September 28, 2024 • 41 mins
The conversation of a potential capital gains tax is heating up as ANZ Chief Executive Antonia Watson says it's becoming necessary.
But the biggest question is what the tax would include, and how it would be enforced.
Opes Partners Resident Economist Ed McKnight joins Tim Beveridge on The Weekend Collective to discuss this and more.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talk,
SEDBS Crowds.
Speaker 2 (00:22):
There's always something happenings Cloud and she's so houseproud, nothing.
Speaker 3 (00:31):
As ladies, littleman, and welcome to back to the show.
This is the Weekend Collective. My producer Tyra is looking
incredibly happy because there's nothing that Tyra loves more than
finding a song to theme to whatever we're talking about.
And so well, this is madness our house and this
is the One Roof Radio show. So there's one nil
(00:52):
to Tyra on that one. There's a clock up a
win anyway. Uh this by the way, if you miss
out on any of the hours, you definitely want to
catch the podcast. Just look for the Weekend Collective on
iHeartRadio or wherever you get your podcasts. Joining me for
the One Roof Radio Show. He's a resident economist at
Ope's Partners. It's Opes and his name is Ed McKnight.
(01:15):
Good afternoon, Great to be here, Tim, of course it is. Yeah,
how are you.
Speaker 4 (01:20):
We're doing really good. We're going to We've got some
great topics on today as well.
Speaker 3 (01:24):
We do. Now, look look at this is not a
topic that ever really goes away. But then again, I
mean it is the property are so we are going
to sort of have There are certain themes that pop
up from time to time. But the reason that this
we're going to talk about CGT a little bit or
a lot, oh eight hundred eighty ten eighty text nine
two nine two don't forget standard SMS charges apply is
(01:46):
Antonio Watson, the CEO of A n Z, said that
she thought now was about the time for it, and
I think that I think that if I interpret from memory,
her reasons for it was that she had maybe inherited
or something, she'd come into ownership of of a residential
(02:06):
property and she looked at the returns for it versus
what's she likes the share market, and she thought, well,
and she thought when she looked at the calculations for
a property, she basically went, well, of course, people if
they're buying a property to me have given the poor yield,
then really, let's be honest, people are buying it for
(02:27):
the capital gain. Therefore, from a point of view of fairness,
it seemed to me she was saying you should probably
have a capital gains tax on it, and that we
did talk back on this in the middle of the
week as well, and I, okay, I'm going to be
forgetting whether I say anything smart or dumb, which is
probably the way I run. Anyway, I could probably find
(02:52):
I think there was a very good point made by
David Farrer on Heathers Show that people who don't mind
the idea of a capital gains tax all of a
sudden when they read what the legislation entails. If there's
something that doesn't suit them, there all of a sudden
they don't like it. But in principle, taking into account
issues of fairness and family homes and things like that,
(03:14):
I'm actually not, in principle offended by it. It's not
I've got other things I would worry about a lot more. Because,
for instance, if I could make a truckload and property,
so I could buy and flick something on and make
and we know that is taxed anyway. But let's say
over ten years, I could buy a property and it
would double in value twelve years and I could make
a bit of money that way. The fact that I
(03:35):
would have to pay tax on it doesn't freak me
out because I can still make a lot of money.
It's like some people make a lot of money when
they go to work and the fact that they get
text on that large income doesn't deter them because they're
still making a lot of money. So it doesn't bother
me so much. Does a CGT bother you? And I mean,
we're talking businesses and things, but this is the property Show,
(03:56):
so we have sort of got a CGT up to
a point away, you go, ed McKnight.
Speaker 4 (04:00):
Yeah, I'm not a fan of it, Tim, And I'll
tell you the reason why. Will come to the arguments,
so I think it's important to talk about them. But
the first point where I start is, Okay, the government
wants to raise more revenue. Do I want to give
more money to the government. Now, my view is that
the government is not very good at spending our money
as it is anyway, So do I really want to
(04:22):
give more of that money to the government. But I
remember speaking to Peter Dunn, he was the leader of
United Future, and he was saying that before you introduce
a new tax, the first thing you've got to think
about is what do we want to spend the money on.
Because the purpose of the tax system is to raise
money in order to fund the government's programs. And the
(04:44):
big issue I have with the debate around a capital
gains tax is we usually start from the perspective of
should we have one or should we not, without really
thinking about, well, what are we going to spend that
money on? And there are two options. So if we
bring in a capital gains tax, one option is to say, well,
we've got an aging population here in New Zealand, the
(05:06):
cost of healthcare, the cost of the pension system is
going to rise, and so one option is to bring
in a capital gains tax to pay for that, so
that we don't have to change any of those settings.
So that could make sense. The other one that sometimes
comes up is let's introduce a capital gains tax, but
what we will do is what's called a tax switch,
(05:28):
where we then decrease the tax rates for things like
income tax. Now, I kind of like the idea of
a tax switch. I like the idea of paying less
in terms of income tax, because at the moment, what
happens is that even quite low income earners pay a
decent proportion of their income in tax.
Speaker 3 (05:48):
Mind you, high income earners pay a huge percentage if
we're talking income. If you're earning let's pack three hundred
thousand a year, which people consider a blooming good income,
you're paying a lot of you do? I think people
forget that. It's all like people go with the rich
people are I'm not paying a lot of tax. Well
maybe on their sets, but when it comes to income.
And this is not a property argument, this is just
(06:09):
correcting the facts that actually people who earn a lot
of money through income tax through income pay a truckload
in tax.
Speaker 4 (06:17):
And one thing you've got to think about is if
you're earning one hundred thousand dollars or more a year,
and about sixteen percent of wage and salary earners earn
one hundred thousand dollars or more per year, about twenty
five thousand dollars is what you're paying in tax per year.
And I think what everyone needs to ask themselves is
are you getting good value for money for that twenty
(06:37):
five thousand dollars? And if we were to talk about
all of the different things that we really care about.
We care about having decent roads, we care about educating
young people, we care about taking care of pensioners, we
care about a healthcare system. You probably say, okay, well
that's all very well and good, but how's that going
for us now? And We've seen a huge expansion of
the state over the last four to five years, especially
(06:58):
over COVID times, and my question is have things gotten
substantially better given that we are devoting a higher share
of our GDP to the public sector. I think any
person on the street would probably say no, So do
we want to give even more money to the government.
Speaker 3 (07:15):
I can argue for you in a way because I
think that what you touched on before was also, you know,
how do we raise money to pay for government programs?
And I think from what we know about capital gains taxes,
they are not a very good way of raising tax
for the government. That's probably the chief argument. That's why
I think Antonio Watson, if I'm interpreting her sort of
(07:38):
I wouldn't say they were throwaway comments either. But I
think she was just talking about it from a point
of view of fairness, that if people are making these
massive capital gains and someone else is working really hard
and getting taxed up the ying yang for their hard work.
It was a bit like that. But here's the other
complicated factor, which is why I think it's difficult to
have an honest discussion about this is even in the
(07:59):
report I read it talked about that capital gains or
a wealth tax, they are completely different things. Capital gains
tax philosophically, I think you can argue for in a
lot more convincing way rather than a wealth tax, which
is just an envy tax. And I don't have a
lot of money, but I don't want a wealth tax
because I just think it's why it's nonsense.
Speaker 4 (08:24):
Yeah, well, the interesting thing, and we'll talk specifically about
the capital gains tax for a second, digging into the
fairness age.
Speaker 3 (08:29):
One confuses the other. People conflate them. They think they're
the same.
Speaker 4 (08:32):
Yeah, people often do.
Speaker 5 (08:34):
So.
Speaker 4 (08:34):
For example, just to define the difference of capital gains tax,
you often pay at the end. So you buy a house,
it goes up in value, or you buy a share,
it goes up in value, you sell it, then you
pay the tax with a wealth tax. Well you've got
a million dollar house and you're paying ten thousand dollars
a year one percent of the value just by owning
that property, not when you sell it, just for owning it.
(08:56):
And so that really starts to become quite difficult because
then if you're somebody who and if we look at
the Green Party's policy, what they proposed at the last election.
You could have maybe a holiday home and it's mortgage
free and it's worth a million dollars, or you'd be
paying that You might be somewhere. I think from memory
the policy was somewhere between ten thousand and up to
(09:19):
up to two and a half twenty five thousand dollars
a year just for the pleasure of owning that property.
Speaker 3 (09:26):
Here's the other complication for it. Look, I'm arguing in
your court. All of a sudden, I've said it doesn't
offend me.
Speaker 6 (09:30):
Well, I'm going to.
Speaker 4 (09:31):
Start arguing against.
Speaker 3 (09:33):
Let's switch. Here's the other one is that the government
adjusted our tax brackets for inflation, which was long overdue.
So for those of you who are trying to vaguely
remember the reason for adjusting the tax brackets and don't
forget about, you know, tax bracks for landlords and all
that nonsense. They adjusted the tax brackets because as inflation
(09:57):
hits and you get paid more and more, you end
up in the higher tax bracket, even though you're no
better off. You see, you're paying a larger proportion of
your income. And so the government changed the income tax
brackets to make it fair. So it's not. Here's the thing.
Here's the thing. So it's not a tax on inflation.
That's the problem with a capital gains tax as well,
because if a value of something such as property goes
(10:20):
up simply because of inflation, that is a nonsense tax
because and that's the problem. How do you take into
account inflation?
Speaker 5 (10:27):
Can you?
Speaker 3 (10:28):
Does any country do it? I don't know.
Speaker 4 (10:29):
I reckon that if you're going to introduce a capital
gains tax, you've got to take you've got to take
the GST approach. So GST we never have an argument
about because it is broad based and it applies to
absolutely everything. So if we dig into the CEO of
a in Z's Antonio Watson's arguments, if we're thinking about fairness,
we've got to tax everything, not just investment properties. We're
(10:50):
going to tax businesses, We've got to tax chares. Yes,
and I actually think you've got to tax the own
home as well. You've got to make it so it
is completely broad based. And here's something very controversial you
talked about previously that the reason that capital gains taxes
is some not that palatable is they don't tend to
raise a lot of revenue. The reason is because generally
(11:11):
when they are brought in that they are only forward looking.
