I guess the NZ sharemarket will have a 25% spike up on V day, on record low volume.?
Then the paper war will start in ernest.
At this stage I am wondering what's the point of saving to invest.
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I guess the NZ sharemarket will have a 25% spike up on V day, on record low volume.?
Then the paper war will start in ernest.
At this stage I am wondering what's the point of saving to invest.
Well.. looks like house prices will continue to rise since this will be the only tax free place to park capital, such a stupid recommendation. Why save to invest in shares, you’d do better leveraging up and buying a bigger “family home”.
Well it will take the argument out of whether you are an investor or a trader.
FP, thought you'd like the idea of a rollover being mooted (perhaps have to reinvest in a similar area). Can't see how they'll ever collect any CGT if that is the case. Maybe you'd be allowed to buy a vintage car or other asset that is likely to still increase in value. Or even put the capital gain into a savings account? Labour must be worried about having National undo it all. Sounds to me like the tax accountants will be happy to provide answers here.
Personally, I have concerns about IRD's capacity to administer a CGT.
And if, as p17 of the executive summary suggests, it will be necessary to undertake a series of test cases, then adequate clarity might well lie some distance in the future.
As far as I know the roll over tax so far is only suggested for business sales.(I think the common term where it exists is 'a repatriation clause') It should apply to all assert classes where CGT is proposed in my opinion, so CGT would only apply on exiting that class of investment. There are good reasons for that, but that's covering old ground. I don't think National would ever undo CGT if it gets established as evidenced by their about turn on their hinted intention of undoing Labour's GST. No doubt you remember Bolger waffling about a transfer tax. Fortunately that's long forgotten, and I for one hope our GST remains in its current simple form. Govt's don't abandon tax schemes - they just try and find better ways to spend it. Forget vintage cars, art and similar nonsense - rest assured it will only apply to income earning assets with the one exemption being a holiday or second home)
Plenty of people pay income tax on shares they sell now, and of course that's at marginal tax rates. If you are deemed to be a trader you will pay tax on profits, whether it's cars, houses, shares, second hand furniture, holes to put in swiss-cheese, or widgets you're selling.
Fair comment, re dividends tax, but you cleverly avoided the investor who didn't intend to sell (when they bought) but for some some reason they eventually were sold. Boom .. CGT rips a massive 'marginal tax rate' hole in your/their capital gains.
Interested in what investors think about this. If you take for example a high capital growth share like XRO or ATM, and say you put $50k in the early days and make a few millions out of it, how do you feel about a tax bill of a few $ hundred thousands or a million or so when you or your estate sell it?
There are people who have decided to invest in and build up businesses rather than buying their own homes. Why not give them a tax break too as good as home-owners get?
If you own a mortgage-free $3m home you are indeed wealthy. Every country that exempts the “family home” applies a CGT exemption. Exempting what can be a multi-million dollar asset, is an exemption for the wealthy.
The whole thing is going to fail. Too many hurdles to get over. The first being Winston. If it is still proposed by the election then they will be out. The concern is if they say that it won't happen, then get re elected with the kermits, they will just do it anyway.
Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.
Correct - its not inflation adjusted. And its not adjusted to reflect the value of your person, un-charged labour, that goes into it.
Problem with this of course is that government has the job of managing inflation. So coffers get a bit low, just tweak inflation levers to give it a boost.