Labour doesn’t understand own CGT proposal

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?

4 Responses to Labour doesn’t understand own CGT proposal

  1. Andrei says:

    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?

    Well apart from individual taxpayers everyone else on your list will get on very well I should imagine.

    They’ll be rubbing their hands in glee as new opportunities to boost their incomes present

  2. Alwyn says:

    How can you possibly expect an informed opinion from one of the MPs yet? When it was announced they said that all the trivial little details would have to be worked out by an “Expert Panel”. Not having seen any further mention of such a panel it is only to be expected that the MPs wouldn’t know, or agree on, an answer to such a minor point of detail.

  3. gravedodger says:

    Short answer to the last para, none of them, but what a goldmine for tax consultants and the lawyers.

  4. fredinthegrass says:

    In support of a well bashed left wing non-policy “why let the truth get in the way of a good/vote grabbing policy?”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: