The Tax Working Group today gave the Government a clear indication that a lot more work needs to be done in designing and implementing a Capital Gains Tax, said Chartered Accountants Australia and New Zealand Tax Leader John Cuthbertson.
"There was a clear recognition that substantive consultation will be required and Inland Revenue will need additional support to get a CGT over the line in a relatively tight timeframe."
"Given the impact that a CGT will have on New Zealand taxpayers, it is important that the Government get the CGT design right."
Cuthbertson said there were no big surprises in terms of the CGT proposed. "It is largely in line with the working group's interim report and subsequent signals."
The working group has acknowledged that more work needs to be done on the taxation of shares to ensure there is no investment bias in favour of foreign shares. "This is important to ensure that our capital markets are not placed at a disadvantage."
CA ANZ overview of Tax Working Group's final recommendations
"There were a number of business-friendly recommendations in today's announcement, including allowing a deduction for seismic strengthening costs and restoring depreciation for some buildings," Cuthbertson said.
"Simplifying Fringe Benefit Tax and potentially removing Entertainment Tax, relaxing loss continuity rules for start-ups and expanding deductions for blackhole expenditure are also potentially good news for businesses."
"The rejection of a simplified taxation basis for small businesses, such as a turnover tax, is a lost opportunity to reduce compliance costs."
Personal income tax
"The recommendation to increase the lowest personal income threshold rather than a creating a tax-free threshold will provide a more targeted result."
"The transfer system is better placed to target support for taxpayers on lower incomes."
"The group's recognition that tax is just one tool to achieve environmental objectives is sensible."
"Also to be applauded is the group's call for the Government to be clear on what its objectives are."
"This will determine the best approach whether it be regulation, education or taxation, or a combination of these."
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