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Five Reasons Capital Gains Tax is Not Welcome in New Zealand.

Five Reasons Capital Gains Tax is Not Welcome in New Zealand.

Earlier this year, the government’s Tax Working Group (TWG) recommended introducing a broad-based capital gains tax, a move that will affect a huge number of Kiwis. Here’s why the proposed Capital Gains Tax (Capital Gain Tax) isn’t right for New Zealand.

  1. Over 2 million New Zealanders have KiwiSaver and a Capital Gain Tax would affect at least 40 percent of the population, not just the 4 percent claimed by Jacinda Ardern.

  2. There are over 500,000 businesses in New Zealand, 360,000 of those are small businesses. They will be affected too.

  3. If the home office is claimed under your business expenses (something that most self-employed people do), your own home would also become subject to tax.

  4. Currently, the proposal excludes family homes, but we cannot guarantee that 10 to 20 years down the track, the Government won’t re-evaluate this.

  5. Property investors are already paying large taxes with a five-year bright-line test in place.

While tax fairness is important, evaluating behavioural responses is also critical in the decision-making process. Kiwis are already weak when it comes to investments, and a Capital Gain Tax would only create more fear and further discourage those looking at investing. This is a factor the government must take into consideration.

Lucia Xiao

I’m a property strategist and mentor. I’m an ex-Housing NZ tenant, but through hard work and the correct strategy, I’ve built a NZ$17M property portfolio in just 5 years. Now, I want to share my knowledge with you so you too can use real estate to achieve financial freedom and live your true purpose.