So you buy a house today and when you eventually
sell it in seven years, you've made a capital gain.
The government taxes you then for a capital gains tax.
If you were to implement it, for it to be effective,
I think you've got to make it retrospective. So even
though you bought your house in nineteen eighty and it
was an investment property, if you sell it next year,
(11:32):
you get paid tax.
Speaker 6 (11:33):
Oh no, you can't be retroactive.
Speaker 3 (11:35):
You can't be retrospective with taxes.
Speaker 4 (11:37):
Well, I don't think. I don't think that it would
ever get past the voters. But for it to be effective,
for it to be sustainable, you've got to make it retrospective.
And I'll tell you the reason why. Because the government
has to start getting revenue straight away so that the
next government doesn't come in and say, right, we're going
to get rid of that.
Speaker 3 (11:56):
Well, let's be honest, that's that would never happen anyway.
You can never have a retrospective tax because you could
say to someone who bought their house for you know,
fifteen thousand dollars years ago, that all of a sudden
they're up for now that I don't think that would
ever wear. But I do things. I do think that
you can have simple things like that, in the fact,
in the family home or your house of residents primary
residents in Australia. I mean it's easy you exempt it
(12:18):
because is it your primary residence. I can argue against
myself again. This By the way, Ed and I are
going to talk until the cows come home. I forgot
to say, I probably said at the start of the
shaking caller and I eight hundred eight ten eighty. But
you can join the conversation anytime you want by picking
up the phone and getting on the blower. I eight
hundred eighty ten and eighty. Here's the other I'm going
to argue against myself again.
Speaker 4 (12:38):
Switch tib have I got now?
Speaker 3 (12:40):
I know, but because but the reason we can do
this is because it's such a divert. It's such a
it's such a nuanced topic. And this is where politics
sometimes doesn't do us any favor, because it deals like
it argues in sleep shammers sometimes. But here's one side.
Remember the cat. Remember how labor adjusted the bright line
test out to ten years, effectively making it a capital
(13:00):
gains tax on property for anyone who's sold within a
ten year period. Correct. Well, there are a lot of
young people who can who live let's pretend they live
in Auckland, who can't afford to buy and get on
the property market in Auckland. If they could, they could
buy a family their own home and it wouldn't be
subject to the bright line test. But of course, because
(13:22):
they can't afford to their way of getting on the
ladder is to buy in I don't know Gisbon or
napierors anywhere christ Church. But of course, of course it's
their only house, but it's not their primary residence. They
sell it to try and get on the ladder and
get ahead, and what happens, whamo you hit them with
a tax. So that's why it is complicated, isn't it.
Speaker 7 (13:43):
Yeah?
Speaker 4 (13:43):
And I think one of the big issues that you
have with tax generally is you create unexpected consequences and
changes in people's behavior. So again, if it comes back
to how do you introduce a capital gains tax in
the right way, there should be no limit to what
it is. You know, if I was put in charge
as an economist of implementing implementing a capital gains tax.
There would be no limit or how long you have
(14:06):
to own it so that you don't have to pay tax.
It would be no matter how long you own it,
whether it's ten, twenty, thirty, fifty years, you're still paying
it once you end up selling it. Because what was
really interesting is when we look at the changes to
the brightline test, as it got lengthened and lengthened, we
actually saw the housing stock decrease. So even as we
(14:28):
saw New Zealand's population increasing, Well, if you bring in
a brightline test, people say, well, I have to hold
my house for ten years before I sell it now.
So the total number of listings ended up coming down
because people were saying, well, I have to hold onto
my house. I can't bring it on to market, and
so you see really unexpected behavior that you don't think about.
Speaker 3 (14:47):
Actually, actually, just on that topic, I think that's one
of the reasons there's something to do with the thirty
year interest rates in the States. Totally unrelated, but that's
why there are certain disincentives to people selling and buying
another house, which is meant that stock in the United
States is not as doesn't turn over as much. But
that's a slightly different topic, isn't it? And we not
going to go there because we're going to take a break.
Come back with your calls the CGT. How would it
(15:11):
work for you? And would it Actually here's the here's
a really simple question. It's a way it gets away
from the pros and cons, but we wanted to We're
going to continue hashing out the pros and cons. Would
it put you off getting into property? See? I don't
think it would, but I want your calls. On eight
h eighty text twenty two past four, Newstalk said B
(15:54):
and welcome back to the show. This is the wonder
Afraid our show. Okay, well clock up a small win
for Tira that this is a home in the house
LDD song, but a kind of bit average, I guess,
ed McKnight. There's the one with radio show show. Cgts
want to put you off investing in property? Do you care?
And which way do you want to go? When it
(16:14):
comes to that discussion which was initiated a few days
ago by Antonio Watson, the CEO of A n Z.
If you like acronyms, let's keep going all abbreviations right,
Let's get into the call show we ed Mark.
Speaker 7 (16:26):
Hello, Yeah, Hi, Look, I've had property and I'm dead
against property gains patch. I want to just know why
they don't put it over every type of business. Every
person that has a business makes a profit. Why don't
you just put it on everything?
Speaker 3 (16:46):
Well, I think I think it would. I think it
would be But because this is the one rief radio show,
we're just talking about it in the context of property.
Speaker 7 (16:55):
Yeah, so realize that. But you're winy people up and saying, well,
you should have it on property, and you send to
always want it on property because they make a profit.
Why didn't you put it onto banks? Why don't you
cut their profit down? Why aren't you doing that?
Speaker 3 (17:09):
Loading that Well, I think you're misconstruing me, Mark, I'm
just putting things in the context of property. I would say, yes,
if you have a CGT, you do put it on
other things and shares and all sorts of things and businesses.
Does that change your opinion of me?
Speaker 7 (17:22):
No, because I'm thinking that you're cutting down the gains
that someone might have worked sixty or seven years and
building a property portfolio, and you're penalizing them. And it's
only in the near well in the past that everyone's
decided a property should be penalized.
Speaker 3 (17:43):
Well, here's the argument why that's not logical, because if
you're just talking about people work hard for their money,
A lot of people work hard as all sorts of jobs,
and they pay tax their entire life on every cent
they ever earned. So the idea that that's not working
for me. But do you think Mark was kind of
misconstruing our context their ed.
Speaker 4 (18:02):
I think what Mark's coming to is that deep sense
of fairness of that what is fair if we're going
to bring in a capital gains tax, and that people
who own shares and banks, as we pretty much all
to because we own it through our care we savers,
that everything should be tax even you know, I own
a business myself. If you build it up from zero
dollars to a million dollars, and you sell your business
(18:24):
for a million dollars, you currently don't pay tax on it,
maybe there should be some tax paid there.
Speaker 3 (18:28):
And I think that's what it would be. I'm not
arguing about it, and we're just focusing on the property issue.
Speaker 4 (18:34):
And I understand that especially landlords like Mark who may
have been building up that portfolio over twenty thirty forty
fifty years. You do feel a bit targeted because often
when we're talking about capital gains tax, people are specifically
talking about property investors. But really it should be applied
to everything.
Speaker 3 (18:51):
Okay, right, let's take some more calls down high. Are
you good? Thanks?
Speaker 8 (18:57):
Real simple questions to answer. The question is why the
hell would you want to have more tech station? Been
professional for thirty years, I've seen numerous clients that are
mid range and right now the struggling. For example, an
(19:17):
average mortgage half a mel fifteen years to go. You're
talking about forty eight hundred dollars a month. You're talking
about rates on top of that, and insurance on top
of that, and there's sixty percent of income going to it, right,
So why on earth are you trying to text some
out out of existence when they retire, and let's look
(19:40):
at those near it's on an orange retirement. You know,
at the end of the day, we don't need any
more text. What we need to do is use it
more effectively. And if you think it's such a great idea,
you bloody pay it, and anyone else who agrees with you,
they can bloody pay it and leave the middle key
we alone.
Speaker 3 (20:02):
End of Okay, good on your Dan. I'm not sure
I'm the legislator on this one, but good on you
for the hostility.
Speaker 9 (20:10):
Ed.
Speaker 6 (20:10):
I kind of like what Dad was saying.
Speaker 4 (20:12):
It was we kind of introed this show with that.
You know, is the government very good or doing currently
doing a very good job at spending our money as
it is a lot of people would probably say no,
which I think was Dan's point as well. And when
Dan was sharing his story there, it actually made me
think of something I heard from Rodney Height, who used
to be the leader of the act Party, and somebody
(20:34):
once said to him, Rodney, why is it that you
are the happiest man in parliament? Way, always so happy?
And he said, because I came into Parliament thinking that
government wasn't very good at getting things done, and so
as I was going throughout my career, I saw that
happening and that's what I was expected. Whereas some people
come into parliament thinking they can change the world and
then they realized that the government is not always good
(20:55):
at getting things done, and so they get their dreams
and hopes slashed by that. And I think it comes
back to Dan's point, which is the government very good
at spending the money they've already got to do. We
really want to give them anymore?
Speaker 3 (21:06):
Yeah, yeah, I mean I think, yeah, it's just when
people say, oh, my heart, you know, I'm investing my money.
It's really hard work. It's like that doesn't in an
argument that impresses me, because everyone works hard for their money.
You know, the idea that somehow the property, if you're
investing in property, you shouldn't be taxed on that. I mean,
I think that's when you start to lose the argument.
(21:27):
I think the argument is one when you say it's
hard to implement and it's hard to work it out
in a fair way where people will feel you know
what I mean. I think the argument that, like, you know,
I've invested in my property portfolio for years, it's hard work.
