Any Māori exemption from a capital gains tax would be a contradiction of fairness, National leader Simon Bridges said.

"If a capital gains tax is bad for Māori, then it it's bad for every New Zealander," he said. "There shouldn't be exemptions for some. That's not the Kiwi way."

The Tax Working Group report, which published its report on February 21, recommended a comprehensive capital gains tax (CGT), excluding the family home.

Chaired by former Finance Minister Sir Michael Cullen, it raised issues about the need for exemptions or deferrals on CGT for Māori organisations in the interests of fairness but it did not included them in its formal recommendations. It said more work needed to be done on that area.

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It said that Māori freehold land held via an entity which was governed by Te Ture Whenua Māori Act merited specific treatment by the Government which could take the form of an exclusion from a CGT or be part of rollover provisions, which allows for CGT to be delayed until the next sale.

The report said that with population growth, the shareholder base of such entities was perpetually diluted so any capital gains made on ownership interests were likely to be non-existent or very small.

The working group said deferral of CGT should apply to iwi transferring assets to associated hapu and marae, particularly after a Treaty of Waitangi settlements when assets are dispersed.

And it said CGT could also create an impediment to a Māori organisation's ability to regain ownership over land lost as a result of historical Crown action.

"Accordingly, rollover [deferral until the next sale] should be provided for transactions relating to recovering by Māori authorities of such land."

It gave as an example when ancestral land was made available by the Crown or became available on the open market after the settlement had concluded.

"Māori organisations may need to realise gains by selling land or other assets acquired through their settlement to purchase that ancestral land.

"Without a rollover rule in this circumstance, a Māori organisation would be subject to tax owing to the arbitrary fact that is preferred ancestral land was not available for the Crown to include in original treaty settlement redress.

Finance Minister Grant Robertson said the Government was not proposing exemptions for Maori but the tax report had set out the merits for exemption and rollover relief. Photo / Mark Mitchell
Finance Minister Grant Robertson said the Government was not proposing exemptions for Maori but the tax report had set out the merits for exemption and rollover relief. Photo / Mark Mitchell

Under the group's CGT plans, deferral of CGT for businesses, would be allowed only for businesses with a turnover of less than $5 million and that the gains were reinvested in a replacement assets – such as upgrade in premises.

The Tax Working Group also recommended that the already controversial tax rate for Māori Authorities of 17.5 per cent be extended to their wholly owned subsidiaries.

Māori Authorities for tax purposes include companies or trustees of trusts which receive or manage assets transferred by the Crown as part of Treaty of Waitangi settlements, Te Ohu Kai Moana, the Crown Forestry Rental Trust, Māori trust boards, and companies or trustees of trusts that own land subject to Te Ture Whenua Māori Act 1993.

Finance Minister Grant Robertson dismissed Bridges statement on the basis there was no recommendation in the Tax Working Group report excluding Māori from a CGT.

"Simon Bridges is wrong again - the Government is not proposing this," said Robertson.

"The independent Tax Working Group has proposed that more work is done on this issue, and outlines in the report that there may be merit for exemptions or roll over relief."