Nineteen CGT details to look out for

The Taxpayers’ Union has listed the top 19 details Kiwis will be looking out for on Thursday in the Tax Working Group’s capital gains tax proposal.
 
In our recent report, Five Rules for a Fair Capital Gains Tax, we outlined criteria to assess whether a capital gains tax is ‘fair’. Capital gains taxes can range from moderate to extreme, or simple to convoluted, depending on the detail of the proposal.

On Thursday we will look to see how the proposals stacks up against these criteria, and check off many other details that we encourage commentators and concerned New Zealanders to look out for.

Details to look out for include:

• Rollover relief:
  • will the capital gains tax apply on death or just on sale of an asset;
  • will the tax apply if capital is simply being recycled within the same asset class (selling a smaller farm to purchase a larger farm, for example)?
• The rate:
  • will there will be a discounted or lower rate, like in Canada, Australia, the United Kingdom, or the United States?
• Revenue neutrality:
  • will the revenue be offset with tax cuts;
  • if so, who will receive them;
  • will revenue neutrality be maintained in the medium-to-long term as CGT revenue grows?
• Family home exemption:
  • will there be exemption exclusions for large properties (will lifestyle blocks be subject to the tax?);
  • will there be a ‘maximum value’ for the family home;
  • how much tax will be payable if there is an exemption exclusion?
• ‘Valuation Day’:
  • will asset owners be required to value their property and businesses;
  • if so, will it be at their expense, or will the general taxpayer be required to pay;
  • if the general taxpayer is required to pay, what will be the estimated cost of ‘V-Day’;
  • how much time will taxpayers have to obtain asset valuations;
  • if valuations are not obtained, will other ‘default valuations’ be used?
• Exemptions:
  • are there any sectoral exemptions (e.g. racing, fisheries);
  • will Maori authorities pay capital gains tax, if so, at what rate;
  • how are vehicles, boats, antiques etc. treated?
• Trusts:
  • at what rate are trusts taxed;
  • will they be taxed on accrued or realised gains?