It's like crime a river, baby. I mean, I know people.
I see people who turn up and their job is
working through the night cleaning commercial buildings, and they might
(21:48):
do that for years. They get taxed on every penny.
So the SOB story is not the strongest argument.
Speaker 4 (21:54):
Yeah, I understand your point around saying everybody works hard
for their money, including you know, like shift workers and
some of those examples you gave. I think where the
likes of Mark and Dan are coming from are saying yeah,
but US property investors often get singled out when we're
talking about capitalist gains taxes. We are often specifically talking
about property investors. And actually, if you bring it in,
(22:16):
it should cover everybody, not just invest Here's.
Speaker 3 (22:19):
The funny thing about it, which and we've got to
get onto more course, because they are lining up. Technically,
if you buy property from a legal point of view,
if your goal is the capital gains and that is
the reason you have bought it, you actually do have
to pay. But the reason you don't is because it's
(22:40):
not so straightforward to prove. That's why they introduced the
bright line. But if you buy anything and the intention
is capital gain and the inland revenue can prove it,
guess what, folks, You're liable for capital gains. But it
just doesn't happen. And I think Antonio was reflecting the thing.
It's like, well, the yields are so terrible. Of course
you buy it for capital gain. And that is factually true,
(23:02):
isn't it that legally, if you buy an asset for
the capital gain, it doesn't matter how long you intend
to keep it, you should pay tax on it. Yeah,
that is correct.
Speaker 4 (23:09):
It's just not often implemented that way because it's extraordinarily
hard to prove. And actually, just before we get into
the calls, it's interesting that you were saying that one
of the reasons that Antonio was bringing it up on
radio and New Zealand was that she did inherit it
a home. Well, the really interesting thing about that is
that under the brightline rules, inherited homes don't aren't caught
(23:29):
by the bright line as it is.
Speaker 3 (23:31):
Yeah, there we go eight eighty. By the way, you know,
it's not get too worked up in the emotion front.
This is just a what if conversation, And I think
the interesting question is also would it put you off
property either way? And it wouldn't put me off I
got it anyway. But I've been thinking about it for
a long time. Pete, Hello, Yes, yes, okay.
Speaker 2 (23:56):
I reckon What should happen is personally is that when
the government was in before, when it was yeah it is,
you buy a property, you've got to keep them from
ten years. And I asked that, yes, you got to
pay text once you got ten years. That way it
keeps the keeps the stock of the rental supply, some
stable and they make their money when they when they
(24:19):
sell it, which is fair enough. But I reckon the
first home should not be text. And we all know
if you if you're flicking your properties now, if you're
a trade, if you're a what a flip of what
he's going to pull in the pay text anyway, I
think it's gone too much for the way of the
cryst relax. They're all doing all those MPs, they're all
(24:40):
doing it.
Speaker 3 (24:40):
You're talking about the blin you're talking about the bright
line test, don't you, rather than the capital gains capital games.
Speaker 2 (24:46):
But I reckon bring it in, but it's got to
be ask not from the first teen years. So you
basically hold the stock the people not flicking them, and
that way they get head after ten years. So you
say you keep the supply of properties on a whole
because there's a lot of people now they see it.
Because Cristal acts, I shouldn't say that it's a rich
trick's great good game.
Speaker 7 (25:04):
It is.
Speaker 2 (25:04):
You can't deny that's what he's in there for and
he doesn't want to pay tax. And that's what they
do it bring it back and keep it for ten years,
sell it in ten years you pay text Well.
Speaker 3 (25:14):
Actually, funny enough, the brightline test inhibits the market, which
restricts supply, which pushes prices up a bit, doesn't it.
So you better to actually just be able to free
to free to buy and sell regardless whenever, shouldn't you?
Speaker 1 (25:26):
Ed?
Speaker 3 (25:26):
What do you think? Any comments?
Speaker 4 (25:28):
Yeah, my view for that, Pete would be you actually
don't want to have a suited number of years that
you've got to hold it and then you can sell
it without tax anyway. And I'll tee the reason why.
Let's say that I was an investor, at which I am,
and then I buy a property, I hold it for
five years. That property no longer suits me for whatever
reason in terms of my investment strategy. But then I go, well,
(25:48):
I can't sell it because if I sell it now,
I've got to pay a whole heap of tax. So
I better just keep holding on to that property rather
than releasing it to the market. I better I hold
it for another five years so that I can get
outside of that window. And that's where that again, the
trouble with taxes is it changes our behavior. What you
really want is if an investor or a first home
(26:11):
by owns a property and now all of a sudden
it doesn't really fit with their strategy. You want them
to release it onto the market because then somebody else
can buy it.
Speaker 3 (26:20):
Yeah, because it does have this artificial restriction of the
supply where you introduced a time limit for exemptions or otherwise. Yeah,
it's funny. It's almost like you'd argue for CGT is
better than a bright line in terms of just supply
and demand.
Speaker 4 (26:33):
I add, that's what I would argue. That's why I
think it's going to be across everything with no number
of years.
Speaker 3 (26:39):
Excellent, there we go. Don't. By the way, Ed doesn't
love the CGT. Just in case that sounded like a
brief confession. It's just a preference ahead of the brightline test.
Thank you Pete for your call. Really appreciate it. Let's
carry on. Richard High Hello.
Speaker 5 (26:52):
Tim, Hello, Hi, hello Tim. To be quite frank at
a capital gaze, I remember many many many years ago
when holy was there's capital gains tax was talked about
that it's a political upper suicide, and wholly I mentioned
that it's political suicide. And to be quite frank for
(27:15):
the chief executive or whatever, they had said on an
enormous salary that she is on. It's a bloody check
of her to talk about capital gains tax? What is
And to be quite frank, To be quite frank, I'll
be quite to the point that woman needs to be
psychologically examined. Subject up, Well.
Speaker 3 (27:33):
Hang on, hold on, hold by Richard. Can I just
mildly challenger on something. How have other countries managed to
bring in a How come it's such a hot potato
here as because of our because other countries have got cgts.
Speaker 5 (27:46):
Lots of them we're talking about here. Other countries have
got a capital gains tax. True, a number of countries
have got capital gains tax, but we're talking about New
Zealand here. And to be quite frank, if you're going
to raise taxes, drop the sorry, dropped the what's it
called it, the pa ye to a wreshold and increase
the GST. That's the best way, and that's the best
(28:08):
way over all to do it. But capital gains tax
is an absolute satan in disguise.
Speaker 3 (28:17):
Yeah, Richard, it makes amazing how Australia managed to implement
a capital gains tax.
Speaker 4 (28:22):
Then, well, it's quite funny because I was actually out
for lunch with one of my colleagues and he argues, oh,
we should have a capital gain tax because I want
my income tax rate to go down. That might happen,
and Australia's got one. I said, yeah, but you can't
go over and look at Australia and say, well, they've
got one. So it's inevitable that we are going to
have one in New Zealand because they introduced their capital
gains tax I believe in nineteen eighty five. That would
(28:43):
be thirty nine years ago, and we still haven't got
one there and yet. To Richard's point there about if
you were to bring one and then you probably should
decrease income taxes as well, I would agree with that,
but I just don't trust any political party enough that
if they make that tax switch, eventually they're going to
increase income taxes.
Speaker 3 (29:01):
Anyway. I do love people's passion about it. I've spoken
Richard on a few occasions, lovely man, and it's the
most impassioned i've heard him. Definitely love your work, Richard, fantastic.
We'll be back in just a moment. Is twenty two
minutes to five News Talk z B and welcome back
(29:30):
this is the week in collective. I'mton beverage. This is
the one roof of radio show. I guess is Ed
McKnight of OPA's partners. You can check them out. O
p op e s.
Speaker 4 (29:39):
What's the website again, Ed, O p ees partners Dot COZ.
Speaker 3 (29:43):
I just should have just carried on talking and editor
dot Curt and Z. Look, we've got truckloads of course
coming and let's keep it going. Rod.
Speaker 9 (29:48):
Hello, Hi Tim. I really can't understand why people are
ignoring the elephant in the room and sofarah's property transactions
are concerned. Uh huh many many years ago, well not
that many of us, But in nineteen seventy one when
I purchased my first home, I paid stamp duty. Now
(30:11):
stamp duty, the imposition of stamp duty on any property
transactions is a simple way of actually gathering revenue for
the government. It's on a percentage basis of the sale
price of the house, and it's paid by the purchaser. So,
in other words, of the house changes hands many many times,
each time it changes hands, is stamp duty payable on it?
(30:35):
And I really think that it. I mean, take for example,
just as a as a own example, five hundred thousand
dollars House say zero point five percent stamp duty payable
two and a half thousand dollars straight into the government coffers,
and to me it just seems why haven't they reintroduced it.
(30:58):
I just can't understand it.
Speaker 3 (30:59):
I think that actually, for me, I don't like the
of the purchase happened to pay it just because it
seems like a hurdle for the first time buy. But
what do you reckon add.
Speaker 4 (31:11):
Well, actually, I think Rods might have a point there.
It's quite interesting over in Melbourne, for instance, in Victoria
and Australia, they have stamp duty and they have variable
rates of stamp duty based on who the purchaser is.
So if you're an investor, you pay a higher stamp duty.
If you're an investor from overseas you pay I'm going
to butcher the figure, but it was over ten percent
(31:32):
the last time I spoke to one of my counterparts
in Australia, so it can be quite hefty over there,
and I think Rod's right to say, well, maybe that
should be part of the conversation. It's quite interesting though
that a lot of us would have an aversion to
that because we say, Wow, we don't want the purchaser
to have to pay it. It should be that grubby
investor who made all that money.
Speaker 3 (31:55):
Now, I just think of it as being put it
on the seller as a transaction tax, just because once
you're in it doesn't matter. When you're buying and selling,
it doesn't matter. But I just sort of think for
that first time by it feels like an impediment.
