An Auckland accounting firm is pointing to what it calls big issues with a proposed withholding tax for overseas property investors.
Photo: 123RF
The proposal is part of government moves to start to control overseas investors and their impact on the local housing market, as well as to get them paying their fair share of tax.
The plan is for overseas investors to pay the lesser of either 10 percent of the sale price or 33 percent of any profit made on property bought and sold within two years, excluding the family home.
A director at William Buck Christmas Gouwland, Leicester Gouwland, said a 33 percent tax rate was too high, and a one-size-fits-all approach would not work.
"When you look at how the proposed withholding tax is to be calculated, it's just on the simple profit on the sale as opposed to the taking into account, for instance, the cost of sale.
"So if you actually work out what the tax could be in a particular situation, you find the withholding tax requirement is significantly higher than what that tax is likely to be."
Mr Gouwland said a sliding tax rate - between 10 and 25 percent of profit made - would work better.
He also said the proposed tax considered profit - but ignored what happened if there was a loss.
"There is no allowance for those losses so you could have the situation where someone doesn't have a tax obligation at all. However, withholding tax is required to be deducted and then they'll need to go through the process of obtaining a refund."
