Capital Gains Tax is off the table
Recently you may have seen in the news the recommendations made to the Government. They have finally taken a look at them and have issued a response…
The Labour-led Coalition Government will not proceed with the capital gains tax recommended by the Tax Working Group.
Prime Minister, Jacinda Ardern, said that the parties in Government had been “unable to find a consensus”. It’s clear that many New Zealanders were not believers of Capital Gains tax and she stated that Labour will be “ruling out a capital gains tax under their leadership in the future”.
The Tax Working Group had made a number of other recommendations for amending the tax system. The Prime Minister said that “the majority of [these other] recommendations will either be investigated further or have formed part of our work programme”.
You can find out what responses the Government has made to the recommendations made by the Tax Working Group here.
Here’s just a few points from the above report that may affect you:
Taxation of business
There will be no major changes in the taxation of business income but the Government is considering the following changes to reduce compliance costs for SMB’s:
a) Increase the threshold for provisional tax to $5,000.
b) Increase the automatic deduction for legal fees with potential expansion of other automatic deductions to other types of professional fees.
c) Adjust the threshold for the write-off of low value assets.
Consider encouraging the savings of low-income earners by carrying out one or more of the following:
a) Refund ESCT for KiwiSaver members earning up to $48K per annum.
b) Reduce the lower PIE rates for KiwiSaver funds (10.5% and 17.5%) by five percentage points each.
These are just some of the factors that will be reviewed by the Government in due course and we encourage you to take a look at the report if you want to get the full picture.
The New Zealand taxation system is still a complex system to navigate for those who do not know what to look for. To make sure you and your business are on the right side of Inland Revenue get in contact with us now.
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