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    Bludging for Families

    canterella
    canterella
    Nymph
    Nymph


    Bludging for Families Empty Bludging for Families

    Post  canterella Wed Aug 19, 2009 9:05 am

    Key attacks rich people who claim welfare

    Prime Minister John Key says wealthy people who are legally manipulating their financial affairs to ensure they benefit from Working for Families are "rorting the system" in a way that is unfair on other taxpayers.

    A Treasury paper for the Tax Working Group says 9700 families with investment properties also receive Working for Families tax credits - and many were boosting their entitlements by offsetting their incomes against rental losses on their properties.

    The paper also said there was growing evidence high-earners were using other ways to "shelter" their incomes to ensure they maximised what they could get from Working for Families.

    They included sheltering income in trusts or setting up a trading company owned by a trust because money received as a trust beneficiary did not count as "income" for the purposes of Working for Families, for which eligibility is determined only by taxable income.

    Yesterday, Prime Minister John Key said such manipulation of the tax system was clearly "rorting the system" - albeit legally - and unfair on other taxpayers. "If someone is using tax structuring as a way to receive Working for Families when they are, in fact, very well off, they're really taking taxpayers' money off the rest of New Zealand. I don't think that's fair and if we can find a way through that, it would be my preference."

    Mr Key said the Government would wait to see whether the Tax Working Group could come up with a way of eliminating or reducing the scope for such activities.

    The Tax Working Group was established by the Government to consider ways to ensure New Zealand's tax system was efficient and fair. It is expected to report back later this year.

    Labour leader Phil Goff said if there were loopholes and the scheme was being exploited through the use of trusts, they should be fixed.

    He did not believe the problem was brought to the attention of Labour when it was in government and believed the scheme was otherwise sound, describing it as "one of the best policies Labour introduced".

    Finance Minister Bill English said there were issues of fairness and complexity because the different tax rates and the test for Working for Families meant people put a lot of effort into arranging their affairs to avoid higher taxes.

    He said despite incomes rising, the IRD had noted fewer people than expected were paying the top personal tax rate and there had been a big increase in the number of entities such as trusts.

    Yesterday, neither Mr English nor Mr Key would rule out Government consideration of an increase to GST or introduction of a capital gains tax - both of which are other proposals that have gone to the Tax Working Group.

    * For their own benefit

    Ways the rich can arrange things to help get Working for Families:

    Set up a trading company owned by a trust. The income as a trust beneficiary is not taken into account for Working for Families.

    Offset income with rental losses from investment properties.

    Maximise fringe benefits, rather than taxable wages.

    Invest in cash PIEs instead of normal bank account.


    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10591703

    I hope you've learned a couple of tricks here guys. How they can get away with it I don't know.
    We used to receive WFF whne Labour was in govt for several months, about $160 a week my husband being the sole earner, self employed in the 60 K income range, and we don't own investment properties. After a few months the IRD sent us a request to pay back about a grand of what we received, so my husband said stuff'em, we don't want anything to do with them, we can do without your 'help'.
    It seems that we weren't rich enough and clever enough to receive WFF! Laughing
    A bit rich from Key to criticise, when his own ministers indulge in a similar activity, with compliments from the taxpayer.
    avatar
    Diaz
    Nymph
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    Post  Diaz Wed Aug 19, 2009 1:31 pm

    Blank


    Last edited by Diaz on Tue Mar 30, 2010 9:12 pm; edited 1 time in total
    canterella
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    Post  canterella Wed Aug 19, 2009 2:06 pm

    Investment properties, another loophole - nothing wrong with it,but why is there not capital tax on it? If you invest in shares, you'll have to pay tax on the dividend, if you have money in savings you have to pay tax on it, so why is it real estate different? Wait - because most politicians own at least one investment property?
    Yes, fix the loopholes and the govt coffers may get a bit more cash.
    Psalter
    Psalter
    River-God
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    Post  Psalter Thu Aug 20, 2009 1:48 am

    Capital gains tax on properties is the only way that the average person from my generation will be able to buy property. Baby boomers have really screwed it for us with "artificially" inflated house prices.

    It is very depressing thinking that a scientist and a teacher in NZ will have to work for 3 years, saving every bit of expendable income to raise a deposit. Sickening really.

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