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The Week in Tax: Time to rethink how we tax residential property investment? The latest draft guidance for taxing cryptoassets, and the latest tax audit claim stats from Accountancy Insurance

The Week in Tax: Time to rethink how we tax residential property investment? The latest draft guidance for taxing cryptoassets, and the latest tax audit claim stats from Accountancy Insurance

In the wake of the government's shock property tax announcements back in March, Inland Revenue has been preparing the relevant discussion documents and papers for consultation.

The range of matters to be addressed is formidable. What represents residential accommodation? What is the definition of a new build? How do we determine what proportion of a mixed-use loan can be deductible? What about the treatment of interest treated as non-deductible for a property, the sale of which is taxable under the Bright-line test or some other provision? Do we still need loss ring-fencing? The list goes on.

It's a long and frankly daunting list, the inescapable conclusion of which is that no matter how hard Inland Revenue tries, and I know they are trying to make it as simple as possible, the tax treatment of residential property will ultimately be vastly more complex.

And that's before you add matters such as preparing for climate change mitigation, earthquake strengthening costs, leaky building repairs and costs relating healthy home standards.

It's no wonder some residential property investors are considering selling up completely or downsizing their investments.

And watching all this, I've been increasingly coming round to the view that maybe it is time to rethink completely how we tax residential rental investment property.

And maybe instead of trying to shoehorn the proposed changes into the existing tax framework we should go back to the basics and adopt the approach that was considered by the last Tax Working Group, but ultimately rejected in favour of a comprehensive capital gains tax. And that is taxing property on a deemed return basis.

Now, what the Tax Working Group looked at is replacing the existing taxation approach on rental income and instead determining taxable income based on the net equity at the beginning of the tax year, applying a rate of return, and taxing this amount at the investors relevant tax rate.

So, for example, Tina owns a residential rental investment property worth one million dollars at the beginning of the income year. That's funded with 300,000 dollars of debt giving equity of $700,000. Tina’s marginal rate is 33%. The deemed rate of return is set at 3.5%.

Tina’s tax bill for the year would be $8,085 dollars, i.e. $700,000 – that’s the net equity - times the deemed rate of return of 3.5% times her marginal rate of 33% percent. She would not pay any tax on the actual rental income she derives from that property.

Now, this deemed rate of return is an idea has been around for some time. It was first suggested by the Mcleod Tax Review in 2001 when they referred to it as the Risk-Free Rate of Return. This was subsequently adopted for the Foreign Investment Fund (FIF) regime, which came into place with effect from 1st April 2007. The FIF regime has what they call the fair dividend rate, which was set back then at 5% and remains at that level today.

Although hugely controversial, and not terribly popular on its introduction, we've all learned to work with the FIF regime and the fair dividend rate. It has its merits in terms of conceptual simplicity. Also for investors, if your return exceeds 5%, your taxable income is capped at 5%. So that’s a win. It does away with the need for distinctions between what is capital and revenue.

And it would take into account some of those factors I mentioned earlier on. The devaluation of a property because it's found to be a leaky home, or it has climate mitigation risks. Alternatively, the costs of earthquake strengthening would improve the value of the asset. The value of the building will rise therefore the Government benefits and it doesn't need to worry about the questions we're seeing right now that I mentioned right at the top of the podcast.

Now, it so happened that myself and Professor Susan St John talked about this particular proposal on a broader aspect at a Fabian Society presentation we made last week. And the more I think about the issue, we saw a change of approach as perhaps an answer to dealing with the housing crisis or a tax answer because ultimately the answers to the housing crisis are multiple and obviously include more supply. But tackling the demand side from the tax perspective was one area where we thought it was worth considering.

I deal with these issues as clients come to me with what are we going to do in this circumstance and that circumstance? And as I drill down into the detail of the impact of the reforms, I cannot help but wonder that it is time to have a really good look at what the Tax Working Group proposed and maybe think about adopting that, rather than trying to shoehorn existing concepts into an increasingly strained tax system.

The Tax Working Group also did some revenue impacts on their proposal. They were quite interesting, in that they figured that for the year ended 31st March 2022 - which is the first year this could have come into place - if they had applied a 3.5% rate of return, the Government would have raised close to one billion dollars.

Now that was ahead of the expected amount of revenue that could have been raised under the capital gains tax proposal that the Tax Working Group actually finished up running with. Just for comparison, in the first year, the expected capital gains that would have come out under the Tax Working Groups proposal across all the asset classes was about $400 million and was roughly $50 million in respect of residential rental investment and second homes.

