What makes you think the effective rate for a CGT would be comparable to the current income tax rates?
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This is going to create some liquidity issues if it becomes law:
https://www.stuff.co.nz/business/107...of-their-dream
Isn't the basis of any CGT that it is paid when the asset is sold, alternatively if you have to pay each year then you must be able to claim the loss if/when it happens as well. Cannot see any govt trying to implement that across a broad spectrum of assets not withstanding the admin nightmare/cost - use the KISS (as possible) principle!
Yes a CGT is paid when the asset is sold. But plenty of countries have a "wealth" tax". For instance, in The Netherlands where I have lived for some time, if you own net cash or assets over 25,000 Euro, you have to pay 4% per annum of that wealth added to your income to be taxed. For example you have 100,000 Euro sitting in a bank account. Every year the tax man takes 4% of this or 4,000 Euro and adds it to your taxable income. . Applies to other assets as well like houses etc. You end up paying 4% of your net assets in tax. This tax is currently at 30%. (your own home is exempt) Think we have it pretty good in NZ at the moment.
thats a bit Sh*t, to take 4% - in the bank you're lucky to get 2%-2.5%, add inflation and it looks more like government theft. Certainly wont encourage saving
You are only taxed on the 4% though... so you end up losing 1.2% of your wealth per annum.
To be fair, on the flip side you are not taxed on your interest. There is no tax on interest income. But yeah if like many countries in Europe you do not even get 1% for your money in the bank then you are going backwards, and with inflation and all you are really going down hill. So there is little incentive to save after certain amounts.
Ok Ok - I misunderstood. thanks for the clarification