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Monday, October 7, 2013

To Tax or Not - The Capital Gains Conundrum

In a recent article in the Business Daily the writer argues for re-introduction of CGT (See article) giving illustrations of situations where the current legislation disproportionately benefits the wealthy. In one example he described a taxpayer who had a 'side-hustle' buying and selling land, earning income which apparently wouldn't be taxed because the gains would be considered under CGT. I disagree with this on the basis that the side-hustle amounts to trading and income derived from it will be taxed in the normal way. The differentiator is that the plots he was buying and subdividing were bought primarily for that purpose a fact which would be easily established by KRA if they were to catch up with him. If for example he had bought that plot years ago, perhaps planning to build a home on it sometime in the future