So the deemed return approach - which Susan and I decided to call “fair economic return”, would have been a better fundraiser for the Government initially. It’s something that we won't see obviously in the coming budget. But I think it is something that policymakers should have a serious think about, because from what I'm seeing and hearing from discussions around how the new tax proposals are going to work, we're heading for an incredible degree of complexity and we're going to expect that complexity to be negotiated by people who are probably not, in all honesty, the most sophisticated of investors and do not have access to the best quality advice. It's actually a recipe for tax pitfalls, not just for investors, but also for those who are advising them.

Taxing crypto gains

Moving on, the recent jump in house prices has had widespread ramifications, as we've been discussing, but in terms of rapid growth, it's been far outstripped by the extraordinary rise in the market capitalisation of cryptoassets. The market capitalisation of virtual currencies has gone from US$354 billion in September 2020 to just under US $.8 trillion dollars at the start of April.

So it's quite timely then that Inland Revenue has issued some guidance for consultation on a couple of matters which are in the cryptoassets world. These are draft questions we've been asked, and the first one is on the income tax treatment of cryptoassets received from an airdrop, and the second one is, I need to be careful how I pronounce this, the tax treatment of cryptoassets received from a hard fork.

Questions about the tax treatment of these two particular events have been raised for some time.

Now, as I've said previously, the pace of change in the cryptoassets world is quite extraordinary and that's been enhanced by the volume of money that's going into it, as evidenced by the dramatic increase in market capitalisations. So Inland Revenue’s original advice that they would consider most proceeds realised from the disposal of cryptoassets to be taxable, has been shifting.

But what happens in these peculiar events?

So an air drop is a distribution of tokens without compensation, i.e. for free, generally undertaken with a view to increasing awareness of a new token and to increase liquidity in the early stages of a new token project. So, for example, they might use it to increase the supply of a cryptoasset in the market, reward early investors or users, or just simply raise awareness of that cryptoasset by distributing it to holders of other cryptoassets.

Inland Revenue’s view of what happens here is that if someone receives an airdrop cryptoasset it's taxable if they have a cryptoassets business or acquired the cryptoasset as part of a profit-making undertaking or scheme, provided services to receive the airdrop, and critically, the cryptoassets are clearly payment for those services, or receive air drops on a regular basis, and the receipt has hallmarks of income. In other cases, however, it's not taxable.

Obviously, people who are mining for cryptoassets or running an exchange will be caught. If they receive airdrop cryptoassets, they’ll be taxable on that airdrop. But the argument now will arise for someone who's what you may call "an investor", who has been holding these assets for some time. They receive these airdrops randomly or they've been holding other assets. The argument might be that in those cases, the receipt of the airdropping cryptoassets, won't be taxable.

What about if you sell an air dropped cryptoasset? Again, it's taxable if the person has a cryptoassets business, they dispose of it as part of the profit-making undertaking or scheme or providing services to receive the airdrop or acquired cryptoassets for the purpose of disposing of them.

in relation to cryptoassets received from a hard fork, similar considerations apply. Now a hard fork is something that changes the protocol code to create a new version of the block chain along the old version. Then creating a new token which operates under the rules of the amended protocol, while the original token continues to operate under the existing protocol. I appreciate this is all very nerdy speak.

But for example, in July 2017 there was a hard fork of Bitcoin that saw the creation of the Bitcoin cash token alongside Bitcoin itself.

If you receive cryptoassets as part of a hard fork, again, Inland Revenue’s arguments are it will be taxable if someone holds the cryptoassets as part of a cryptoassets business or acquired the cryptoassets as part of a profit-making undertaking or scheme. And similarly, if they dispose of cryptoassets received after a hard fork, they will be taxable if the person has a cryptoassets business, disposed of them as part of a profit-making undertaking or scheme, acquired those cryptoassets for the purpose of disposing them, or acquire the original cryptoassets for the purpose of disposing of them. For example, the person received new cryptoassets through an exchange.

There are quite detailed rules on this so it's going to pay to work through these issues carefully. But Inland Revenue is steadily expanding on the advice it's giving on cryptoassets, which is good to see.

Consultation on these two items run through till 25th of May. The principles as applied here seem reasonable at first sight, but obviously when you drill down into them you might think maybe we want to tweak what Inland Revenue is saying.

But as I said earlier, if you're a cryptoassets investor and you're holding a lot of cryptoassets as an investment, as part of a general portfolio, you're probably now in a stronger position to argue that air drops and hard forks are not necessarily taxable.

