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Comprehensive Capital Gains Tax is being introduced in New Zealand

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On 01 Feb 2019 Tax working group headed by sir Michal Cullen has recommended the Government to introduce capital gain tax. The formal report is due to be released to the public on 21 Feb 2019. The government may consider the introduction from 01 April 2021


It is expected the scheme will be broad based with very little and no exemptions, excluding family home.


Sir Michael Cullen is the same person who was behind the introduction of GST in New Zealand. The GST scheme is a broad based with very little exemptions, almost everything in New Zealand attract GST. It makes New Zealand GST unique in the world. New Zealand is the only country in the world who has broad based consumption tax with no exemptions not even on essential items. GST collects significant revenue for the government.


It is expected the Capital Gain tax will be very similar to the broad-based GST concept. The new capital gain tax will be introduced on all sorts of capital items, such as shares, retirements funds, business assets, personal property and New Zealand’s most loved asset real estate.


The introduction of capital gain has been in discussion for several years. It seems, the time has come for the introduction.


What is included?


It may include.

- Land (including buildings). Includes Residential rental, Commercial, Agricultural and Industrial
- All business assets – depreciable property, intangible IP and goodwill
- Interests in equity (shares, PIEs, Kiwisaver)

- Holiday homes, vacant land.

- Controlled foreign corporations (CFC) and Foreign investments funds. (FIF)

 

The greater details of above will come out over the time. It seems CFC, FIF, Kiwi Saver, PIE, and definition of family home will require additional work and policy explanation by the tax working group. As these areas are already very complex.

 

How transition will take place.


It is expected on the introduction day; the existing assets will be valued. That, valuation shall be used to determine the amount of tax at the time of realisation. Tax amount would be realisation price – acquisition price + capitalised costs.

It is expected this topic will have heavy public interest and it will be main discussion point between political parties. New Zealand has election in 2020.

 

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Saurav Wadhwa

Saurav Wadhwa is the Managing Director of IBBZ Accounting. IBBZ Accounting is one of the finest tax consulting firm based in Auckland, New Zealand. IBBZ Accounting has multiple business awards. 
Saurav Wadhwa is Masters in Taxation and Post Graduate in Law. Has dual membership with New Zealand Institute of Chartered Accountants and CPA Australia. He has a passion for Helping New Zealand Businesses. 


 


Awards and Recognition


 


As of Aug 2020 total number of 115 businesses saved from tax debt associated problems. Their written testimonials and Google Reviews provides authenticity of these numbers.


2019 IBBZ Accounting was Finalist in two categories: Excellence in Customer Service and Excellence in Business Planning. Westpac Auckland Business Awards


2018 IBBZ Accounting was Finalist in Westpac Auckland Business Awards: Strategy and Business Planning 2018.


2017 Saurav was appointed as a committee member to New Zealand Public Practice Board of CPA Australia. 


2015 Saurav won the award of Best Accountant of the Year.


2014 IBBZ Accounting won the award of Best Small Business 2014. 



 


News Paper Articles.


Sunday Star Times -Fairfax Media -12-08-2018


InTheBlack Aug 2018 issue - CPA Australia In Practice Publication 


 


Contact us on info@ibbz.co.nz  or 09 272 8050

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