Minority view on extending the taxation of capital gains
Source: BusinessNZ
[Feb 21, 2019]
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Three of the eleven members of the Tax Working Group do not favour the Group’s recommendations on capital gains tax.
Group members BusinessNZ Chief Executive Kirk Hope, former Bell Gully tax partner Joanne Hodge and former Inland Revenue
Deputy Commissioner (Policy) Robin Oliver do not recommend that the Tax Working Group’s proposed capital gains rules
should be implemented.
Their view is that administration costs, complexity and investment distortions that will result from the rules would
outweigh the revenues that could be gained from a comprehensive capital gains tax as proposed, and it would not
significantly reduce overinvestment in housing or increase tax fairness.
The minority group considers that a more limited capital gains tax could be appropriate if focused on rented residential
property where most revenue could be raised.
The minority group does not support a capital gains tax on business assets, saying this could discourage investment and
innovation and tend to lock businesses into current asset holdings. Concerns with the ‘valuation day’ approach (taxing
growth in the value of assets from the proposed commencement date of 1 April 2021) include its vulnerability to
conflicting valuations of assets.
The minority group has concerns with taxing both shares and business assets on the grounds that this could create double
taxation, penalising New Zealanders owning shares in New Zealand, and making overall taxation on investment less
consistent.
The minority group recommends retaining New Zealand’s current relatively simple and efficient tax system while amending
some specific current rules and better enforcing others.
The Minority View on Extending the Taxation of Capital Gains is available here
ENDS