The Tax Working Group, led by Sir Michael Cullen, released its interim report in September 2018 on the future of tax in New Zealand. The key highlights of the report are:
- exploring the idea of extending the taxation of capital income. In essence, they are discussing a capital gains tax but have not yet gone as far as to recommend one…yet.
In the report they have floated two means of taxing capital income; on a realisation basis, that is, tax the profit of an asset when it is disposed of, and the taxation of deemed returns. The latter option means a person would pay tax on simply holding an asset.
These methods, no doubt, will be discussed further and recommended on in their final report.
- ruling out the introduction of a land tax or wealth taxes
- retaining the GST regime in its current form, meaning that there would be no change to the rate of GST or providing any more exemptions; and
- largely maintaining the current framework for taxing businesses, including not changing the current company tax rate.
The Tax Working Group’s final report is expected to be issued in February 2019. This report will outline the group’s recommendation on the above issues. We will let you know what has been recommended in our April 2019 edition of Topical Taxes