IRD audit claims rise +30%

And finally, you may recall that last year I spoke with the accountancy insurance provider Accountancy Insurance.  They've just released some information about the latest tax audit claims for the year ended 31st March 2021. What they said is they saw policy claims increase 31% in the 2020-2021 financial year compared with the previous 2019-2021 financial year.

So what happened here is that Inland Revenue is clearly still active in reviewing taxpayers despite Covid-19 and the various disruptions that caused. Accountancy Insurance noted that GST verification claim activity increased by 48% year on year and income tax related claim activity increased by 67% percent over the 12 months to March 2021.

Now, apparently, what drove those income tax claims were two specific projects, which we've discussed beforehand here, that Inland Revenue started in late 2020; a Bright-line test property initiative and another initiative on the automatic exchange of financial account information under the common reporting standards.

Interestingly only about 5% of claims related to rental property, employer obligations and other matters. Only just over 1.3% of claims related to full scale audits with just under 10% were what we call client risk reviews. But 55% of all claims made related to GST verification and just under 28% relates to income tax returns.

So, this comes out just as interesting news has just started to break that apparently Inland Revenue is going through another round of restructuring and reducing its audits investigation staff. I find it strange that they're doing that at the time when they clearly can ramp up their activity. But this Accountancy Insurance report shows is that Inland Revenue is not dead or resting, but is still very active in this space. And you should expect that if you file a GST return with a significant GST refund claim, it will be subject to some scrutiny.

Well that’s it for today, I’m Terry Baucher and you can find this podcast on my website or wherever you get your podcasts. Thank you for listening and please send me your feedback and tell your friends and clients.

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I'll simply copy two posts I've made a tax forum elsewhere: first re using deemed rate of return for property:

I think deemed rate of return for residential is awful: not just because it's a complete distortion of the underlying activity and there's so little of reality left in our markets or over-regulated business lives, but taxing equity incenitivises the use of debt financing doesn't it? So we go full circle and end up with an ever greater debt problem?

Needless to say, I've always thought the deemed rate of return for the FIF regime is equally dreadful, and it way inappropriately skews saving portfolios to NZX and ASX, one of those being among the smallest economies in the world.

The real question is why are we looking at ever increasing distortions with dopey taxes that only glance anymore at the actual business activity, and not at real solutions such as a smaller state not distorting the property and investment markets other than minimally, and getting back to price discovery for interest rates set by the market: I reckon that puts mortgage costs up by 3% or so, and hey presto, supposedly property problem solved.

You could get around that by applying the deemed return to the asset value rather than equity, so the owner of the rented house pays the same tax regardless of the amount of debt they have taken on. I believe this is more in keeping with the FiF tax which doesn't care whether the assets are debt funded or not.

I disagree a little with the article in that the 3.5% suggested deemed rate of return is so much lower than the 5% on foreign shares - why the discrepancy? This could be corrected in two ways, of course.

The real beauty for investors is the simplicity of the system. Look up the CV of your properties (or get them valued), multiply by 0.035, pay tax on the result. Bad news for accountants perhaps.

Trouble is you're being taxed on a fictitious profit that doesn't take your costs into account at all. I think this will always tax you on a profit that is greater than the profit you could make, and you might even have a loss.

So, just adds to an already definite rental crisis on Roberton's disastrous policy apocalypse for landlords which will see homelessness rise in order to get middle class kids out of mum and dad's and into their first home

In the example in the article, the owner is paying tax of approx 1-1.5% of the equity value. Nobody would be investing in property if they were expecting returns around that level. Even a modest expected return of 5% per annum leaves that as a very reasonable effective tax rate.

It is a somewhat roundabout way to try to capture some kind of capital gains tax without having to do so overtly, unfortunately the political equation seems to prohibit explicit capital gains tax on property (which you may have an argument against anyway?)

As proposed in the article, it would lead to significantly more tax being paid by investors, and yet leave them with much more favourable treatment that investors in overseas companies (5% of asset value Vs 3.5% of net asset value becoming taxable income). This is despite property investment having far more negative externalities. This really underlines how sweet the deal has been. Something will change, pick your poison.

Um, what are the negative externalities of property investment? Providing the lower social economic groups with better quality housing than government does?

Don't set a rate to try and capture a capital gains tax: a system has to be honest, if you you want a capital gains tax then have an honest capital gains tax, and tax the actual income from the activity: income less expenses, including interest. And we now do have a CGT with the 10 year BL anyway, so just leave taxing business income on real terms: taxing actual business profit.

