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What does the new Labour Coalition Government mean for tax?

So, we finally know the make-up of the New Zealand Government (Labour, NZ First and the Greens) yet we still don’t know what tax policies are going to change – and we won’t know until sometime next week at the earliest.

The tax policy wish-list of the new Government includes:

Labour

  • Reverse National's tax cuts that were to take effect from 1 April 2018
  • Extend the bright-line test to 5 years
  • Remove the ability to offset rental losses against other income (phased in over 5 years)
  • Set up a Tax Working Group to consider introducing a capital gains tax from 2021
  • Re-introduce the R&D tax credits
  • Remove secondary tax rates
  • Allocate a further $30m to IRD to crack down on multi-national tax avoidance
  • Look at introducing a Diverted Profits Tax for multi-national companies
  • Introduce a regional fuel tax in Auckland
  • Introduce a royalty on the commercial consumption of water
  • Introduce a $25 levy on international visitors

NZ First

  • Establish inflation adjustment for PAYE tax thresholds
  • Remove secondary tax
  • Remove GST from basic items and the non-service component of Council Rates
  • Review the double-taxation of 'tax-like' instruments
  • Treat seismic strengthening as R&M
  • From 1 April 2019: reduce company tax rates over 3 years to 25%; introduce a tax on export income; increase the low-asset threshold to $20k; introduce R&D tax credits

Greens

  • Introduce a capital gains tax

Given no one policy is common across the three parties it will come down to negotiations as to what polices get to see the light of day.  We await the release of the coalition agreements next week with bated breath...

 

Shelley-ann Brinkley
Associate - Tax Consulting
T +64 9 414 5444
E shelley-ann.brinkley@hayesknight.co.nz

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