Cullen debates farm impact

Sir Michael Cullen has continued his public statements on the impact of a capital gains tax, although his tone has softened considerably.

Yesterday the Tax Working Group chairman released a lengthy statement on the impact the proposals of the Tax Working Group would have on farms.

It came two days after the former Labour MP and minister of finance questioned statements made by the National Party about the possible effect on KiwiSaver.

Cullen did not say why he issued the latest statement, instead claiming he had ‘‘responded to a request to comment on recent claims about the effect on farmers’’.

On Tuesday, Cullen told Stuff that he was considering whether to respond to statements made by National’s agriculture spokesman, Nathan Guy, claiming they were ‘‘particularly egregious’’ and needed to be corrected.

This week it emerged that while the Tax Working Group has disbanded, Cullen’s contract was extended by the Government.

Cabinet papers show Cullen was to be paid $1062 a day in his role as chairman of the group.

‘‘We extended his appointment as the chair of the TWG to 30 June because we were aware there would be extended public discussion on the report, and this has played out,’’ Finance Minister Grant Robertson said in a statement.

So far, Cullen had not submitted any invoices in his ongoing role as chairman, a spokesman for Robertson said.

Cullen’s statement restated that capital gains tax would only be charged on gains made after any changes were implemented, ‘‘which the Government has indicated would be after the next election’’.

The statement said capital gains tax would not be paid when ownership was transferred in certain circumstances.

‘‘For example, if a farmer dies and the property is passed down through inheritance, no tax would be payable at that time.’’

The statement did not mention what happens when multiple family members inherit a farm but opt to transfer the ownership to one child, a common practice among farming families.

Critics have warned that even if a sibling sold their stake to another sibling for $1, the transaction would trigger the same CGT bill as if the shareholding had been sold at market value.

‘‘These are important matters, so it’s important that people have the full picture,’’ Cullen said.

Federated Farmers had earlier renewed its appeal for the Government to reject most of a ‘‘raft of new taxes’’ proposed by the Tax Working Group.

‘‘Small business would pay the costs, large business would spend thousands avoiding the costs and tax advisers, and valuers would have a field day,’’ Federated Farmers vice-president Andrew Hoggard said.