17/09/2006
NewstalkZBAn outcry from businesses and investor groups has forced the government to dump its controversial capital gains tax on foreign shareholdings.It will be replaced by a tax on up to five percent of the value of foreign shares held at the beginning of the tax year.
Revenue Minister Peter Dunne says it is a simpler and fairer tax system.
He says the revised tax plan means the government will forego about $140 million in revenue.
Under the revised plan, tax will not be charged in years in which a share portfolio loses money.
Plans for a capital gains tax on foreign shareholdings have been watered down.
Investors were up in arms at the original scheme, which proposed taxing unrealised gains.
Instead, it is being replaced with a tax on up to five percent of the value of foreign shares at the start of the tax year.
Peter Dunne denies the change is the result of political pressure.
He says it is a tax on the proceeds people get from their investments.
Mr Dunne says it is what many of the people making submissions at the select committee have called for.
The new rules include a $50,000 threshold.
Below that, investors are exempt from tax.
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