How many Kiwis will get hit by the Greens asset tax?

Thomas Coughlan writes:

The Greens have proposed a 1.5 per cent tax on assets held in trust, mainly so that trusts cannot be used to avoid the wealth tax. The difficulty with this is that we know very little about how many people will be caught up by this tax and how it will affect them.

The two key things to remember about this asset tax, is it applies from the first dollar, and it is on gross, not net assets.

You will pay $15,000 a year tax on your family home if it is owned by a trust, whether or not it is mortgage free or if you have an $800,000 mortgage on it (which means $15,000 tax on $200,000 of equity).

For active trusts that filed a return this year, the median net equity in the trust is $370,060 – hitting the trust with a tax bill of $5550 a year.

That is net equity – but the tax will apply to gross assets so higher than that.

An information vacuum is ideal for a scare campaign and some of those numbers look very scary. If there are, say 500,000 trust beneficiaries, that would equate to 12 per cent of all taxpayers – 1 million trustees would equate to a quarter of income taxpayers.

Yep, a huge number will be affected.