Capital Gains Tax - I wonder if they'll rebate any tax if negative growth?

[Kwaka14]

Saw this in the herald today and I'm way pleased the house is gone. I wonder if they'll provide a tax rebate if property values fall....

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10576312

[carver]

it wont work, cause they will budget on it, then when thing sturn to shit they are out of money, bit like building consents

[James Deuce]

They do that and Labour will be back in next term. Maybe even the Maori Party as primary coalition party with the Greens as number two.

Kwaka, you KNOW the answer to your question. You knew it before you asked.

[RantyDave]

Move some of the tax away from company tax and onto capital gains? Sounds awesome. Do it now.

Dave

[Hitcher]

Capital gains tax? Political suicide. Enforcement would be ponderous as there are too many ways to avoid it.

[NDORFN]

It's a bit late for that. The housing boom is over.

[discotex]

It's a bit late for that. The housing boom is over.

Surely the point is to prevent another housing bust.......

That's most common sense I've seen from treasury ever. Less personal tax, less company tax, more GST and capital gains. That means you get more bang for buck personally in every way unless you save by borrowing to buy houses. Exactly what this economy needs!

[The Stranger]

Interesting to see who really pays for a capital gains tax.
The same people who pay all tax, those who can least afford it, low to middle income earners.

So I have an investment property, it is currently rented well below market value. I rely upon the capital gain for a return. They introduce a capital gain tax and I will be looking for top dollar on my rent instead, as will all other investors.
What effect will this have on rents?
How will increasing rents help the people looking for a first home? They have enough problems now without having to cover my tax burden for me.

Currently about 35% of our housing stock is rental. Not that long ago (about 30yrs if I recall correctly) that figure was 10%.
It doesn't make sense to fuck with that many people's lives.

That said, the cynic in me says that National are unlikely to introduce a tax in which many of them would be caught themselves.

[NDORFN]

Surely the point is to prevent another housing bust.......

That's most common sense I've seen from treasury ever. Less personal tax, less company tax, more GST and capital gains. That means you get more bang for buck personally in every way unless you save by borrowing to buy houses. Exactly what this economy needs!

Sure but such a massive number of middle-income consumers (the one's most likely to be making the personal tax gains) have a mortgage [edit] or pay rent. So it'll just punish the people it's suppose to help and end up cutting even.

[NDORFN]

Interesting to see who really pays for a capital gains tax.
The same people who pay all tax, those who can least afford it, low to middle income earners.

So I have an investment property, it is currently rented well below market value. I rely upon the capital gain for a return. They introduce a capital gain tax and I will be looking for top dollar on my rent instead, as will all other investors.
What effect will this have on rents?
How will increasing rents help the people looking for a first home? They have enough problems now without having to cover my tax burden for me.

Currently about 65% of our housing stock is rental. Not that long ago (about 30yrs if I recall correctly) that figure was 10%.
It doesn't make sense to fuck with that many people's lives.

That said, the cynic in me says that National are unlikely to introduce a tax in which many of them would be caught themselves.

Exactly :niceone:

[Hitcher]

"Capital gains" should only be taxed once they are realised as income.

This raises some interesting issues about the taxation treatments applied to superannuation investments.

[James Deuce]

Surely the point is to prevent another housing bust.......

That's most common sense I've seen from treasury ever. Less personal tax, less company tax, more GST and capital gains. That means you get more bang for buck personally in every way unless you save by borrowing to buy houses. Exactly what this economy needs!

It will create empty properties and over crowded poverty filled state house ghettos. The bias has swung too far toward rental properties for CGT to work for long. People just scraping by with one rental property will simply stop paying the mortgage on the rental. It's not good sense, it's a mild panic that if Australia cuts company tax again, then NZ businesses will just bugger off over the ditch as they should have years ago.

National are left floundering trying to keep both our economy and local businesses viable thanks to Labour's anti-business practices, and this will be one of the options Treasury want to make public so it can be shot down and replaced with something more insidious like 15% GST.

[NDORFN]

I like that thinking Hitcher. I the IRD ever upgrade thier systems they could administer superannuation back to senior citizens (or just not take it off them in the first place).

[cowpoos]

I wonder if they'll provide a tax rebate if property values fall....


You don't get a hand out from IRD when if your bussiness makes a loss...why would they give you money if your house makes a loss??

I don't understand peoples thinking on this....

[Flatcap]

At the risk of agreeing with someone sporting a beard, the idea has some merit, particularly if it results in greater investment in productive export industries.

[The Stranger]

Move some of the tax away from company tax and onto capital gains? Sounds awesome. Do it now.





Less personal tax, less company tax, more GST and capital gains.

