TalkTax

… and so the battle continues as to whether or not New Zealand should introduce a capital gains tax. Today labour released its tax policy – a capital gains tax was at its centrepiece. The proper income tax treatment of capital gains has raised much debate and controversy amongst New Zealanders for many years.

Any good tax system or tax policy requires equity (equality), certainty, convenience and efficiency. Given a capital gains tax has the convergence of these key tax policy criteria, I believe the case for the introduction of such a tax is justified. What is your view?

Received anonymously:

The Rewrite Advisory Panel (RAP) was established to advise rewriters of the Income Tax Act 1994. The Income Tax Act 2004 saw the RAP becoming the arbiter on possible unintended legislative changes and the Income Tax Act 2007 saw it becoming the overseer of the clarity of that Act (see: www.rewriteadvisory.govt.nz)

In 2009, a submitter raised with the RAP the definition of ‘revenue account property’ (the second RAP referred to in the title but, to avoid confusion, I do not use that acronym in this note). The submitter said:–

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John Peterson and Vicki Ammundsen join me on this first TalkTax podcast.  Hope you enjoy our thoughts on the Budget released today.  Please leave a comment below.

Click on this link to listen: Thoughts on the Budget

The transcript of the podcast is copied below:

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One can imagine the Income Tax Act 2007 looking in the mirror on the morning of 1 January and saying to itself: “You need to loose some weight buddy”. Or the IR 3 trying to squeeze into its envelope and feeling as if it’s bursting at the seams. Alas, just like with everyone else, neither the Tax Act nor the IR 3 is likely to keep to their New Year’s Resolutions.

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The well publicised new Associated Persons Rules are due to come into force within the next week or two and already there is uncertainty about their application.  The rules are possibly the most complex part in the Income Tax Act, and what makes things worse is that they play a very important role in the taxation of some of the largest assets traded in New Zealand – i.e. real property.  It is therefore very important that everyone understands exactly what they are, and how to apply them.

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Did you see Professor Craig Elliffe on TV3 yesterday morning? He was discussing the possibility of a CGT regime being implemented in New Zealand. Have a look at the TV3 interview:

http://www.3news.co.nz/Are-capital-gains-taxes-beneficial/tabid/369/articleID/116854/cat/772/Default.aspx

The Taxation (Business Tax Measures) Act 2009 (enacted on 30 March) introduced a couple of fairly major changes to the cash basis person rules, which have gone relatively unnoticed by practitioners.  The Act was enacted ostensibly to provide a suite of tax relief measures for small to medium enterprises but carries both good and bad news in the cash basis persons sphere.

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Tax advisors finally have some decent weekend reading now that the Income Tax Bill has been reported back to Parliament.

lf you feel like sharing a few moments of exasperation with us, take a look at the Officials’ cursory dismissal of our submission that the anti-streaming rule for partnerships in section HG 2(2) be abolished.

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