The proliferation of housing investors drives up the price of houses, beyond the reach of many. Putting your money into a house doesn't drive productivity, doesn't create anything much, and doesn't improve society. Compare this with putting money into companies which are actually improving the world and increasing productivity.

I would certainly support a full capital gains tax implemented properly. Capital gains do not stop existing after ten years and the tax due should not disappear either. Given the inability of either major party to get this done, I would support this kind of round about method.


The necessity for more taxes is evidence of an economy going in the wrong direction. This can be attributed to many things, however the most over whelming fact is the absolute waste and incompetence by successive governments being at the forefront of all our problems.

"Wastrel bureaucrats" is mostly just propaganda to enable "starving the beast". It's what's driving this country into the ground. Nothing gets done, because every time a solution is posited, it gets shouted down by "public sector is wasteful".

The silent generation delivered an amazing egalitarian society to the baby boomers who've since run it into the ground with their "do nothing" or "do less" approach to every problem. Anything that may impinge on their ability to extract profits from the following generations is off the cards.

“A society grows great when old men plant trees in whose shade they know they shall never sit.” The cycle will turn again, things will get fixed, it just may require the passing of the boomers.

Agreed. and if Govt got on and did they job they were elected to do A lot of the Country's problems would fix themselves. Including the Property problems

A difficulty with proposing a risk-free-return tax on residential property is that the Ardern Government (well, okay, Ardern herself) has boxed itself into a corner with promises of No CGT, No wealth taxes, during her imperium.
Perhaps the announced local-government shakeup offers an alternative. The Government could mandate rating unimproved land values only by every local body (; and it could strike a single rate to be applied uniformly throughout the country, of x%, y%, z%, for residential, commercial, agricultural zones, etc.
If the Government required local bodies to deposit those rate revenues in a central fund, which the Government would then disperse for local body and infrastructure work as it saw fit, the Government would have succeeded in imposing through rates a universal land tax without imposing a land tax.

What makes rates into rates and not taxes is that the council determines how much revenue it needs for the year, then divides it proportionally over the rating units in their catchment.

Changing it to a system where central government arbitrarily decides how much needs to be collected without regard to costs, makes it squarely a tax, and the opposition will say this is breaking their promise of new no taxes beyond the 39% threshold.

I do like your outside of the box approach though.

We had a central government land tax until 1990:

We really need to bring that back to pressurise productive and efficient usage of land. Reduce land values and rents. And to fund the infrastructure, consents and monitoring necessary for new builds instead of lumping it all on new developments. Growth charges, consent fees, monitoring fees, connection charges, stormwater management due to lack of societal investment, are adding over $100k onto the cost of all new builds.

This may explain why our cities are broke and landowners are getting rich:


We are left now to only imagine what could have been achieved had all the money not gone into property and Crypto and had gone into new business instead. Fact is the money went into the areas of highest return for the lowest perceived risk. Even more tax is not the solution, fix the problem and increase interest rates.

Testing ... keep getting told I can't post something longer due to site maintenance?

I can post above, but not a longer comment on cyrptoassets ... is there a work limit now? Or is it the fact I'm copying and pasting the same comment I made to a tax forum?

Can't even post a single paragraph that is copied and pasted (although I did just that for my first comment about property above). So I give up.

Welcome to Facebook, Mr Trump.

Replace letters with numbers

3 - E
4 - R/A
1 - L


Highly likely interest are using some overbearing Drupal plugin without thinking.

Deemed rate of return based on equity? Simple to sidestep. Just load up on debt to reduce equity.
Deemed income can be levied to curb the ghost houses phenomena. Exemption in respect of only One owner-occupied house. The rest subjected to tax. On actual rental income . If left empty, then deemed income based on what average market rental is. In one swift blow IRD can slash the spectre of ghost houses.

By loading up on debt you pay interest instead.

DRoR obviously depends on interest rates, so just needs to be set at a level where loading up on debt doesn't get you ahead of just paying the tax.

Feels like there are tax grabs left, right and center atm. Further government overreach

Surely we need to go back to first principals:

a) Central government should be taxing land. Its a limited resource, is easy to tax, and its hard to avoid the tax. Land needs to used economically efficiently and we need RMA reform as well to further promote that (i.e. more flexibility in density to achieve efficient economic use).

