21st February 19 saw the release of The Working Tax Groups final report. It was no surprise that the media had a field day with predictions of dire consequences to all areas of the economy. We need to take a step back and look at this logically. Although yesterday’s report is a comprehensive look at taxes in New Zealand, it is at its core, a recommendation only.
We note that the Finance Minister, Grant Robinson and Revenue Minister, Stuart Nash, signalled that the government were not looking to do a major overhaul of the tax system but that there was room for improvement. The government is not bound to accept all the recommendations and they acknowledged that it is highly unlikely that all the recommendations will be implemented.
This is a classic let’s look at an ideological perfect tax system and then wind it back to something that will be more palatable to the majority of the voters. Therefore, in April 19 when the government releases its response to the report, we will then be able to comment on the implications the new proposed legislation will have. Until the Governments response is released, it is all speculation.
One factor will be NZ First’s support base and their response if Winston Peters and NZ First choose to support the governments response. How aggressive Labour goes will be highly dependent on how the polls are looking leading into April.
As the government signalled, they will not pass any legislation arising from the report before the end of the current Parliamentary term and that no policy measure would come into force before 1 April 2021. Therefore, it will come down to the voter, those who turn up on the 2020 Election day as to what form the Capital Gains Tax, if any, will take.
This leaves us plenty of time to work through the implications of the potential Capital Gains Tax for you and your businesses.