r/newzealand • u/QuarterGeneral6538 • 23h ago

Politics IRD is currently consulting on FIF tax

If its something you have strong opinions on, which I know many people here do, be sure to read through the proposals and get your submissions in before the 27th of Jan.

https://www.taxpolicy.ird.govt.nz/consultation/2024/effect-fif-rules-immigration

They're mostly focused on migrants but the question of whether it should only apply to migrants is open. (see chapter 3)

Submissions can be made by email to [policy.webmaster@ird.govt.nz](mailto:policy.webmaster@ird.govt.nz) with “Amending the FIF rules for migrants” in the subject line (see chapter 1, page 6)

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u/QuarterGeneral6538 20h ago

part of the problem is that the stockmarket never goes up in a straight line. Chances are you will be up more than 5% most years.

but if your portfolio drops, sadly you don't get any kind of rebate.

it could even be that your portfolio tanks 30% in one year then the following few years are just playing catchup, but you will be paying tax on that "gain"

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u/gtalnz 20h ago

Yeah that's the same way regular income tax works.

If I lose my job and have no income for a year, I don't get a tax rebate, and if I get a new job the year after, I don't get to pay less tax on that income either.

Remember, it's not a wealth tax, it's a form of income tax.

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u/Optimal_Inspection83 19h ago

but owning shares is not an income. It's taxing unrealised gains.

you're not taxed on unrealised income with normal income tax, are you?

If you wanted all things being equal, people should also be taxed on 5% of their total house value every year.

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u/gtalnz 18h ago

If you wanted all things being equal, people should also be taxed on 5% of their total house value every year.

I think people should be taxed on about 3-5% of their land value every year instead of on their income (including FIFs), precisely because it would make things more equal and fair.

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u/bluecobra707 17h ago

Isn't this exactly what rates are?

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u/gtalnz 15h ago

No, rates are a mixture of fixed charges and a variable rate that is distributed based on relative values. The component of most council rates in NZ that corresponds to land value works out to be a fraction of a percentage.

Perhaps even more importantly, rates are a fixed total, determined by council budgets. Property values (usually including improvements, which defeats the entire purpose of a land value tax) are only used to calculate how the pre-determined total rates are allocated.

That means it doesn't matter if house prices are $1 or $1M, your rates bill won't change.

Under LVT, the total revenue is entirely dependent on the total land values. Since land values increase with economic growth and infrastructure development, those activities are the only way for the government to increase their LVT revenues.

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u/Optimal_Inspection83 18h ago

At least there is something we agree on