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Speaker 1: Now, how do you feel about an inheritance inheritance tax?

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Speaker 1: It is understood that Labor is considering whether they advocate

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Speaker 1: for an inheritance tax or not, and they're reportedly taking

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Speaker 1: inspiration from Ireland's version. Now, what happens in Ireland is

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Speaker 1: they don't pay any tax on anything that they get

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Speaker 1: inheritance wise of up to five hundred and fifty eight

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Speaker 1: thousand New Zealand dollars. But then if it clicks over that,

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Speaker 1: it's thirty three percent tax on everything else. Jeff Nightingale

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Speaker 1: is an independent tax advisor who joins me.

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Speaker 2: Now, hey, Jeff, good afternoon, Heather.

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Speaker 1: You like the Irish version of it?

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Speaker 2: Well, I'm not sure I like any versions of inheritance tax,

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Speaker 2: but they're pretty common amongst the OECD, and most of them,

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Speaker 2: like the Irish version, do have an exemption both for

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Speaker 2: a financial level, but also usually exempting your personal house.

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Speaker 1: Oh so your personal house you can inherit from your

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Speaker 1: parents and then also another five hundred and fifty eight

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Speaker 1: thousand New Zealand dollars.

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Speaker 2: Yeah, different jurisdictions have different rules, but in principle most

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Speaker 2: of them have that.

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Speaker 1: Yet, why don't you like an inheritance tax.

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Speaker 2: Well, I think there are some really good arguments for

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Speaker 2: it from a wealth redistribution in an equity sense. It

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Speaker 2: sort of provides a catch all at the end of

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Speaker 2: life to pick up untaxed capital gains and things, and

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Speaker 2: it's a decent source of revenue for the government. There

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Speaker 2: are a number of reasons why you might not like it.

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Speaker 2: It can get very complex to administer because it's based

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Speaker 2: on valuations. It can drive some really unwelcome economic behaviors

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Speaker 2: because you've got to find cash to pay it, and

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Speaker 2: therefore you might realize you might sell a family business,

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Speaker 2: or you might realize some assets that are not yet

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Speaker 2: you know, that's not the right time to do that.

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Speaker 2: And then the final thing is people tend to hate it.

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Speaker 2: Voters don't like it.

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Speaker 1: No, I would have thought so. I mean, yeah, it

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Speaker 1: seems like it's death to the party who comes out

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Speaker 1: with the death tax. Right. Is there an argument for

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Speaker 1: us doing it because we are outliers.

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Speaker 2: Yeah, I mean, there are some reasonable arguments for doing it.

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Speaker 2: The OECD often recommends that we consider it where outlies

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Speaker 2: in a couple of centses one, as we don't have

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Speaker 2: a capital a broad based capital gains tax, and therefore

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Speaker 2: an inheritance tax would act as a sort of a sweeper,

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Speaker 2: a cover end of life to pick up some of that.

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Speaker 2: And then the other reason is the economic reason, which

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Speaker 2: is to try and encourage the handing down and the

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Speaker 2: using of assets during someone's lifetime rather than accumulating big

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Speaker 2: wealth inequalities. That's why, you know, that's why the OECD

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Speaker 2: recommends it, But voters don't like them.

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Speaker 1: No, absolutely. Do you think just on the capital gains

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Speaker 1: tax which you mentioned just before, do you think that

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Speaker 1: the attitude has changed in this country on the CGT

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Speaker 1: or is it still a nago.

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Speaker 2: I think it's shifted a bit, but I'm biased. I

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Speaker 2: was a member of the Tax Working Group in twenty

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Speaker 2: eighteen that recommended one, but I think it has shifted it.

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Speaker 2: I think people are starting to look forward. We're going

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Speaker 2: to have a bit of a bit of a tax

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Speaker 2: revenue shortage in this country over the next twenty or

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Speaker 2: thirty years. Treasury is projecting unless we deeply slash government expenditure,

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Speaker 2: and I don't think, you know, the voters have not

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Speaker 2: indicated they want to deeply slash. They want to control it,

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Speaker 2: but they don't want to deeply slash it, and so

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Speaker 2: we may need some more revenue, and probably the most

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Speaker 2: sensible thing to go to would be a realization based

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Speaker 2: capital gains tax.

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Speaker 1: Jeff, there is a text that's come through. Can I

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Speaker 1: please ask Jeff. This is Heather. Can you please ask Jeff.

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Speaker 1: Would asset's owned by a family trust likely attract the

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Speaker 1: inheritance test because that tax because there would be a

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Speaker 1: big growth coming for trusts.

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Speaker 2: If so, yes, I mean it's all in the question

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Speaker 2: of design. But almost certainly, if you wanted the inheritance

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Speaker 2: tax to stick, you would have to apply it to

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Speaker 2: family trusts. And somehow transferred the exemptions over. New Zealand

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Speaker 2: did just to have an inheritance tax. We got rid

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Speaker 2: of it in nineteen ninety two, but it was very unpopular.

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Speaker 2: But in those days there was a lot of effort.

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Speaker 2: You know, tax advisors like me made good business out

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Speaker 2: of putting people into trust and trying to avoid the thing.

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Speaker 2: And that's the other kind of argument against them.

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Speaker 1: Yeah, so from a personal point of view, actually, Jeff,

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Speaker 1: it might suit you if we bring these complicated things.

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Speaker 1: And thank you for so much for your time. I

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Speaker 1: appreciate it, Jeff. Jeff Nightingale, independent tax advisor.

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