Most of the current housing crisis is reflected in land price appreciation, not house price appreciation. It is this land price appreciation that needs taxing to drive the economic use of land.

b) Local government should then be limited to taxing (rating) the improvement value. Its the people in the houses that drive the need for local government services not the land itself.

c) The deemed rate of return is wrong. Excess profits should pay more tax. What should be done is that rental properties (as a business) are allowed to claim depreciation of the asset value of the improvement (the house) by the rate of inflation. Any rental return over that should then be taxed.

(Investors should then be allowed back in the property market if a,b,c & d are implemented along with a population strategy that manages demand levels to a rate of increase that can be sustained (maximise marginal wellbeing per capita growth taking account of externalities like insane house prices and need to meet zero carbon goals))

d) c) would then allow government to move on bank term deposits as well, allowing the return up to the rate of inflation not to be taxed and thereby leveling the playing field further.

Deemed rate of return just for simplicity sake is the worst idea ever. Often the value of an asset has nothing at all to do with a realistic profit from it. I live in a house in Queenstown and currently rent out a flat underneath. If you used the deemed rate of return on this flat the tax would be way more than I could ever rent it out for. Result, I would take it off the market and no-one would ever live there. One less habitable place for society. This equation must work for half the home and incomes in the we country.

Absolutely Jamin. This was my main point above: the only fair way to tax a residential rental is the same as for any other business, it's actual profit: income less expenses earned to make that profit.

Nothing else, such as the distortions of deemed rates, is justified or wise in a fair tax system.

That's why the entire property needs the deemed rate applied to it. Has a number of effects, one it lowers property values (which in turn lowers the deemed return), secondly, it puts your home investment on the same footing as those non home owners who are being taxed on their deposits. Further, it taxes not just labor but wealth.

Let the screaming begin by those who don't understand tax.

TOP policy. The most sane, simplest and fairest out there.

No that is absurd: you will be taxing non-existent profits in just about every case.

Majority of landlords will leave the market.

The lower socio-economic tenants will all end homeless, so middle class kids can leave mum and dad's to buy their first home.

Taxation only works on demand: it's musical chairs with owners across same number of houses. Housing issues can only be solved by increasing supply, and that's nothing to do with taxation.

That's why TOP, our communist party, will never see power, God help us if they do.

You have just confirmed your ignorance of taxation. Go and read the policy, digest it, make sure you can understand and then try and rebut it constructively.
At the same time ponder just how insane the property market has become and how distorted the tax base is as a result.
Supply is not the problem. Demand created by artificially low interest rates and the lack of any alternative investment (in part due to tax law) is the problem.
TOP is not communist, TOP is fact based policy Party, with tax it is about broadening, not increasing the tax base. Have you actually read any TOP policies?

Tax only works on demand for a fixed number of housing stock. It does not change supply. It does nothing to correct artificially low interest rates set by a command economy construct called the RBNZ. It does not change the Mt Everest sized regulation that is stopping the freeing up of land and adding cost on cost to the cost of new builds.

The only sane tax base for a free society is a minimal one alongside the smallest state possible: so a low, flat income tax. Nothing else.

Flat tax, asset tax and a UBI (and close most of msd as a result) and the job would be complete. Lower tax all round and labor and wealth taxed equally.

You are a closet TOP voter.

A UBI is communism: paying people for wilful laziness and non-productivity is the death of a free economy.

A UBI would need double the current tax take, because you save no admin while growing the size and power of the state hugely, all the while creating dreadful incentives to do nothing.

Why no savings on admin you ask: coz solo mother of seven can't live on the same UBI as you can so you need a bureaucracy just like WINZ to assess individual circumstances. Add to that soon separate positive discrimination systems for Maori (UBI x 2?) and it's a joke.

Accept it: you want free prosperous society, then there's no free lunch. TOP is a gateway Gulag party.

Your problem is you believe a UBI is intended for people to live on. It's not. It's a universal safety net for everyone without the punishing and arbitrary limitations applied by the current welfare system operated by WINZ.

Yeah, sure it is.

All benefits creep and become a way of life. That's why the state is now so huge.

We do very much need to address the Communism that is our UBI for wealthy older folk, currently over 50% of our welfare benefit budget.

Agree with your earlier comments re the reserve bank and price discovery. It is absurd that we are using taxpayer subsidies and Reserve Bank monetary policy to prevent price discovery and to inflate property investment portfolios.

Too much welfare, far too much, creating welfare dependency in our older, wealthier generations.

Leave out the age nonsense, but yes, govt super should be asset and income tested: totally bullshit for those of us who've paid tax through all our lives, and lots of it, but our job apparently it just to carry the rest of you.

The age part is certainly relevant as the UBI functions based on age.