Speaker 4 (32:07):
Well, you've got to remember, with any tax, the buyer
is eventually paying it. So even if we look at GST,
the seller pays it, but it is obviously passed on
to the buyer. And that would be the same with
any capital gains tax as well. Eventually that's going to
be passed on to the buyer.
Speaker 3 (32:22):
Although if a house is worth a million dollars, it's
not suddenly worth more than a million plus stamp duty
because it's only willing worth what someone's prepared to pay
for it, you know, and people think of the seller
will just add that to the price. It's like, it
doesn't quite work like that.
Speaker 4 (32:34):
The market is the market, yeah, but what you might
also see is that people then delay when they sell it.
That can restrict supply.
Speaker 3 (32:40):
That pushes house prices up.
Speaker 4 (32:42):
So it's impossible to just say we're going to introduce
a tax and only the seller is going to bear
the brunt of it. All taxes are eventually passed on
to the buyer.
Speaker 3 (32:52):
Interesting question, anything to add rod before we go.
Speaker 10 (32:55):
Yeah.
Speaker 9 (32:55):
The other thing is that it could be an incentive
for someone that's selling a house. If it is the
purchase of that's paying the stamp duty, a seller can say, hey, look,
I'm prepared to reduce the price of the house by
the amount of stamp duty. So in effect they are
paying it. The seller is paying it anyway, but they're
reducing the price for the purchaser. And there's also both
(33:16):
sort of connotations that come into it. And I really
think that it's a simple system. I mean, they've got
it in force in the UK they pay stem duty,
the purchaser pays there. In Australia and I'm not sure
about the States, they may do too, but it's a
simple system.
Speaker 3 (33:34):
Yep. Thanks, right, it's interesting, I think, yeah, you know,
we're not going to bring one of those in either.
And let's be honest, too, good.
Speaker 11 (33:43):
A how are you good?
Speaker 3 (33:46):
Thanks?
Speaker 11 (33:47):
I was just waiting for the same answer to give
about the stamp duty. I wanted Godman to introduce some
kind of stamp duties on the houses.
Speaker 3 (33:55):
Yep, you like that idea, Yes, I do like it.
Speaker 11 (33:59):
So that will be like god Man will get some
money out of it, and Godman can make sure and
ask them where the money is going to be used for,
like to make new hospitals or new schools or something
like that, so you can know where the money is going.
Speaker 3 (34:12):
Yeah, actually that is actually that The other thank you, pint.
Speaker 7 (34:15):
That.
Speaker 3 (34:15):
The other argument for that is is it a tax
that happens right now, Yeah, instant.
Speaker 4 (34:19):
If you get that tax revenue straight away, then it
becomes very politically unpalatable to then remove it because then
you've got to decrease some government programs. But it's interesting
that there are a number of countries, including Singapore, which
has stamp duty. What's interesting is Singapore has stamp duty
but does not have a capital gains tax, so maybe
you can have one without the other.
Speaker 3 (34:41):
Okay, thanks for your call, pint, Andy High.
Speaker 12 (34:44):
Yeah, Hi, not a fan of capital gains tax quite
a number of different reasons. First one of them is
does it improve our our economic performance? I don't think
you've touched on a toll. Second one is that we've
got a housing shortage, does it incentivize people to build
and own houses? The good one is that if you
if you sell a house which is worth a million
(35:05):
bucks and you pay capital gains taxes, Let's say've worked hard,
you paid your mortgage off, you buy another house which
is worth a million bucks, and all of a sudden
they pressed though you've now got a mortgage, which seems
pretty unfair because all you're doing is you're selling sense
you like.
Speaker 3 (35:19):
For like think that's why, well, I think that's why
you wouldn't have it on your place principal place of residence,
which is an easy drafted exception.
Speaker 12 (35:27):
Yeah, I would agree, and you've been backward to the
force on that one. The other thing is that, I mean,
we encourage people to save for their retirement and because
we will know that the pension is not exactly princely
and then you know, but if you start doing these
kind of things, you reduce certainty for people who've possibly
been doing this for a long long time, you know, decades,
and you're just up in there their retirement planning, which
(35:49):
is it is a dramatic effect on people. So if
you just did that at the spur of a drop
of a hat. That would have a really devastating effect
a lot of people.
Speaker 3 (35:57):
Good on you. Actually, I'll be honest, if I suddenly
was really into investing in property, I'll probably really load
the idea. That's personal interest.
Speaker 4 (36:04):
Yeah, well and property, And obviously I don't think it's
the gat the best side here.
Speaker 3 (36:10):
Okay, good on you. Hey, look, we need to take
a quick moment. We'll come back with one roof Property
of the Week. We'll try and squeeze another call or
two if we can, but before we wrap up the hour.
But thank you so much for your feedback everything so far,
and we'll be back in just to take us eleven
minutes to five News Talks d B. That's eleven roots.
Speaker 6 (36:30):
Left the wave.
Speaker 10 (36:31):
That's just.
Speaker 3 (36:37):
Dunkof and welcome back to the One Roof radio show.
I'm turn Beverage. My guest is Ed McKnight. It is
eight minutes to five.
Speaker 6 (36:48):
The one roof Property of the Week on the Weekend Collective.
Speaker 3 (36:51):
Yes, the wonder Roof Property of the Week. It's I'll
tell you what you're getting a lot for your money
on this one. By the way, just go to the
one roof site and look for one nine six Tinui.
That's t I n Ui Valley Road, Masterton. I'll give
you the price in just a second. I'll describe a
few things about it. The blurb is sort of it's
a stunning estate, seamlessly blending the charm of a small
(37:13):
farm with the comforts of an expansive lifestyle retreat, nestled
in the tranquil and piccure picturesque to Nui Valley. It's
just thirty five minutes from Masterton. Four bedrooms on a
nineteen point eight eight hectar site. It's a big property
and guess what you reckon you're going to be paying
(37:34):
for it. I've had a look around it. It's a
pretty modern looking house, quite large, lots of bedrooms, plenty
of living space. Expect to estimate eight hundred thousand dollars,
which ed quite a lot of bang for your buck
if you want to be in that neck of.
Speaker 4 (37:49):
The woods, huge property. You got to remember that the
average sale price for a property in Marsterton starts with
a three in front of it, three hundred and sixty
five thousand dollars. I think this is a good reminder
actually that houses are actually not expensive. Everywhere in New
Zealand there are pockets of New Zealand you can still
pick up a lot of house relatively cheaply.
Speaker 3 (38:08):
Yeah, you would definitely be your country lord and lady,
wouldn't you being in that one? But yeah, twenty hectares,
I wouldn't want it. Too much work for me. You'd
have to have a ride on Moa, I think probably,
But yeah, go and check it out. It's a very
attractive looking property. Lovely tree lined driveway that I'm looking
(38:29):
for here. There's a quite a comprehensive set of photos there,
but the size of the property. In fact, I love
it for its driveway. I'll love a good tree lined driveway.
Do you like a tree lined driveway?
Speaker 1 (38:38):
Ed?
Speaker 4 (38:39):
If I could afford it term, i'd have one myself.
Speaker 6 (38:42):
I love it.
Speaker 3 (38:44):
A tree lined driveway. Depending where you want it, of course,
if you want nineteen point eight eight hectares in Auckland,
it'd be worth a couple hundred million anyway, but eight
hundred thousand. Go and check it out on the one
roof site. Let's see if we can squeeze the very
quickly on the CGT one more. Call Alan, it's you here.
Speaker 7 (39:02):
Hi.
Speaker 10 (39:03):
I lived in Australia for a while, and they have
a comprehensive capital gains tax. And basically this is how
it works. The family home is exempt, the house you
live in is exempt. You don't ever pay any tax
on that. Now, the other thing is they have a
starting date. They nominate a starting date and that starting
(39:25):
date is reviewed every now and then every few years
they change the date. Now, the other thing, you're allowed
Every year you're allowed whatever the rate of inflation is
the cost of living business, so every year you are
allowed that. Now, all it does really over there is
(39:45):
catch people that are buying and selling all the time
as the principal means of making a living.
Speaker 3 (39:52):
Well, if you're buying and selling all the time, you're
going to get pained anyway.
Speaker 7 (39:55):
Do you like it?
Speaker 3 (39:56):
Do you like the tax ollan or not?
Speaker 13 (39:58):
Well, the way it works over there, hardly anybody pays it.
People that are buying and selling shares the main people
that get caught. You've got to keep very strict records
if you're in the share market and you're buying and
selling shares. But it has very little effect on the
real estate market. And ask for people landlords, you know,
(40:23):
that have two or three houses and that sort of thing. Well,
they as long as they sit on those houses for
years and years and years, they don't pay any they
don't play any capital games tax. It's only paid when
you sell.
Speaker 3 (40:36):
Yeah, okay, hey, look we're running a bit short of time.
There any comment on that before we wrap it up here.
Speaker 4 (40:41):
Yeah, it's really interesting my fiance Angela, who's probably listening
to the show as a financial advisor. And one thing
if you're thinking about taxing shares that you've got to
be really careful about is when you are rebalancing your portfolio.
So often what will happen if you're investing in shares
is you might have bought some shares they've gone up
in value. So then you say, hey, I need to
sell some put some money in turn deposits. You've just
(41:03):
got to make sure that you're not captured by those.
Speaker 3 (41:05):
Indeed, God, that was a quick answer, because the time
is upon us ed. How quickly has that out gone
real far rocketed? Look, I can sum it all up.
I would say as a cultural thing, New Zealander's generally
hated capital gains tax, or at least listeners to this show,
and that's where we can park it ed McKnight from
op's partners, Opspartners, dot Cot and Z. Thanks for your time.
(41:26):
We'll be back with the Parents Squad. John Cowen is
waiting on the wings. Back shortly.
Speaker 6 (41:33):
For more from the Weekend Collective.
Speaker 1 (41:34):
Listen live to News Talk zed Be weekends from three pm,
or follow
Speaker 6 (41:39):
The podcast on iHeartRadio
You're listening to the Weekend Collective podcast from News Talk,
SEDBS Crowds.
Speaker 2 (00:22):
There's always something happenings Cloud and she's so houseproud, nothing.
Speaker 3 (00:31):
As ladies, littleman, and welcome to back to the show.
This is the Weekend Collective. My producer Tyra is looking
incredibly happy because there's nothing that Tyra loves more than
finding a song to theme to whatever we're talking about.
And so well, this is madness our house and this
is the One Roof Radio show. So there's one nil
(00:52):
to Tyra on that one. There's a clock up a
win anyway. Uh this by the way, if you miss
out on any of the hours, you definitely want to
catch the podcast. Just look for the Weekend Collective on
iHeartRadio or wherever you get your podcasts. Joining me for
the One Roof Radio Show. He's a resident economist at
Ope's Partners. It's Opes and his name is Ed McKnight.
(01:15):
Good afternoon, Great to be here, Tim, of course it is. Yeah,
how are you.
Speaker 4 (01:20):
We're doing really good. We're going to We've got some
great topics on today as well.
Speaker 3 (01:24):
We do. Now, look look at this is not a
topic that ever really goes away. But then again, I
mean it is the property are so we are going
to sort of have There are certain themes that pop
up from time to time. But the reason that this
we're going to talk about CGT a little bit or
a lot, oh eight hundred eighty ten eighty text nine
two nine two don't forget standard SMS charges apply is
(01:46):
Antonio Watson, the CEO of A n Z, said that
she thought now was about the time for it, and
I think that I think that if I interpret from memory,
her reasons for it was that she had maybe inherited
or something, she'd come into ownership of of a residential
(02:06):
property and she looked at the returns for it versus
what's she likes the share market, and she thought, well,
and she thought when she looked at the calculations for
a property, she basically went, well, of course, people if
they're buying a property to me have given the poor yield,
then really, let's be honest, people are buying it for
(02:27):
the capital gain. Therefore, from a point of view of fairness,
it seemed to me she was saying you should probably
have a capital gains tax on it, and that we
did talk back on this in the middle of the
week as well, and I, okay, I'm going to be
forgetting whether I say anything smart or dumb, which is
probably the way I run. Anyway, I could probably find
(02:52):
I think there was a very good point made by
David Farrer on Heathers Show that people who don't mind
the idea of a capital gains tax all of a
sudden when they read what the legislation entails. If there's
something that doesn't suit them, there all of a sudden
they don't like it. But in principle, taking into account
issues of fairness and family homes and things like that,
(03:14):
I'm actually not, in principle offended by it. It's not
I've got other things I would worry about a lot more. Because,
for instance, if I could make a truckload and property,
so I could buy and flick something on and make
and we know that is taxed anyway. But let's say
over ten years, I could buy a property and it
would double in value twelve years and I could make
a bit of money that way. The fact that I
(03:35):
would have to pay tax on it doesn't freak me
out because I can still make a lot of money.
It's like some people make a lot of money when
they go to work and the fact that they get
text on that large income doesn't deter them because they're
still making a lot of money. So it doesn't bother
me so much. Does a CGT bother you? And I mean,
we're talking businesses and things, but this is the property Show,
(03:56):
so we have sort of got a CGT up to
a point away, you go, ed McKnight.
Speaker 4 (04:00):
Yeah, I'm not a fan of it, Tim, And I'll
tell you the reason why. Will come to the arguments,
so I think it's important to talk about them. But
the first point where I start is, Okay, the government
wants to raise more revenue. Do I want to give
more money to the government. Now, my view is that
the government is not very good at spending our money
as it is anyway, So do I really want to
(04:22):
give more of that money to the government. But I
remember speaking to Peter Dunn, he was the leader of
United Future, and he was saying that before you introduce
a new tax, the first thing you've got to think
about is what do we want to spend the money on.
Because the purpose of the tax system is to raise
money in order to fund the government's programs. And the
(04:44):
big issue I have with the debate around a capital
gains tax is we usually start from the perspective of
should we have one or should we not, without really
thinking about, well, what are we going to spend that
money on? And there are two options. So if we
bring in a capital gains tax, one option is to say, well,
we've got an aging population here in New Zealand, the
(05:06):
cost of healthcare, the cost of the pension system is
going to rise, and so one option is to bring
in a capital gains tax to pay for that, so
that we don't have to change any of those settings.
So that could make sense. The other one that sometimes
comes up is let's introduce a capital gains tax, but
what we will do is what's called a tax switch,
(05:28):
where we then decrease the tax rates for things like
income tax. Now, I kind of like the idea of
a tax switch. I like the idea of paying less
in terms of income tax, because at the moment, what
happens is that even quite low income earners pay a
decent proportion of their income in tax.
Speaker 3 (05:48):
Mind you, high income earners pay a huge percentage if
we're talking income. If you're earning let's pack three hundred
thousand a year, which people consider a blooming good income,
you're paying a lot of you do? I think people
forget that. It's all like people go with the rich
people are I'm not paying a lot of tax. Well
maybe on their sets, but when it comes to income.
And this is not a property argument, this is just
(06:09):
correcting the facts that actually people who earn a lot
of money through income tax through income pay a truckload
in tax.
Speaker 4 (06:17):
And one thing you've got to think about is if
you're earning one hundred thousand dollars or more a year,
and about sixteen percent of wage and salary earners earn
one hundred thousand dollars or more per year, about twenty
five thousand dollars is what you're paying in tax per year.
And I think what everyone needs to ask themselves is
are you getting good value for money for that twenty
(06:37):
five thousand dollars? And if we were to talk about
all of the different things that we really care about.
We care about having decent roads, we care about educating
young people, we care about taking care of pensioners, we
care about a healthcare system. You probably say, okay, well
that's all very well and good, but how's that going
for us now? And We've seen a huge expansion of
the state over the last four to five years, especially
(06:58):
over COVID times, and my question is have things gotten
substantially better given that we are devoting a higher share
of our GDP to the public sector. I think any
person on the street would probably say no, So do
we want to give even more money to the government.
Speaker 3 (07:15):
I can argue for you in a way because I
think that what you touched on before was also, you know,
how do we raise money to pay for government programs?
And I think from what we know about capital gains taxes,
they are not a very good way of raising tax
for the government. That's probably the chief argument. That's why
I think Antonio Watson, if I'm interpreting her sort of
(07:38):
I wouldn't say they were throwaway comments either. But I
think she was just talking about it from a point
of view of fairness, that if people are making these
massive capital gains and someone else is working really hard
and getting taxed up the ying yang for their hard work.
It was a bit like that. But here's the other
complicated factor, which is why I think it's difficult to
have an honest discussion about this is even in the
(07:59):
report I read it talked about that capital gains or
a wealth tax, they are completely different things. Capital gains
tax philosophically, I think you can argue for in a
lot more convincing way rather than a wealth tax, which
is just an envy tax. And I don't have a
lot of money, but I don't want a wealth tax
because I just think it's why it's nonsense.
Speaker 4 (08:24):
Yeah, well, the interesting thing, and we'll talk specifically about
the capital gains tax for a second, digging into the
fairness age.
Speaker 3 (08:29):
One confuses the other. People conflate them. They think they're
the same.
Speaker 4 (08:32):
Yeah, people often do.
Speaker 5 (08:34):
So.
Speaker 4 (08:34):
For example, just to define the difference of capital gains tax,
you often pay at the end. So you buy a house,
it goes up in value, or you buy a share,
it goes up in value, you sell it, then you
pay the tax with a wealth tax. Well you've got
a million dollar house and you're paying ten thousand dollars
a year one percent of the value just by owning
that property, not when you sell it, just for owning it.
(08:56):
And so that really starts to become quite difficult because
then if you're somebody who and if we look at
the Green Party's policy, what they proposed at the last election.
You could have maybe a holiday home and it's mortgage
free and it's worth a million dollars, or you'd be
paying that You might be somewhere. I think from memory
the policy was somewhere between ten thousand and up to
(09:19):
up to two and a half twenty five thousand dollars
a year just for the pleasure of owning that property.
Speaker 3 (09:26):
Here's the other complication for it. Look, I'm arguing in
your court. All of a sudden, I've said it doesn't
offend me.
Speaker 6 (09:30):
Well, I'm going to.
Speaker 4 (09:31):
Start arguing against.
Speaker 3 (09:33):
Let's switch. Here's the other one is that the government
adjusted our tax brackets for inflation, which was long overdue.
So for those of you who are trying to vaguely
remember the reason for adjusting the tax brackets and don't
forget about, you know, tax bracks for landlords and all
that nonsense. They adjusted the tax brackets because as inflation
(09:57):
hits and you get paid more and more, you end
up in the higher tax bracket, even though you're no
better off. You see, you're paying a larger proportion of
your income. And so the government changed the income tax
brackets to make it fair. So it's not. Here's the thing.
Here's the thing. So it's not a tax on inflation.
That's the problem with a capital gains tax as well,
because if a value of something such as property goes
(10:20):
up simply because of inflation, that is a nonsense tax
because and that's the problem. How do you take into
account inflation?
Speaker 5 (10:27):
Can you?
Speaker 3 (10:28):
Does any country do it? I don't know.
Speaker 4 (10:29):
I reckon that if you're going to introduce a capital
gains tax, you've got to take you've got to take
the GST approach. So GST we never have an argument
about because it is broad based and it applies to
absolutely everything. So if we dig into the CEO of
a in Z's Antonio Watson's arguments, if we're thinking about fairness,
we've got to tax everything, not just investment properties. We're
(10:50):
going to tax businesses, We've got to tax chares. Yes,
and I actually think you've got to tax the own
home as well. You've got to make it so it
is completely broad based. And here's something very controversial you
talked about previously that the reason that capital gains taxes
is some not that palatable is they don't tend to
raise a lot of revenue. The reason is because generally
(11:11):
when they are brought in that they are only forward looking.
