NZ Tax Working Group Talks Capital Gains

September 20, 2018 Taxation in New Zealand

Taxes in New ZealandWELLINGTON – New Zealand should tax capital gains, but maybe not via a capital gains tax.

The New Zealand Tax Working has released its Interim Report with a discussion on potential tax changes which may be recommended for the country, including a tentative approval of a capital gains tax.

The Tax Working Group was established by the Labour-led government and tasked with evaluating what changes should be enacted in the New Zealand tax system.

The question of a capital gains tax is a contentious one in New Zealand, as investors in the country have a strong preference for investment in property, due in part to a lack of capital gains tax.
It was noted that introducing a brand new capital gains tax would prove to be complicated.

As a potential alternative, the report mentions the possibility of extending the current tax net to charge income tax on capital gains from a wider range of assets.

Another alternative was to tax the deemed rate of returns on selected assets or taxing the risk-free rate of return on some assets.

The report also contained recommendations not to enact land taxes, gift taxes, or wealth taxes.

The final findings of the Tax Working Group will be used by the Labour Party to set its tax policies in the next national election.