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Sir Michael Cullen's working group has today recommended a swathe of changes to New Zealand's tax system. Here they are in a nutshell:
- Capital gains tax (CGT) to apply after the sale of residential property, businesses, shares, all land and buildings except the family home, and intangibles such as intellectual property and goodwill.
- Tax rate to be set at the income-earner's top tax rate, likely to be 33 per cent for most.
- Calculation of gains to not to be retrospective - tax to be applied to gains made after April 2021.
- Art, boats, cars, bikes, jewellery, personal household items and the family home to be exempt.
- Losses on the sale of assets bought before April 2021 will generally be able to be used to reduce paid on gains from other assets.
- Increase the threshold of the lowest tax rate (10.5 per cent), allowing more income to be taxed at the lower rate.
- Increase social welfare net benefits to allow similar benefits as low-income earners post tax threshold adjustments.
- House on farms and surrounding land up to 4500 sq metres exempt from CGT, calculated as a percentage of total farm value.
- CGT on small businesses can be deferred (roll over relief) if annual turnover is less than $5 million and sale proceeds are reinvested in similar asset class.
- No support to make company tax progressive ie smaller companies paying less than 28 per cent.
- Capital gains tax estimated to raise $8.3 billion over five years.
- Expand coverage and rate of Waste Disposal Levy, expand the ETS and use congestion charging.
- Better tax benefits for Kiwsavers on low and middle incomes.
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