As we roll out fibre to the home, more and more people will work from home – at least part of the time. This will have a number of positive side-effects such as reduced congestion, lower carbon emissions and reduced office rental pressure.
Ernst & Young tax partner Jo Doolan said Labour had claimed that only a small proportion of New Zealanders would be impacted by capital gains tax, but because most firms employed fewer than five people many owner/operators could be affected.
“It’s quite clear in [Labour’s] document … but they’re hoping they can distract attention from it,” Doolan said. “Let’s not be sneaky about it and pretend it’s not going to impact on a lot of people.”
Small and medium enterprises (SMEs) could choose not to claim tax deductions for a home office, and would therefore avoid the capital gains tax. “Either way you’re going to be paying more tax. We want our SMEs to grow and that’s absolutely critical to the future. We can’t afford to be hitting them.”
And just think about the compliance costs:
There would also be issues in policing it, defining the areas used for operating the business, and valuing those areas, Craig said. Many entrepreneurial companies kept costs low by working from home. “Why would you punish that efficiency? It’s going to add a whole lot of compliance obligations for very little practical effect,” Craig said.
BusinessNZ chief executive Phil O’Reilly described the proposed tax as “absolutely counterproductive”. If a person owned a house for 10 years but ran a business from the home for only half that time, which part would be subject to the tax? “It just shows you the ridiculous nature of this proposal.”
If you are going to do a Capital Gains Tax, then it should be simple and fair and apply to all assets.Tags: CGT