Thursday, 21 February 2019 13:42

Farmers against capital gains tax

Written by 
Andrew Hoggard. Andrew Hoggard.

Federated Farmers says a capital gains tax will add unacceptably high costs and complexity.

"There is nothing in the Tax Working Group’s final report, released today, that persuades us otherwise," Feds vice-president and commerce spokesperson Andrew Hoggard says.

"A CGT would make our well-regarded tax system more complex, it will impose hefty costs, both in compliance for taxpayers and in administration for Inland Revenue, and it will do little or nothing to ease the housing crisis."

Federated Farmers says it is notable that the members of the working group could not agree on the best way forward, with three deciding a tax on capital gains should only apply to the sale of residential rental properties and the other eight recommending it should be broadened to also include land and buildings, assets, intangible property and shares.

"Federated Farmers believes that the majority on the tax working group have badly under-estimated the complexity and compliance costs of what they’re proposing, and over-estimated the returns."

The recommended ‘valuation day’ approach to establishing the value of assets, even with a five-year window, will be a feeding frenzy for valuers and tax advisors, "and just the start of the compliance headaches for farmers and other operators of small businesses that are the driving force of the New Zealand society and economy.

Lifestyle block owners whose properties are bigger than 4,500m2 will not be fully exempt.

"Trying to look for positives, at least if farmers and small business operators have to swallow the CGT rat, it is made slightly more palatable by the TWG’s recommendation that roll-over relief applies."

It would mean that if a farm is ‘sold’ to family successors, or there is a transfer on death or matrimonial separation to a family member, or a business restructuring where there is no change of ownership, there would be no capital gains tax to pay at that time. However, the potential tax liability would accumulate and kick if the farm property was ever sold out of that family’s ownership.

"We’re also glad that the Tax Working Group has confirmed that money that farmers and other land owners spend on QEII and Nga Whenua covenants, locking up and protecting land for biodiversity and environmental enhancement, should be tax deductible.

"There are many other aspects of the TWG’s report that Federated Farmers would wish to examine and debate further."

 

More like this

Pea weevil nearly wiped out

An insect pest which since mid-2016 has forced a ban on growing peas in Wairarapa is on the verge of eradication.

Fake news — Billboard ruling

Anti-farming lobby Greenpeace has been ordered to take down billboards it had erected around the country accusing fertiliser companies Ballance and Ravensdown of polluting rivers.

Drought declared in Mainland

The drought formally declared in the northern regions of the South Island is now extended into Marlborough, Buller and Nelson.

 
 

» Latest Print Issues Online

The Hound

Light reading

In a follow-up to this old mutt’s piece two issues ago about Fonterra directors getting to grips with the co-op’s…

Shocking

There are many stories from ‘the impossible to believe, but believable’ files that your old mate is often told about.

 
 

» Connect with Rural News