Yesterday the Government released its response to the Tax Working Groups recommendations and the big talking point in the media at large was the Government decision to not pursue an extension to the taxation of capital gains.
While this was definitely a significant feature of the working groups recommendations there were a further 98 points some of which signal change and some of which have been almost automatically denied as a result of no capital gains tax.
Some of the items the Government have indicated would be a high priority are:
- Consider taxing vacant and by land bankers.
- Considering the deductibility, possibly via depreciation, for seismic strengthening
- Reviewing loss trading and continuity rules
- Provision of security to Inland Revenue for tax debt where shareholders in closely held companies have overdrawn current accounts / loans and there is doubt of the shareholder repaying the debt
- Making directors who have an economic ownership in a company personally liable for GST and PAYE arrears
- Strengthening enforcement rules for closely held companies.
Some other items which were discounted due to no capital gains tax include:
- Changes to the income tax rate thresholds
- Changing the second marginal tax rate
Where the tax working group suggested keeping the status quo this has almost been accepted without fail.
Very few of the other suggestions, such as environmental taxes, with the exception of a sugar tax, have been ruled out at this stage.