Capital gains tax policy rushed through development

Author
Felix Marwick ,
Publish Date
Mon, 18 May 2015, 4:12AM
(Getty Images)
(Getty Images)

Capital gains tax policy rushed through development

Author
Felix Marwick ,
Publish Date
Mon, 18 May 2015, 4:12AM

It's emerged the Government's new policy stance on property taxes has only just been developed.

The Prime Minister announced a range of new property tax gain measures yesterday, including a new "bright line" test to tax gains from residential properties sold within two years of purchase.

From October all non-residents and Kiwis buying or selling a property, other than their family home, will have to provide an IRD number as part of land transfer processes.

Minister of Revenue Todd McClay confirms they were developed recently.

"We've been working through a number of things through a period of time. The current one is for a 4-5 week period.

"We've put a lot of extra work into it."

But McClay denies it's a response to political or public pressure, saying lots of tax policies come across his desk on an ongoing basis.

Green Party Co-Leader Metiria Turei isn't buying that logic. She says it shows the Government's desperate to take measures to cool the housing market.

"A month ago John Key was saying that a capital gains tax was off the table. Now he's done a massive u turn.

"It is a good policy to have. He could implement a much better, more effective one if he chooses. There's no doubt it is a u turn."

Turei says the new measures effectively create data covering property ownership.

"He's bringing in a capital gains tax, poorly thought out as it is. and he's setting up a register of foreign investors, foreign owners.

"These are good policies. He shouldn't be ashamed of it. If he's ashamed of it, he shouldn't have done it."

McClay adds the new measures will allow IRD to have very clear information on taxpayers and make it easier for it to enforce tax rules.

"Though it does mean that there will also be some oversight on exactly who's purchasing properties, but from a tax point of view most importantly it tells us about who's selling and how often they're selling."

The Prime Minister's hopeful the new moves will make a mark on the burgeoning Auckland housing market.

John Key says the measures are likely to have some effect on the Auckland property market but it's difficult to know.

"My overall view would be this would help, just like the LVR restrictions that the Bank announced earlier in the week.

"All of these things help."

But it's the timing of the measures that has raised eyebrows - and it isn't just the Greens who think the government has done a u-turn.

Labour Leader Andrew Little says the stunning thing about it is that for the past year the Government's refused to accept there's a housing crisis, especially in Auckland.

"So now they finally decide that the thing that the Reserve Bank has said is a problem, the thing that every Aucklander has said is a problem, the thing that just about every bank has said is a problem, the government has now grudgingly, finally accepted as a problem. So now they've made the move."

Little believes the anti-property speculation tax measures are the smallest steps possible and don't do enough and can be circumvented.

"I think the bigger problem is going to be people thinking, 'gee, OK so I've just got to hold onto it for two years and as soon as I get to that two year mark I'm free to sell'."