24 Mar, 2021 20:15 am

Dunne Speaks: PM Gets Her Capital Gains Tax After All

Dunne Speaks: PM Gets Her Capital Gains Tax After All
George Orwell once observed that “political speech and writing are largely the defence of the indefensible… Thus political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness…”. The current argument ...

At present, capital gains arising from the sale of non-owner-occupied residential investment properties sold within five years of purchase are taxed at the taxpayer’s marginal tax rate (usually 33% or 39%, depending on their income level).It has also vehemently denied that this amounts to a capital gains tax on investment property sales, so does not break its earlier promises not to introduce such a tax.On the broader question of whether the extension of the bright line test constitutes a capital gains tax, the Prime Minister says it does not because it relates only to investment property and does not include land, shares, business and intangible assets as recommended by the Cullen Tax Working Group in 2019.After all, she promised to resign if her government ever moved to introduce a capital gains tax.

Both propose taxing the capital gains at the taxpayer’s marginal tax rate – the only variation is that the Working Group wanted that to apply to all such transactions, whereas the government is limiting the scope to changes within a ten-year period.Admittedly, the Working Group also proposed including capital gains other than on property sales, something the government has ruled out so far.

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