New Zealand HNW investigation raises fears of new inheritance tax
The New Zealand government has allocated NZ $ 5 million to its Inland Revenue to examine the income and wealth of high net worth individuals over two years, which coincides with the upcoming election, suggesting that a tax on high net worth estates could be introduced.
According to a briefing note from New Zealand law firm Minter Ellison Rudd Watts, the recently released IRD 2021-22 work program includes research on the Inland Revenue involving the collection of information on the level of tax paid by wealthy individuals.
He further cited OECD comments that there is a strong case for equity in inheritance tax, especially in countries that do not tax capital gains like New Zealand. -Zealand, and concerns about increasing inequalities due to tax-exempt gains in the housing market in particular. .
It seems possible that a more targeted inheritance tax targeting the “1%” (or an even smaller percentage of the population) will be introduced. ”
Louise Meng, lawyer with Minter Ellison Rudd Watts. said: “The government recently said that the research the Inland Revenue will be undertaking is purely an information-gathering exercise. new taxes. The line test and denial of interest changes have led some to express some skepticism about this. “
We would be surprised if the government decided to go to the next election by proposing a large-scale inheritance tax. But it seems possible that a more targeted inheritance tax targeting the “1%” (or even a smaller percentage of the population) could be introduced. “
If the government decided to do so, the law firm said there would be many technical issues to address, including:
• tax havens, including asset value thresholds, and potential exclusions for family homes and family businesses;
• interaction with the tax rules of trusts; and
• the potential need to reintroduce the gift obligation, to address perceived avoidance concerns.
• No doubt the prospect of an inheritance tax will be of concern to many families, who will want to follow the Inland Revenue review closely.