Last week the Government released it’s response to the recommendations of the Tax Working Group (TWG). Most notably, the Government has announced it will not be adopting any of the TWG’s recommendations on capital gains taxation (CGT) and has agreed that no further work will be explored on CGT. The Government was unable to find a consensus on CGT and is of the view that many New Zealanders also do not endorse a CGT. The Government has however agreed to tighten rules around land speculation and to work on ways to counter land banking.
A consequence of the Government’s decision not to adopt the CGT recommendations is that no further work will be undertaken on the personal income tax recommendations. This means the Government will not undertake any further work on considering increasing the bottom threshold of personal tax and will not reduce the top marginal tax rate.
A refreshed tax policy work programme will be released mid-year. We can expect it will touch on the other priorities that the Government have announced, which include progressing legislation for research and development tax incentives, GST on low-value goods from offshore suppliers, a discussion document on a digital services tax and further work to ensure multinationals pay their fair share of tax.
A full list of the Government’s responses to the TWG recommendations can be found here – http://taxpolicy.ird.govt.nz/news/2019-04-17-government-responds-twg-recommendations#statement