... Or just a mangy dog?

The Northland Age - - Local News -

Fed­er­ated Farm­ers had said from the out­set that a cap­i­tal gains tax was a “mangy dog” that would add un­ac­cept­ably high costs and com­plex­ity, and there was noth­ing in the Tax Work­ing Group’s fi­nal re­port that per­suaded the fed­er­a­tion oth­er­wise ac­cord­ing to vi­cepres­i­dent An­drew Hog­gard.

“A CGT would make our well­re­garded tax sys­tem more com­plex, it will im­pose hefty costs, both in com­pli­ance for tax­pay­ers and in ad­min­is­tra­tion for In­land Rev­enue, and it will do lit­tle or noth­ing to ease the hous­ing cri­sis,” he said.

It was no­table that even the mem­bers of the work­ing group could not agree on the best way for­ward, three de­cid­ing a tax on cap­i­tal gains should only ap­ply to the sale of res­i­den­tial rental prop­er­ties, the other eight rec­om­mend­ing it should be broad­ened to also in­clude land and build­ings, as­sets, in­tan­gi­ble prop­erty and shares.

Fed­er­ated Farm­ers be­lieved that the ma­jor­ity on the tax work­ing group had badly un­der-es­ti­mated the com­plex­ity and com­pli­ance costs of what they were propos­ing, and over-es­ti­mated the re­turns.

The rec­om­mended ‘val­u­a­tion day’ ap­proach to es­tab­lish­ing the value of as­sets, even with a five-year win­dow, would be a feed­ing frenzy for valuers and tax ad­vis­ers, and just the start of the com­pli­ance headaches for farm­ers and other op­er­a­tors of small busi­nesses who were the driv­ing force of New Zealand so­ci­ety and the econ­omy.

Life­style block own­ers whose prop­er­ties were big­ger than 4500 square me­tres would not be fully ex­empt.

“Try­ing to look for pos­i­tives, at least if farm­ers and small busi­ness op­er­a­tors have to swal­low the CGT rat it is made slightly more palat­able by the rec­om­men­da­tion that roll-over re­lief ap­plies,” Mr Hog­gard said.

“That would mean that if a farm is ‘sold’ to fam­ily suc­ces­sors, or there is a trans­fer on death or mat­ri­mo­nial sep­a­ra­tion to a fam­ily mem­ber, or a busi­ness re­struc­tur­ing where there is no change of own­er­ship, there would be no cap­i­tal gains tax to pay at that time. How­ever, the po­ten­tial tax li­a­bil­ity would ac­cu­mu­late, and kick if the farm prop­erty was ever sold out of that fam­ily’s own­er­ship.

“We’re also glad that the Tax Work­ing Group has con­firmed that money that farm­ers and other land own­ers spend on QEII and Nga Whenua covenants, lock­ing up and pro­tect­ing land for bio­di­ver­sity and en­vi­ron­men­tal en­hance­ment, should be tax de­ductible.”

There were many other as­pects of the re­port that Fed­er­ated Farm­ers would wish to ex­am­ine and de­bate fur­ther, but in the mean­time the mangy dog should be put back in its ken­nel.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.