Exemption for proposed capital gains tax could be on the cards for iwi

A capital gains tax exemption could be on the cards for iwi, with the Tax Working Group suggesting a reshuffling of the rules for Māori collectively owned land and assets.

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The Tax Working Group has suggested a reshuffling of the rules for collectively-owned Māori land and assets. Source: 1 NEWS

Sir Michael Cullen - who headed the tax working group - is warning of potential legal ramifications if the Government fails to address the issue.

"I think the general non-Māori public needs to understand there are some special cases here and it's not some particular special deal.

"It arises out of our history and the nature of those collectively owned lands," Sir Michael says.

It's not just land, iwi also receive commercial property, forestry and other assets potentially hit by such a tax.

Antony Thompson of Auckland iwi Ngāti Whātua agrees any CGT needs to be looked when it comes to iwi assets.

"It would be detrimental, primarily because we'd be spending more money on tax and we'd be spending less on our people.

"What we really want is equity at the end of the day - the ability for people to determine their own futures, their own destinys," he told 1 NEWS.

Structuring the rules to cater for Māori could be a hard sell politically - but the tax working group warns failure to do so could see legal action.

"Under National there would be no capital gains tax so we don't have to worry about exemptions," National's Amy Adams says.

The working group is now urging the Government to explore the issue further through consultation.