Oz example shows risk of gains tax

Labour wants to introduce a capital gains tax and a ban on foreign investors in order to make housing more affordable. One only needs to look at Australia to know what a disaster for Kiwi citizens this could end up being. My husband is a Kiwi, I’m an Aussie. We moved back to New Zealand from Australia this year to help look after his elderly mother, renting out our Australian house. In May the Australian government announced that non residents (including Australian citizens) will lose all exemptions from capital gains tax unless they sell their house before 2019.

This applies to my husband and I who bought our house in Australia 13 years ago. If we don’t sell our house we will pay 45 per cent of the gain since then to the Government. We bought our house for $500,000, it’s now valued at $1.1 million. That means we would owe the Australian government around $300,000 in capital gains if we don’t sell in the next two years.

Nobody is suggesting Labour intend this for Kiwis who might end up overseas (about 50,000 a year migrate) but then, when capital gains was introduced in 1985 in Australia nobody foresaw Australian citizens losing half their capital gains just because they choose to move overseas.

As I have learned, many of these laws have “unintended consequences”. Once you open the can of worms, those worms under populist issues can rapidly become out of control. Michelle Cooke, Upper Hutt.