GST. Sure, I'm all for increasing the percentage of the tax take from GST as it catches the black market economy in the tax net too.

But lets not forget the real root of this issue. The amount the govt spends. So whilst it may be a good idea to tweak the tax system here and there none of that will help the economy more than reducing govt spending.
Treasury spending serious energy on that one will pay way way bigger dividends.

Plus of course history suggests that as they increase the burden in one area to another they simply forget to reduce the burden in the other area and hello they wind up with a windfall - that we pay for.
Do they ever hand it back? No, they simply spend more.
So be careful what you wish for.

[James Deuce]

"Capital gains" should only be taxed once they are realised as income.

This raises some interesting issues about the taxation treatments applied to superannuation investments.
There's a Tui billboard in there. Probably two.

[James Deuce]

At the risk of agreeing with someone sporting a beard, the idea has some merit, particularly if it results in greater investment in productive export industries.

Oooo look, another Tui billboard.

[vifferman]

I think capital gains tax is a capital idea. :shifty:
Especially if it targets speculators, greedy developers, and those who use family trusts to avoid paying tax, like my sister-in-law and her husband. Their household income is much higher than ours, yet they pay virtually no tax, courtesy of owning three rental properties that they use to post a loss to offset against their tax.

[The Stranger]

You don't get a hand out from IRD when if your bussiness makes a loss...why would they give you money if your house makes a loss??

I don't understand peoples thinking on this....

You get a tax credit if your business makes a loss (I think) which can be used against future income.
The same principal should apply here, why not? You make a loss on your investment you get a credit to use against your income.

[Flatcap]

At the risk of agreeing with someone sporting a beard, the idea has some merit, particularly if it results in greater investment in productive export industries.


Oooo look, another Tui billboard.


Yes, I shouldn't listen to Beardy-Weirdies

Quite right

[The Stranger]

I think capital gains tax is a capital idea. :shifty:
Especially if it targets speculators, greedy developers, and those who use family trusts to avoid paying tax,

speculators, greedy developers are already taxed on all of their activities - even on their personal properties.

Damn, my trust has to file tax returns and pay tax on any income. I would be REALLY interested to know how they avoid this - please.

[Brett]

It's a bit late for that. The housing boom is over.

Untill they loosen the immigration control and immigrants come flooding into NZ again, this will bolster auckland at least...

[discotex]

You get a tax credit if your business makes a loss (I think) which can be used against future income.
The same principal should apply here, why not? You make a loss on your investment you get a credit to use against your income.

Absolutely.. IF capital gains are realised on sale then if you make a loss you should be able to offset that loss against your income (in the case of an LAQC).

I don't by your other argument about requiring higher rents blah blah unless capital gains are on unrealised gains (which would be stupid). Landlords who hold onto property for the long term won't be affected very much as the size of the capital gains will more than offset the tax.

You can also exempt the average home owner and single property owner so you don't hurt them. The simple way is to make it a sliding scale so if you sell after 5 years you pay less capital gains tax than someone who sells after 1.

It's really a "sky will fall in" argument against it until there are details of the specifics.

All that said, I'd rather see a "stamp duty" style system rather than capital gains. It could discourage speculation and encourage cashflow positive long-term rentals.

[The Stranger]

Absolutely.. IF capital gains are realised on sale then if you make a loss you should be able to offset that loss against your income (in the case of an LAQC).

I don't by your other argument about requiring higher rents blah blah unless capital gains are on unrealised gains (which would be stupid). Landlords who hold onto property for the long term won't be affected very much as the size of the capital gains will more than offset the tax.

Say what?. They will be affected more as the gain is likely to be higher.

You can also exempt the average home owner and single property owner so you don't hurt them. The simple way is to make it a sliding scale so if you sell after 5 years you pay less capital gains tax than someone who sells after 1.

It's really a "sky will fall in" argument against it until there are details of the specifics.



Hmm "sky will fall in" argument. Well ok, but you are offering ideas as to possible outcomes without knowing the details too of course. So if it's good for you to speculate on the possible situation I feel it is acceptable for me to also.

[smoky]

Brian Fallow is a left wing, soft-cock, who’s lacking in any ability to write without resorting to scaremongering to get attention.
He has a poor understanding of NZ financial systems. There is a difference between a columnist and a reporter and he is not a reporter – important to remember when reading, he’s paid to sensationalise
Then don’t forget the history of our current Treasury Secretary; John Whitehead. He’s a throwback to the Rogernomics era, when he held very senior public service position in Treasury; his bent is toward a free market dictatorship. Which of course is all about the less well off paying for an environment where big investors can get even richer.

