Basically, the TWG wants to extend taxes on capital gains to things other than property. But, they are also looking at reintroducing building depreciation, so it is not all bad for property investors.  

TAX ON CAPITAL INCOME
A capital gains tax (CGT) regime for property and share traders/developers etc already exists in New Zealand, so this is nothing new. The TWG recommendation is to extend this to catch gains on assets that are not already taxed:

• Land and property (other than the family home)
• Intangible property, including goodwill
• All other assets held by a business or for income producing purposes that are not already taxed on sale (such as plant and equipment)
• Shares in companies and other equity interests

The Final Report arrives in February 2019.
​​

Some key points:

• Sir Michael Cullen has indicated that any new CGT would not be retrospective, so this is a huge relief for existing investors. 
  
• Losses arising from the sale of an asset would be carried forward, and subject to ring-fencing e.g. you sell a rental property, and make a loss: this loss can only be used against another rental property.
• No changes to company tax rates or GST.
• Won't be introduced until 2021/22

For more information, please contact either Guy Johnson or Paul O'Driscoll or via the details below.

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We are sometimes asked: what does "tax-deductible" really mean? Does it mean that I get all my money back?  Well...

No.

When an item is ​tax deductible that means that the cost is able to be deducted from taxable income or the amount of tax to be paid.

All purchases are either 100% tax-deductible, partially tax-deductible or not tax-deductible. A 100% tax deductible item does not mean you get 100% of the money spent back. It means that you can claim 100% of the cost against your taxable income. A 50% tax deductible item e.g. phone, means you can claim half the cost against your income.

So, let's say that you want to put new carpets in your rental property. The cost comes to $4000. This would be 100% tax-deductible. You can claim all of that cost against the rental income the property is earning.

But let's then say that you are at the supermarket, and you forgot your personal credit card. So you pay for your groceries from your rental property account.  This would not be tax-deductible.

If you have further questions, please place a comment here or contact us.