What will a CGT mean to tech? (22 Feb, 2019)

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What will a CGT mean to tech? (22 Feb, 2019)

Postby aardvark_admin » Fri Feb 22, 2019 5:40 am

This column is archived at: https://aardvark.co.nz/daily/2019/0222.shtml

Is a capital gains tax good or bad for the technology sector?

As you can see, I think it is good for some, bad for others.

Established tech companies may well find it easier to rake up investment capital for expansion but startups could find it even harder to get the angel or VC funding they need to get their new ideas off the ground.

What's your take?
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby Perry » Fri Feb 22, 2019 6:38 am

Bruce wrote:Firstly, I've long complained about the fact that the ability to make very healthy tax-free capital gains on real-estate in New Zealand has really compromised the availability of funding for productive enterprise.

What you refer to as a healthy gain is a mirage. An illusion.

I can sell my home for ten times the price I paid for it.

So I made a gain of ten, right?

Great!

So I can go out and buy ten similar homes with that gain?

Get real.

I'd be lucky to buy just one, when all the fees are deducted from my sale price.

With no indexing for inflation, the socialists' greedy grab is exposed for just what it is.
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby aardvark_admin » Fri Feb 22, 2019 7:08 am

Perry, even the tax working group came to the conclusion that property investment was one of the best options -- having provided solid,sound returns that far exceeded the rate of inflation over the past 20 years or so.

The return on property doesn't come from selling one property to buy another because, as you quite rightly point out, the new property will also be more expensive.

The return on property comes when you "cash out" and divest yourself of your property investments then use the tax-free capital gain for other purposes -- such as retirement or investing in productive enterprise. It is then that you get the true return.

For those with a property investment porfolio, this cashing out process can deliver huge gains -- because they're not going to be buying new properties with that money.
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby RoddyAxn » Fri Feb 22, 2019 7:17 am

Progressive capital gains tax
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby Wetherman » Fri Feb 22, 2019 7:58 am

The IRD will be "taking" an extra $8 billion from the economy (that's us) over the next 5 years. That's $2000 each. So we're worse off, right?
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby aardvark_admin » Fri Feb 22, 2019 8:22 am

I believe that the goal is to be fiscally neutral.

Besides which, as was the case with GST, WFF and all the other initiatives that National opposed when in opposition, the CGT will quickly be repealed by that party when they get back into office.... right? (Pfffft!)
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby Perry » Fri Feb 22, 2019 8:42 am

Bruce wrote:Perry, even the tax working group came to the conclusion that property investment was one of the best options -- having provided solid,sound returns that far exceeded the rate of inflation over the past 20 years or so.

Returns?

Or change in numbers?

Bruce wrote:The return on property comes when you "cash out" and divest yourself of your property investments then use the tax-free capital gain for other purposes -- such as retirement or investing in productive enterprise. It is then that you get the true return.

For those with a property investment porfolio, this cashing out process can deliver huge gains -- because they're not going to be buying new properties with that money.

That's when the gain is an illusion. In almost all cases, the investors gets the same coloured-bits-of-paper purchasing power when selling, no matter numbers.

And most of that inflationary erosion of purchasing power of money is caused by gummint-driven inflation. If the gummint awards itself the power to tax inflation that it is largely responsible for, does no one see a problem with that?

For most "mum and dad" property investors - by far the bulk of PIs in NZ - property is a hedge against the evils of inflation. Not a get-rich-slow scheme.

In the glossary of the actual report, there is no definition of "fair" or "balance," yet the TWG avers (glibly) that it examined the "fairness and balance of New Zealand’s tax system."

Funny, that.

Image
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby aardvark_admin » Fri Feb 22, 2019 8:49 am

But if you compare the "affordability" of housing in NZ as a multiple of the average wage, it is clear that investing in property has been a much more successful strategy for preserving/growing wealth than throwing money into the sharemarket or other investments -- right?
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby phill » Fri Feb 22, 2019 9:05 am

most of our current bunch of honest, highly qualified, innovative and revered politicians have several properties set up in trusts
( ,,,,,,,, ....... A E I O U use em sparingly theres probably not enough )

i might live and eat in a sewer .. but hey look how many of these shiney things i have got
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Re: What will a CGT mean to tech? (22 Feb, 2019)

Postby hagfish » Fri Feb 22, 2019 9:25 am

Perry wrote:
Bruce wrote:Firstly, I've long complained about the fact that the ability to make very healthy tax-free capital gains on real-estate in New Zealand has really compromised the availability of funding for productive enterprise.

What you refer to as a healthy gain is a mirage. An illusion.

I can sell my home for ten times the price I paid for it.

So I made a gain of ten, right?

Great!

So I can go out and buy ten similar homes with that gain?

Get real.

I'd be lucky to buy just one, when all the fees are deducted from my sale price.

With no indexing for inflation, the socialists' greedy grab is exposed for just what it is.


Just a nitpick, but 'your home' won't attract CGT if/when you sell it. And even if it were an investment property, the CGT will only be on gains occuring after the tax comes into effect in a couple of years.

Also, the word 'fair' always seems to derail discussions about tax. The only 'fair' tax is a poll tax, and good luck getting that to fly. 'Equitable' might be a better word, but opinions differ on what that means, too. You can't please all the people, ever..
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