So you buy a house today and when you eventually
sell it in seven years, you've made a capital gain.
The government taxes you then for a capital gains tax.
If you were to implement it, for it to be effective,
I think you've got to make it retrospective. So even
though you bought your house in nineteen eighty and it
was an investment property, if you sell it next year,
(11:32):
you get paid tax.
Speaker 6 (11:33):
Oh no, you can't be retroactive.
Speaker 3 (11:35):
You can't be retrospective with taxes.
Speaker 4 (11:37):
Well, I don't think. I don't think that it would
ever get past the voters. But for it to be effective,
for it to be sustainable, you've got to make it retrospective.
And I'll tell you the reason why. Because the government
has to start getting revenue straight away so that the
next government doesn't come in and say, right, we're going
to get rid of that.
Speaker 3 (11:56):
Well, let's be honest, that's that would never happen anyway.
You can never have a retrospective tax because you could
say to someone who bought their house for you know,
fifteen thousand dollars years ago, that all of a sudden
they're up for now that I don't think that would
ever wear. But I do things. I do think that
you can have simple things like that, in the fact,
in the family home or your house of residents primary
residents in Australia. I mean it's easy you exempt it
(12:18):
because is it your primary residence. I can argue against
myself again. This By the way, Ed and I are
going to talk until the cows come home. I forgot
to say, I probably said at the start of the
shaking caller and I eight hundred eight ten eighty. But
you can join the conversation anytime you want by picking
up the phone and getting on the blower. I eight
hundred eighty ten and eighty. Here's the other I'm going
to argue against myself again.
Speaker 4 (12:38):
Switch tib have I got now?
Speaker 3 (12:40):
I know, but because but the reason we can do
this is because it's such a divert. It's such a
it's such a nuanced topic. And this is where politics
sometimes doesn't do us any favor, because it deals like
it argues in sleep shammers sometimes. But here's one side.
Remember the cat. Remember how labor adjusted the bright line
test out to ten years, effectively making it a capital
(13:00):
gains tax on property for anyone who's sold within a
ten year period. Correct. Well, there are a lot of
young people who can who live let's pretend they live
in Auckland, who can't afford to buy and get on
the property market in Auckland. If they could, they could
buy a family their own home and it wouldn't be
subject to the bright line test. But of course, because
(13:22):
they can't afford to their way of getting on the
ladder is to buy in I don't know Gisbon or
napierors anywhere christ Church. But of course, of course it's
their only house, but it's not their primary residence. They
sell it to try and get on the ladder and
get ahead, and what happens, whamo you hit them with
a tax. So that's why it is complicated, isn't it.
Speaker 7 (13:43):
Yeah?
Speaker 4 (13:43):
And I think one of the big issues that you
have with tax generally is you create unexpected consequences and
changes in people's behavior. So again, if it comes back
to how do you introduce a capital gains tax in
the right way, there should be no limit to what
it is. You know, if I was put in charge
as an economist of implementing implementing a capital gains tax.
There would be no limit or how long you have
(14:06):
to own it so that you don't have to pay tax.
It would be no matter how long you own it,
whether it's ten, twenty, thirty, fifty years, you're still paying
it once you end up selling it. Because what was
really interesting is when we look at the changes to
the brightline test, as it got lengthened and lengthened, we
actually saw the housing stock decrease. So even as we
(14:28):
saw New Zealand's population increasing, Well, if you bring in
a brightline test, people say, well, I have to hold
my house for ten years before I sell it now.
So the total number of listings ended up coming down
because people were saying, well, I have to hold onto
my house. I can't bring it on to market, and
so you see really unexpected behavior that you don't think about.
Speaker 3 (14:47):
Actually, actually, just on that topic, I think that's one
of the reasons there's something to do with the thirty
year interest rates in the States. Totally unrelated, but that's
why there are certain disincentives to people selling and buying
another house, which is meant that stock in the United
States is not as doesn't turn over as much. But
that's a slightly different topic, isn't it? And we not
going to go there because we're going to take a break.
Come back with your calls the CGT. How would it
(15:11):
work for you? And would it Actually here's the here's
a really simple question. It's a way it gets away
from the pros and cons, but we wanted to We're
going to continue hashing out the pros and cons. Would
it put you off getting into property? See? I don't
think it would, but I want your calls. On eight
h eighty text twenty two past four, Newstalk said B
(15:54):
and welcome back to the show. This is the wonder
Afraid our show. Okay, well clock up a small win
for Tira that this is a home in the house
LDD song, but a kind of bit average, I guess,
ed McKnight. There's the one with radio show show. Cgts
want to put you off investing in property? Do you care?
And which way do you want to go? When it
(16:14):
comes to that discussion which was initiated a few days
ago by Antonio Watson, the CEO of A n Z.
If you like acronyms, let's keep going all abbreviations right,
Let's get into the call show we ed Mark.
Speaker 7 (16:26):
Hello, Yeah, Hi, Look, I've had property and I'm dead
against property gains patch. I want to just know why
they don't put it over every type of business. Every
person that has a business makes a profit. Why don't
you just put it on everything?
Speaker 3 (16:46):
Well, I think I think it would. I think it
would be But because this is the one rief radio show,
we're just talking about it in the context of property.
Speaker 7 (16:55):
Yeah, so realize that. But you're winy people up and saying, well,
you should have it on property, and you send to
always want it on property because they make a profit.
Why didn't you put it onto banks? Why don't you
cut their profit down? Why aren't you doing that?
Speaker 3 (17:09):
Loading that Well, I think you're misconstruing me, Mark, I'm
just putting things in the context of property. I would say, yes,
if you have a CGT, you do put it on
other things and shares and all sorts of things and businesses.
Does that change your opinion of me?
Speaker 7 (17:22):
No, because I'm thinking that you're cutting down the gains
that someone might have worked sixty or seven years and
building a property portfolio, and you're penalizing them. And it's
only in the near well in the past that everyone's
decided a property should be penalized.
Speaker 3 (17:43):
Well, here's the argument why that's not logical, because if
you're just talking about people work hard for their money,
A lot of people work hard as all sorts of jobs,
and they pay tax their entire life on every cent
they ever earned. So the idea that that's not working
for me. But do you think Mark was kind of
misconstruing our context their ed.
Speaker 4 (18:02):
I think what Mark's coming to is that deep sense
of fairness of that what is fair if we're going
to bring in a capital gains tax, and that people
who own shares and banks, as we pretty much all
to because we own it through our care we savers,
that everything should be tax even you know, I own
a business myself. If you build it up from zero
dollars to a million dollars, and you sell your business
(18:24):
for a million dollars, you currently don't pay tax on it,
maybe there should be some tax paid there.
Speaker 3 (18:28):
And I think that's what it would be. I'm not
arguing about it, and we're just focusing on the property issue.
Speaker 4 (18:34):
And I understand that especially landlords like Mark who may
have been building up that portfolio over twenty thirty forty
fifty years. You do feel a bit targeted because often
when we're talking about capital gains tax, people are specifically
talking about property investors. But really it should be applied
to everything.
Speaker 3 (18:51):
Okay, right, let's take some more calls down high. Are
you good? Thanks?
Speaker 8 (18:57):
Real simple questions to answer. The question is why the
hell would you want to have more tech station? Been
professional for thirty years, I've seen numerous clients that are
mid range and right now the struggling. For example, an
(19:17):
average mortgage half a mel fifteen years to go. You're
talking about forty eight hundred dollars a month. You're talking
about rates on top of that, and insurance on top
of that, and there's sixty percent of income going to it, right,
So why on earth are you trying to text some
out out of existence when they retire, and let's look
(19:40):
at those near it's on an orange retirement. You know,
at the end of the day, we don't need any
more text. What we need to do is use it
more effectively. And if you think it's such a great idea,
you bloody pay it, and anyone else who agrees with you,
they can bloody pay it and leave the middle key
we alone.
Speaker 3 (20:02):
End of Okay, good on your Dan. I'm not sure
I'm the legislator on this one, but good on you
for the hostility.
Speaker 9 (20:10):
Ed.
Speaker 6 (20:10):
I kind of like what Dad was saying.
Speaker 4 (20:12):
It was we kind of introed this show with that.
You know, is the government very good or doing currently
doing a very good job at spending our money as
it is a lot of people would probably say no,
which I think was Dan's point as well. And when
Dan was sharing his story there, it actually made me
think of something I heard from Rodney Height, who used
to be the leader of the act Party, and somebody
(20:34):
once said to him, Rodney, why is it that you
are the happiest man in parliament? Way, always so happy?
And he said, because I came into Parliament thinking that
government wasn't very good at getting things done, and so
as I was going throughout my career, I saw that
happening and that's what I was expected. Whereas some people
come into parliament thinking they can change the world and
then they realized that the government is not always good
(20:55):
at getting things done, and so they get their dreams
and hopes slashed by that. And I think it comes
back to Dan's point, which is the government very good
at spending the money they've already got to do. We
really want to give them anymore?
Speaker 3 (21:06):
Yeah, yeah, I mean I think, yeah, it's just when
people say, oh, my heart, you know, I'm investing my money.
It's really hard work. It's like that doesn't in an
argument that impresses me, because everyone works hard for their money.
You know, the idea that somehow the property, if you're
investing in property, you shouldn't be taxed on that. I mean,
I think that's when you start to lose the argument.
(21:27):
I think the argument is one when you say it's
hard to implement and it's hard to work it out
in a fair way where people will feel you know
what I mean. I think the argument that, like, you know,
I've invested in my property portfolio for years, it's hard work.
It's like crime a river, baby. I mean, I know people.
I see people who turn up and their job is
working through the night cleaning commercial buildings, and they might
(21:48):
do that for years. They get taxed on every penny.