As a salaried worker I'm doing my part carrying the bludging wealthy property investor or pensioner, the ones whose parents' generations funded free education and affordable housing.

Agree to a point. However, the situation re benefits in NZ is now so out of control that most of society is now on some sort of benefit (or govt/council employed). And it's rising.
The point of UBI is to get rid of the expensive, vague, confusing an often discretionary based system that is encouraging rorting and breeding.
So here is your $250. That's it. Go and work if you want (and keep it all) or live in a commune...but that's all your getting from your fellow tax payer.

What's your alternative?

Sure, that's the theory. But in practice no Government is going to reduce benefits to existing beneficiaries so there would still be carve outs or grandfathering of existing benefits, along with the associated administration costs.

"The market capitalisation of virtual currencies has gone from US$354 billion in September 2020 to just under US $.8 trillion dollars at the start of April."

Market cap of virtual currencies was north of USD2T at the start of April >

Hello Terry
Going back to the proposals of the Tax Working Group is not going back far enough. In the 1970s and 1980s NZ adopted a tax system that now is quite different from the rest the of the OECD. We tax capital income differently; we tax labour income differently; we tax retirement savings differently. Very few of these differences can be justified in terms of basic economic tax theory, which is why the NZ approach to tax is not copied by richer or more progressive countries overseas. We have evolved an ever more complicated mess which has resulted in low taxes on labour income, high taxes on capital income, and a huge incentive to build large houses and artificially inflate land prices. Your proposal is aimed at tackling part of the latter problem but for it to be at all effective it needs to be applied to all residential property, including owner-occupied, without significant income or wealth exemptions. If this does not happen, old people like me, you, and Dr St John will still be beneficiaries of artificially high land prices and guilty of imposing large intergenerational transfers from young and future generations to ourselves. This is standard economic theory. In my view it is also fundamentally unfair to young people, however, I realise that my views on what is fair or unfair don't matter. (If you or others want to transfer resources from young people to old by artificially inflating land prices by taxing other assets more than owner-occupied or rented land prices, that is your choice. )

The alternative is to try and adopt a tax system that looks more like those adopted in richer and more progressive countries. One option, adopted by most OECD countries, is to reform the taxation of retirement savings so that housing is not taxed less than other assets. In most countries this means taxing retirement savings at a lower rate - at a rate that tax theory suggests is efficient. This is what Norway and Denmark and Sweden and Germany and Ireland do - they tax capital income at lower rates than labour income in order to reduce tax distortions and promote a high wage economy. It isn't rocket science, it isn't new, it is tried and tested - it just doesn't meet the approval of generations of NZ bureaucrats and politicians who seem to like inventing distinctive tax approaches that have the unintended but very real side-effect of distorting housing markets. Unfortunately the last tax working group hardly considered conducting a proper examination of the ways the NZ tax system differs from standard overseas practice, possibly because the Chairman was responsible for some of these departures. (Muldoon was the other culprit when he adopted the modern NZ superannuation system which eschews social security taxes.) For example, the TWG assumed that all income should be taxed at the same rate, a proposition rejected by most tax theory and most countries as an excessively distortionary and ineffective method of raising revenue. If your starting proposals are inconsistent with standard tax practice, it is hardly likely that you will come up with a well functioning tax system - and hence the capital income tax mess we have now, a list of special cases for different income types.

New proposals may fix the problem. But we should first consider adopting the standard tax practices adopted overseas first. If you sail on a different course than the rest of the fleet, and the rest of the fleet seem to be ahead, the first thing you should do is to consider whether the rest of the fleet might have made some better choices rather than assume you have the best course.


Seems like an awful lot of effort going into taxing cryptocurrency compared to considering the honesty of property investors who really, truly, absolutely never bought for capital gains.

Agreed. Many have been on the radio recently including Ashley Church stating that most investment was for capital appreciation. Some reason he likes to not use the word "speculation".

FIF taxes on shares is one of the reasons why New Zealanders pour all their money into houses. Its an unfair tax that is nothing more than a wealth tax with a different name, and does nothing to encourage alternative investments. Just think how much better off New Zealand would have been had investors been encouraged to invest in global companies like Amazon and Apple instead of being directed into residential housing.

Agreed - as time goes by, the FIF regime is harder and harder to justify - I could appreciate the need for reporting what you own in external companies from a disclosure/compliance point of view, but given how accessible these shares are now to retail investors who would cross the thresholds (.e.g through broker-less apps), there's no reason to treat them differently.