Does Labour understand it’s own capital gains tax proposal?
Trans Tasman says they don’t:
In a press statement issued August 3, Labour’s finance spokesman David Cunliffe stated categorically “KiwiSaver funds will not incur capital gains tax on their share investments under Labour’s policy proposals. KiwiSaver funds which invest in shares are already taxed as portfolio investments entities (PIEs) at the PIE rate of 28%, or as widely-held superannuation funds taxed at 30%.”
Revenue spokesman Stuart Nash added “in neither case would the KiwiSaver fund attract additional capital gains tax,as tax is already paid on a trading basis.”
Trans Tasman says that’s incorrect:
One of the big attractions of KiwiSaver funds is they do NOT pay tax on share _trading gains.
Based on a written response from Cunliffe to the Shareholders’ Association on July 20, in circumstances where currently no tax is payable on capital gains, the 15% CGT would apply under Labour’s proposal. So KiwiSaver funds would suffer CGT on share trading gains, which are currently exempt from CGT, at the rate of 15%. And where Labour says PIEs are taxed at 28%, the maximum rate, they are actually taxed at the rate of the investor, which could be lower than 28%, ie at 10.5%, or 17.5%. Widely-held superannuation funds are taxed at 28%, not the 30% rate, as Cunliffe contended.
One of the reasons simple tax rules are better is that they are easier, and less expensive to administer and more difficult to avoid.
If Labour’s CTG is so complex it’s own MPs don’t understand it, how will the IRD, accountants, lawyers and individual taxpayers get on?