A proposal by the Tax Working Group's (TWG's) for a capital gains tax (CGT) is under fire from Federated Farmers.
The TWG has recommended applying the tax to gains and losses on land improvements (except the family home), including shares and business assets.
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Federated Farmers has previously labelled a CGT as "a mangy dog that will add unacceptably high costs and complexity".
"There is nothing in the Tax Working Group's final report that persuades us otherwise," said Vice-President and Commerce spokesperson Andrew Hoggard.
"A CGT would make our well-regarded tax system more complex, it will impose hefty costs, both in compliance for taxpayers and in administration for Inland Revenue, and it will do little or nothing to ease the housing crisis," he said.
He said it was notable that even the members of the working group could not agree on the best way forward, with three deciding a tax on capital gains should only apply to the sale of residential rental properties and the other eight recommending it should be broadened to also include land and buildings, assets, intangible property and shares.
"Federated Farmers believes that the majority on the tax working group have badly under-estimated the complexity and compliance costs of what they're proposing, and over-estimated the returns," said Mr Hoggard.
The group maintains the recommended 'valuation day' approach to establishing the value of assets - even with a five-year window - will be a feeding frenzy for valuers and tax advisors, and just the start of the compliance headaches for farmers and other operators of small businesses that are the driving force of the New Zealand society and economy.
Lifestyle block owners whose properties are bigger than 4500 metres squared will not be fully exempt.
"Trying to look for positives, at least if farmers and small business operators have to swallow the CGT rat, it is made slightly more palatable by the TWG's recommendation that roll-over relief applies."
He said that would mean that if a farm is 'sold' to family successors, or there is a transfer on death or matrimonial separation to a family member, or a business restructuring where there is no change of ownership, there would be no capital gains tax to pay at that time.
"However, the potential tax liability would accumulate and kick if the farm property was ever sold out of that family's ownership."
"We're also glad that the Tax Working Group has confirmed that money that farmers and other land owners spend on QEII and Nga Whenua covenants, locking up and protecting land for biodiversity and environmental enhancement, should be tax deductible."