World of Finances

July 14 – Labour Party leader Phil Goff unveiled the worst kept secret in recent New Zealand politics by confirming a Labour-led government would introduce a flat rate 15% capital gains tax, unadjusted for inflation, on all assets other than the family home from April 2013.

It is promoting the tax and a range of other measures, including putting the top personal tax rate back to 39% for incomes over $150,000, as an alternative to the partial privatisation of state businesses promoted by the National-led government.

The first $5000 of personal income would also be made exempt from tax, and would likely be introduced in two steps in the first term of a Labour-led Government, Goff said.

The package also includes removal of GST from fresh fruit and vegetables, at an estimated annual cost of $300 milliion.

Describing the policy as a “game changer” for economic policy – and implicitly for Labour, which has polled poorly for most of the current term of Parliament – Goff said it was time for New Zealand to adopt a capital gains tax, which all developed countries have, apart from Switzerland and Turkey.

However, the capital tax would take 15 years to reach a “steady state”, collecting an expected $3.7 billion annually by 2028, according to “headline estimates” from the economic consultancy, BERL.

In the short term, the Labour package would increase government deficits between now and 2018, adding around $1.9 billion to total government borrowing over that period.

The package is highly dependent in the short term on additional revenue from a range of roughly calculated anti-tax avoidance measures, likely to concentrate on taxation of trusts and more effective collection of outstanding unpaid tax.

The package also assumes that agriculture will be brought into the emissions trading scheme, raising as much as $254 million by 2014, offset by new spending on research and development tax credits.

Exemptions from the proposed tax are few.

While the family home will be exempt, the family bach will not be.

Full Article…

I previously highlighted the itemized tax filing delay, which came as a result of the Obama tax cut deal (aka the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010). The Act extended some deductions from 2009 through 2010 and 2011. It’s time for an update.

After getting their system and paperwork in order (as well as Turbotax, H&R Block, and all the tax software companies who had to update their software), the the IRS announced the new 2011 start date for itemized tax deduction filers. If you’ve already purchased your tax software, you’re fine, you can start working on your return, just wait until February 14, otherwise your return will spontaneously combust when you submit it.

The new tax filing start date is February 14, celebrated by some as Valentines Day (the perfect way to spend that special Hallmark holiday with your loved one).

Those affected by tax filing delay were the following groups:

• Taxpayers who itemize tax deductions.

Full Article…

Last week Amazon had the software package I use on sale – H&R Block at Home. This week it is Turbo Tax’s turn to be on sale. For all of you Turbo Tax fans who have not yet purchased your 2009 software, you may want to take advantage of this deal (on sale, free shipping, & sales tax free depending on your state). I found a $10.00 rebate (link below) which can bring the cost of this down a bit further.

– Intuit $10 Rebate for Turbo Tax
– TurboTax Deluxe Federal + State 2009 + efile

Labels: Taxes