So the SOB story is not the strongest argument.
Speaker 4 (21:54):
Yeah, I understand your point around saying everybody works hard
for their money, including you know, like shift workers and
some of those examples you gave. I think where the
likes of Mark and Dan are coming from are saying yeah,
but US property investors often get singled out when we're
talking about capitalist gains taxes. We are often specifically talking
about property investors. And actually, if you bring it in,
(22:16):
it should cover everybody, not just invest Here's.
Speaker 3 (22:19):
The funny thing about it, which and we've got to
get onto more course, because they are lining up. Technically,
if you buy property from a legal point of view,
if your goal is the capital gains and that is
the reason you have bought it, you actually do have
to pay. But the reason you don't is because it's
(22:40):
not so straightforward to prove. That's why they introduced the
bright line. But if you buy anything and the intention
is capital gain and the inland revenue can prove it,
guess what, folks, You're liable for capital gains. But it
just doesn't happen. And I think Antonio was reflecting the thing.
It's like, well, the yields are so terrible. Of course
you buy it for capital gain. And that is factually true,
(23:02):
isn't it that legally, if you buy an asset for
the capital gain, it doesn't matter how long you intend
to keep it, you should pay tax on it. Yeah,
that is correct.
Speaker 4 (23:09):
It's just not often implemented that way because it's extraordinarily
hard to prove. And actually, just before we get into
the calls, it's interesting that you were saying that one
of the reasons that Antonio was bringing it up on
radio and New Zealand was that she did inherit it
a home. Well, the really interesting thing about that is
that under the brightline rules, inherited homes don't aren't caught
(23:29):
by the bright line as it is.
Speaker 3 (23:31):
Yeah, there we go eight eighty. By the way, you know,
it's not get too worked up in the emotion front.
This is just a what if conversation, And I think
the interesting question is also would it put you off
property either way? And it wouldn't put me off I
got it anyway. But I've been thinking about it for
a long time. Pete, Hello, Yes, yes, okay.
Speaker 2 (23:56):
I reckon What should happen is personally is that when
the government was in before, when it was yeah it is,
you buy a property, you've got to keep them from
ten years. And I asked that, yes, you got to
pay text once you got ten years. That way it
keeps the keeps the stock of the rental supply, some
stable and they make their money when they when they
(24:19):
sell it, which is fair enough. But I reckon the
first home should not be text. And we all know
if you if you're flicking your properties now, if you're
a trade, if you're a what a flip of what
he's going to pull in the pay text anyway, I
think it's gone too much for the way of the
cryst relax. They're all doing all those MPs, they're all
(24:40):
doing it.
Speaker 3 (24:40):
You're talking about the blin you're talking about the bright
line test, don't you, rather than the capital gains capital games.
Speaker 2 (24:46):
But I reckon bring it in, but it's got to
be ask not from the first teen years. So you
basically hold the stock the people not flicking them, and
that way they get head after ten years. So you
say you keep the supply of properties on a whole
because there's a lot of people now they see it.
Because Cristal acts, I shouldn't say that it's a rich
trick's great good game.
Speaker 7 (25:04):
It is.
Speaker 2 (25:04):
You can't deny that's what he's in there for and
he doesn't want to pay tax. And that's what they
do it bring it back and keep it for ten years,
sell it in ten years you pay text Well.
Speaker 3 (25:14):
Actually, funny enough, the brightline test inhibits the market, which
restricts supply, which pushes prices up a bit, doesn't it.
So you better to actually just be able to free
to free to buy and sell regardless whenever, shouldn't you?
Speaker 1 (25:26):
Ed?
Speaker 3 (25:26):
What do you think? Any comments?
Speaker 4 (25:28):
Yeah, my view for that, Pete would be you actually
don't want to have a suited number of years that
you've got to hold it and then you can sell
it without tax anyway. And I'll tee the reason why.
Let's say that I was an investor, at which I am,
and then I buy a property, I hold it for
five years. That property no longer suits me for whatever
reason in terms of my investment strategy. But then I go, well,
(25:48):
I can't sell it because if I sell it now,
I've got to pay a whole heap of tax. So
I better just keep holding on to that property rather
than releasing it to the market. I better I hold
it for another five years so that I can get
outside of that window. And that's where that again, the
trouble with taxes is it changes our behavior. What you
really want is if an investor or a first home
(26:11):
by owns a property and now all of a sudden
it doesn't really fit with their strategy. You want them
to release it onto the market because then somebody else
can buy it.
Speaker 3 (26:20):
Yeah, because it does have this artificial restriction of the
supply where you introduced a time limit for exemptions or otherwise. Yeah,
it's funny. It's almost like you'd argue for CGT is
better than a bright line in terms of just supply
and demand.
Speaker 4 (26:33):
I add, that's what I would argue. That's why I
think it's going to be across everything with no number
of years.
Speaker 3 (26:39):
Excellent, there we go. Don't. By the way, Ed doesn't
love the CGT. Just in case that sounded like a
brief confession. It's just a preference ahead of the brightline test.
Thank you Pete for your call. Really appreciate it. Let's
carry on. Richard High Hello.
Speaker 5 (26:52):
Tim, Hello, Hi, hello Tim. To be quite frank at
a capital gaze, I remember many many many years ago
when holy was there's capital gains tax was talked about
that it's a political upper suicide, and wholly I mentioned
that it's political suicide. And to be quite frank for
(27:15):
the chief executive or whatever, they had said on an
enormous salary that she is on. It's a bloody check
of her to talk about capital gains tax? What is
And to be quite frank, To be quite frank, I'll
be quite to the point that woman needs to be
psychologically examined. Subject up, Well.
Speaker 3 (27:33):
Hang on, hold on, hold by Richard. Can I just
mildly challenger on something. How have other countries managed to
bring in a How come it's such a hot potato
here as because of our because other countries have got cgts.
Speaker 5 (27:46):
Lots of them we're talking about here. Other countries have
got a capital gains tax. True, a number of countries
have got capital gains tax, but we're talking about New
Zealand here. And to be quite frank, if you're going
to raise taxes, drop the sorry, dropped the what's it
called it, the pa ye to a wreshold and increase
the GST. That's the best way, and that's the best
(28:08):
way over all to do it. But capital gains tax
is an absolute satan in disguise.
Speaker 3 (28:17):
Yeah, Richard, it makes amazing how Australia managed to implement
a capital gains tax.
Speaker 4 (28:22):
Then, well, it's quite funny because I was actually out
for lunch with one of my colleagues and he argues, oh,
we should have a capital gain tax because I want
my income tax rate to go down. That might happen,
and Australia's got one. I said, yeah, but you can't
go over and look at Australia and say, well, they've
got one. So it's inevitable that we are going to
have one in New Zealand because they introduced their capital
gains tax I believe in nineteen eighty five. That would
(28:43):
be thirty nine years ago, and we still haven't got
one there and yet. To Richard's point there about if
you were to bring one and then you probably should
decrease income taxes as well, I would agree with that,
but I just don't trust any political party enough that
if they make that tax switch, eventually they're going to
increase income taxes.
Speaker 3 (29:01):
Anyway. I do love people's passion about it. I've spoken
Richard on a few occasions, lovely man, and it's the
most impassioned i've heard him. Definitely love your work, Richard, fantastic.
We'll be back in just a moment. Is twenty two
minutes to five News Talk z B and welcome back
(29:30):
this is the week in collective. I'mton beverage. This is
the one roof of radio show. I guess is Ed
McKnight of OPA's partners. You can check them out. O
p op e s.
Speaker 4 (29:39):
What's the website again, Ed, O p ees partners Dot COZ.
Speaker 3 (29:43):
I just should have just carried on talking and editor
dot Curt and Z. Look, we've got truckloads of course
coming and let's keep it going. Rod.
Speaker 9 (29:48):
Hello, Hi Tim. I really can't understand why people are
ignoring the elephant in the room and sofarah's property transactions
are concerned. Uh huh many many years ago, well not
that many of us, But in nineteen seventy one when
I purchased my first home, I paid stamp duty. Now
(30:11):
stamp duty, the imposition of stamp duty on any property
transactions is a simple way of actually gathering revenue for
the government. It's on a percentage basis of the sale
price of the house, and it's paid by the purchaser. So,
in other words, of the house changes hands many many times,
each time it changes hands, is stamp duty payable on it?
(30:35):
And I really think that it. I mean, take for example,
just as a as a own example, five hundred thousand
dollars House say zero point five percent stamp duty payable
two and a half thousand dollars straight into the government coffers,
and to me it just seems why haven't they reintroduced it.
(30:58):
I just can't understand it.
Speaker 3 (30:59):
I think that actually, for me, I don't like the
of the purchase happened to pay it just because it
seems like a hurdle for the first time buy. But
what do you reckon add.
Speaker 4 (31:11):
Well, actually, I think Rods might have a point there.
It's quite interesting over in Melbourne, for instance, in Victoria
and Australia, they have stamp duty and they have variable
rates of stamp duty based on who the purchaser is.
So if you're an investor, you pay a higher stamp duty.
If you're an investor from overseas you pay I'm going
to butcher the figure, but it was over ten percent
(31:32):
the last time I spoke to one of my counterparts
in Australia, so it can be quite hefty over there,
and I think Rod's right to say, well, maybe that
should be part of the conversation. It's quite interesting though
that a lot of us would have an aversion to
that because we say, Wow, we don't want the purchaser
to have to pay it. It should be that grubby
investor who made all that money.
Speaker 3 (31:55):
Now, I just think of it as being put it
on the seller as a transaction tax, just because once
you're in it doesn't matter. When you're buying and selling,
it doesn't matter. But I just sort of think for
that first time by it feels like an impediment.
