Tax Working Group published an interim “Future of Tax” report

Tax Working Group (The Group) publishes interim “Future of Tax” report 20 September 2018

The highlights of the interim report include the following:

The taxation of capital income: The Group’s work on capital income is not yet complete. The Interim Report sets out two potential options for extending capital income taxation: extending the tax net to include gains on assets that are not already taxed; and taxing deemed returns from certain assets (known as the risk-free rate of return method of taxation). The Group is not recommending the introduction of wealth taxes or land taxes.

Environmental and ecological outcomes: The Group sees significant scope for the tax system to sustain and enhance New Zealand’s natural capital. Short-term opportunities include expanding the Waste Disposal Levy, strengthening the Emissions Trading Scheme, and advancing the use of congestion charging.

Housing affordability: The Group has found that the tax system is not the primary cause of unaffordable housing in New Zealand, but is likely to have aggravated the house price cycle. The Group’s future work will include consideration of the housing market impacts on the options for extending capital income taxation.

GST: The Group is not recommending a reduction in GST, or the introduction of new GST exceptions. Instead, the Group believes that other measures (such as transfers) will be more effective in supporting those on low incomes.

Business taxation: The Group is not recommending a reduction in the company rate or the introduction of a progressive company tax. The Group is still forming its views on the best ways to reduce compliance costs and enhance productivity.

The administration of the tax system: The Group has identified a number of opportunities to improve tax collection such as increasing penalties for non-compliance as well as recommending a single Crown debt collection agency to ensure all debtors are treated equally. A taxpayer advocate service is also recommended to assist small businesses in dispute with Inland Revenue.

Correct structuring of your financial affairs is becoming more and more important, your business and major assets need to be protected and therefore planning ahead and shaping up your future proactively, not reactively, is advisable.

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