The Tax Working Group’s recommendations on changes to the New Zealand tax system have just been released. These are the main recommendations, according to RNZ.
- 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. Assets to be valued from when the tax is imposed.
- The tax would NOT apply to the family home, and personal assets such as cars, paintings, jewellery, and household appliances. However, a holiday home WOULD be taxed on sale.
- 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.
- Exemptions from capital gains to be granted for some “life events” such as relationship breakup, death. A family farm passed on to a family member would be covered by a rollover and there would be no tax on the capital gain. But if the family member then sells to a third party the capital gain would be taxed.
- No changes to income tax rates, but a recommendation to raise the income threshold for low and middle income groups, i.e they would earn more at a low or lower tax rate.
- No change to GST and no exemptions for certain types of products, such as food and drink.
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