Speaker 4 (32:07):
Well, you've got to remember, with any tax, the buyer
is eventually paying it. So even if we look at GST,
the seller pays it, but it is obviously passed on
to the buyer. And that would be the same with
any capital gains tax as well. Eventually that's going to
be passed on to the buyer.
Speaker 3 (32:22):
Although if a house is worth a million dollars, it's
not suddenly worth more than a million plus stamp duty
because it's only willing worth what someone's prepared to pay
for it, you know, and people think of the seller
will just add that to the price. It's like, it
doesn't quite work like that.
Speaker 4 (32:34):
The market is the market, yeah, but what you might
also see is that people then delay when they sell it.
That can restrict supply.
Speaker 3 (32:40):
That pushes house prices up.
Speaker 4 (32:42):
So it's impossible to just say we're going to introduce
a tax and only the seller is going to bear
the brunt of it. All taxes are eventually passed on
to the buyer.
Speaker 3 (32:52):
Interesting question, anything to add rod before we go.
Speaker 10 (32:55):
Yeah.
Speaker 9 (32:55):
The other thing is that it could be an incentive
for someone that's selling a house. If it is the
purchase of that's paying the stamp duty, a seller can say, hey, look,
I'm prepared to reduce the price of the house by
the amount of stamp duty. So in effect they are
paying it. The seller is paying it anyway, but they're
reducing the price for the purchaser. And there's also both
(33:16):
sort of connotations that come into it. And I really
think that it's a simple system. I mean, they've got
it in force in the UK they pay stem duty,
the purchaser pays there. In Australia and I'm not sure
about the States, they may do too, but it's a
simple system.
Speaker 3 (33:34):
Yep. Thanks, right, it's interesting, I think, yeah, you know,
we're not going to bring one of those in either.
And let's be honest, too, good.
Speaker 11 (33:43):
A how are you good?
Speaker 3 (33:46):
Thanks?
Speaker 11 (33:47):
I was just waiting for the same answer to give
about the stamp duty. I wanted Godman to introduce some
kind of stamp duties on the houses.
Speaker 3 (33:55):
Yep, you like that idea, Yes, I do like it.
Speaker 11 (33:59):
So that will be like god Man will get some
money out of it, and Godman can make sure and
ask them where the money is going to be used for,
like to make new hospitals or new schools or something
like that, so you can know where the money is going.
Speaker 3 (34:12):
Yeah, actually that is actually that The other thank you, pint.
Speaker 7 (34:15):
That.
Speaker 3 (34:15):
The other argument for that is is it a tax
that happens right now, Yeah, instant.
Speaker 4 (34:19):
If you get that tax revenue straight away, then it
becomes very politically unpalatable to then remove it because then
you've got to decrease some government programs. But it's interesting
that there are a number of countries, including Singapore, which
has stamp duty. What's interesting is Singapore has stamp duty
but does not have a capital gains tax, so maybe
you can have one without the other.
Speaker 3 (34:41):
Okay, thanks for your call, pint, Andy High.
Speaker 12 (34:44):
Yeah, Hi, not a fan of capital gains tax quite
a number of different reasons. First one of them is
does it improve our our economic performance? I don't think
you've touched on a toll. Second one is that we've
got a housing shortage, does it incentivize people to build
and own houses? The good one is that if you
if you sell a house which is worth a million
(35:05):
bucks and you pay capital gains taxes, Let's say've worked hard,
you paid your mortgage off, you buy another house which
is worth a million bucks, and all of a sudden
they pressed though you've now got a mortgage, which seems
pretty unfair because all you're doing is you're selling sense
you like.
Speaker 3 (35:19):
For like think that's why, well, I think that's why
you wouldn't have it on your place principal place of residence,
which is an easy drafted exception.
Speaker 12 (35:27):
Yeah, I would agree, and you've been backward to the
force on that one. The other thing is that, I mean,
we encourage people to save for their retirement and because
we will know that the pension is not exactly princely
and then you know, but if you start doing these
kind of things, you reduce certainty for people who've possibly
been doing this for a long long time, you know, decades,
and you're just up in there their retirement planning, which
(35:49):
is it is a dramatic effect on people. So if
you just did that at the spur of a drop
of a hat. That would have a really devastating effect
a lot of people.
Speaker 3 (35:57):
Good on you. Actually, I'll be honest, if I suddenly
was really into investing in property, I'll probably really load
the idea. That's personal interest.
Speaker 4 (36:04):
Yeah, well and property, And obviously I don't think it's
the gat the best side here.
Speaker 3 (36:10):
Okay, good on you. Hey, look, we need to take
a quick moment. We'll come back with one roof Property
of the Week. We'll try and squeeze another call or
two if we can, but before we wrap up the hour.
But thank you so much for your feedback everything so far,
and we'll be back in just to take us eleven
minutes to five News Talks d B. That's eleven roots.
Speaker 6 (36:30):
Left the wave.
Speaker 10 (36:31):
That's just.
Speaker 3 (36:37):
Dunkof and welcome back to the One Roof radio show.
I'm turn Beverage. My guest is Ed McKnight. It is
eight minutes to five.
Speaker 6 (36:48):
The one roof Property of the Week on the Weekend Collective.
Speaker 3 (36:51):
Yes, the wonder Roof Property of the Week. It's I'll
tell you what you're getting a lot for your money
on this one. By the way, just go to the
one roof site and look for one nine six Tinui.
That's t I n Ui Valley Road, Masterton. I'll give
you the price in just a second. I'll describe a
few things about it. The blurb is sort of it's
a stunning estate, seamlessly blending the charm of a small
(37:13):
farm with the comforts of an expansive lifestyle retreat, nestled
in the tranquil and piccure picturesque to Nui Valley. It's
just thirty five minutes from Masterton. Four bedrooms on a
nineteen point eight eight hectar site. It's a big property
and guess what you reckon you're going to be paying
(37:34):
for it. I've had a look around it. It's a
pretty modern looking house, quite large, lots of bedrooms, plenty
of living space. Expect to estimate eight hundred thousand dollars,
which ed quite a lot of bang for your buck
if you want to be in that neck of.
Speaker 4 (37:49):
The woods, huge property. You got to remember that the
average sale price for a property in Marsterton starts with
a three in front of it, three hundred and sixty
five thousand dollars. I think this is a good reminder
actually that houses are actually not expensive. Everywhere in New
Zealand there are pockets of New Zealand you can still
pick up a lot of house relatively cheaply.
Speaker 3 (38:08):
Yeah, you would definitely be your country lord and lady,
wouldn't you being in that one? But yeah, twenty hectares,
I wouldn't want it. Too much work for me. You'd
have to have a ride on Moa, I think probably,
But yeah, go and check it out. It's a very
attractive looking property. Lovely tree lined driveway that I'm looking
(38:29):
for here. There's a quite a comprehensive set of photos there,
but the size of the property. In fact, I love
it for its driveway. I'll love a good tree lined driveway.
Do you like a tree lined driveway?
Speaker 1 (38:38):
Ed?
Speaker 4 (38:39):
If I could afford it term, i'd have one myself.
Speaker 6 (38:42):
I love it.
Speaker 3 (38:44):
A tree lined driveway. Depending where you want it, of course,
if you want nineteen point eight eight hectares in Auckland,
it'd be worth a couple hundred million anyway, but eight
hundred thousand. Go and check it out on the one
roof site. Let's see if we can squeeze the very
quickly on the CGT one more. Call Alan, it's you here.
Speaker 7 (39:02):
Hi.
Speaker 10 (39:03):
I lived in Australia for a while, and they have
a comprehensive capital gains tax. And basically this is how
it works. The family home is exempt, the house you
live in is exempt. You don't ever pay any tax
on that. Now, the other thing is they have a
starting date. They nominate a starting date and that starting
(39:25):
date is reviewed every now and then every few years
they change the date. Now, the other thing, you're allowed
Every year you're allowed whatever the rate of inflation is
the cost of living business, so every year you are
allowed that. Now, all it does really over there is
(39:45):
catch people that are buying and selling all the time
as the principal means of making a living.
Speaker 3 (39:52):
Well, if you're buying and selling all the time, you're
going to get pained anyway.
Speaker 7 (39:55):
Do you like it?
Speaker 3 (39:56):
Do you like the tax ollan or not?
Speaker 13 (39:58):
Well, the way it works over there, hardly anybody pays it.
People that are buying and selling shares the main people
that get caught. You've got to keep very strict records
if you're in the share market and you're buying and
selling shares. But it has very little effect on the
real estate market. And ask for people landlords, you know,
(40:23):
that have two or three houses and that sort of thing. Well,
they as long as they sit on those houses for
years and years and years, they don't pay any they
don't play any capital games tax. It's only paid when
you sell.
Speaker 3 (40:36):
Yeah, okay, hey, look we're running a bit short of time.
There any comment on that before we wrap it up here.
Speaker 4 (40:41):
Yeah, it's really interesting my fiance Angela, who's probably listening
to the show as a financial advisor. And one thing
if you're thinking about taxing shares that you've got to
be really careful about is when you are rebalancing your portfolio.
So often what will happen if you're investing in shares
is you might have bought some shares they've gone up
in value. So then you say, hey, I need to
sell some put some money in turn deposits. You've just
(41:03):
got to make sure that you're not captured by those.
Speaker 3 (41:05):
Indeed, God, that was a quick answer, because the time
is upon us ed. How quickly has that out gone
real far rocketed? Look, I can sum it all up.
I would say as a cultural thing, New Zealander's generally
hated capital gains tax, or at least listeners to this show,
and that's where we can park it ed McKnight from
op's partners, Opspartners, dot Cot and Z. Thanks for your time.
(41:26):
We'll be back with the Parents Squad. John Cowen is
waiting on the wings. Back shortly.
Speaker 6 (41:33):
For more from the Weekend Collective.
Speaker 1 (41:34):
Listen live to News Talk zed Be weekends from three pm,
or follow
Speaker 6 (41:39):
The podcast on iHeartRadio
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