPS) on Land Transport, outlining the Coalition Government’s plan to build and maintain a transport system that enables people to get to where they need to go quickly and safely... More

ALSO:

Government: Humanitarian Support For Gaza & West Bank

Winston Peters has announced NZ is providing a further $5M to respond to the extreme humanitarian need in Gaza and the West Bank. “The impact of the Israel-Hamas conflict on civilians is absolutely appalling," he said... More


Government: New High Court Judge Appointed

Judith Collins has announced the appointment of Wellington Barrister Jason Scott McHerron as a High Court Judge. Justice McHerron graduated from the University of Otago with a BA in English Literature in 1994 and an LLB in 1996... More

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels


 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.