• The Labour party’s tax policy is to be announced later this week.  There have been hints it may be broadened from being just on investment property to include other assets such as shares
  • Of course New Zealand shares already have a tax on gains if an individual or Trust is classified as being a trader
  • But capital gains on Australasian shares in PIEs (Portfolio Investment Entities) are tax free.  These are the entities used by most KiwiSaver funds.
  • The value of this tax free status is very valuable, particularly for younger investors who may be in KiwiSaver for 30-40 years and so get the compounding benefit of tax free gains for a long period.
  • So a key question for KiwiSavers is would a new capital gains tax apply to KiwiSaver Funds?  This is certainly something to look for in Labour’s announcement.
  • If it does then 1.8 million KiwiSavers would potentially impacted by this move and so it would not just be a tax on the rich, which it is being portrayed to be.
  • Unfortunately it would also be another example of the goal posts being changed in a negative way for KiwiSaver investors with the Government potentially taking another slice out of KiwiSaver accounts. 
  • This would be disappointing as KiwiSaver funds are a growing source of capital for productive investments, especially New Zealand currently lacks sufficient savings levels currently for this purpose.

 Anthony Quirk, AFA