John Whitehead and his mates would dearly love to have a ‘broader base’ tax with lower rates. Interpretation; more GST on a wider range of things (including capital gains tax), in the past he’s suggested raising GST to 15%. But Company Income Tax should be reduced.

That means we all pay more for stuff, while our bosses pay less tax “shifting more of the tax base towards consumption”

He raises the red hearing of people leaving NZ to go where taxes are lower – what a crock of shyte – the difference in wages is not about tax, the differential is way bigger than the few % they could hope to reduce our tax by. Of course the extra $ a week from tax cuts will soon disappear for most of us if the GST is increased

The key point around Capital Gains Tax is this; The largest rental home providers in the country is the State, followed by the Mum & Dad investors.
We use them to try build an asset that will subsidise our retirement
The Government encourages this – they know it is largely inflation proof, creates wealth and is sustainable, so they cut us some slack to make it even more affordable.

This doesn’t suit the greedy capitalist who would like to reduce their competition – to quote; “shifting investment incentives, by taxing returns to capital in a more even-handed way”
That means no advantages to private landlords/LAQCs
“…….. capital gains or property taxes would be beneficial for encouraging investment in productive activity………. reduces the impact of tax distortions on investment decisions, thereby improving the allocation of capital in the economy."
That means they would like to remove the incentives for hard working Mums & Dads to invest in real estate, make it less profitable for us, so more of us will invest in investment funds or shares – trust them with our money, because they are ‘productive’.

Most of us see it as investing in risk – and going by the investment companies and industry track records, most of us would rather take a gamble and invest in a second property than risk loosing our live savings in some company that goes bankrupt while their directors are paid fat bonuses and live in luxury

[Naki Rat]

"Capital gains" should only be taxed once they are realised as income.

This raises some interesting issues about the taxation treatments applied to superannuation investments.

Isn't this effectively what the high "Stamp Duty" payable in the course of property transactions in NSW (and probably elsewhere in Aussie) does. That has worked to stop real estate speculation there.... Yeah right!

[vifferman]

Damn, my trust has to file tax returns and pay tax on any income. I would be REALLY interested to know how they avoid this - please.
I'm no accountant (I leave that to the WifeAccountantPorcupinePillionist), but I believe the loan payments they are making on their properties and other costs are effectively higher than their rental income, so the trust is effectively making a loss, offset against the income the trust gets from their salaries. This is just a guess - all I know is that the trust is set up as a loss-making venture, but the nett result is they effectively pay very little tax, are much better off than us - despite having a similar gross household income - and will have four wodges of Auckland property at retirement.

Trust law was originally designed to protect family properties (such as farms, or heritage homes) from potential mortgagee sale or the like, so the beneficiaries of the trust (kids, grandkids, etc.) were protected. Loopholes allow the greedy and unscrupulous to manipulate things so the property in trust, and income directed into the trust, is beyond the reach of the IRD.
Unfortunately, this state of affairs will continue on until there are no longer so many politicians, judges, lawyers, etc taking advantage of it. In other words, indefinitely, or forever, whichever comes first.

For us, integrity and conscience come before the mighty dollar. Sorry kids... you will just have to envy your wealthy cousins...

[Winston001]

John Whitehead and his mates would dearly love to have a ‘broader base’ tax with lower rates. Interpretation; more GST on a wider range of things (including capital gains tax), in the past he’s suggested raising GST to 15%.

The problem is that GST at 15% isn't an easy calculation. To find the GST component in $100 you have to divide by 7.65 and even then that is only approximate. At 12.5% we divide by 9 = exact answer. So moving to 15% might make fiscal sense but opens the door to lots of errors.



“…….. capital gains or property taxes would be beneficial for encouraging investment in productive activity………. reduces the impact of tax distortions on investment decisions, thereby improving the allocation of capital in the economy."

Most of us see it as investing in risk – and going by the investment companies and industry track records, most of us would rather take a gamble and invest in a second property than risk loosing our live savings in some company that goes bankrupt while their directors are paid fat bonuses and live in luxury

Mmmmm.....Yes and No.

As a nation we do not invest in business. Instead we invest in houses. Its worked for generations but only because NZ has generated enough wealth from a narrow sector - farming. That's provided the money for the rest of us to buy stuff.

Ideally mum and dad would invest in a cheese factory or merino wool fabric machine, or something internet based.

But you are right - investment in shares and funds has proven dismal for many Kiwis. In that sense I completely understand the fascination with property - it is solid, low risk, and it can't evaporate like a finance company. :eek:


Isn't this effectively what the high "Stamp Duty" payable in the course of property transactions in NSW (and probably elsewhere in Aussie) does. That has worked to stop real estate speculation there.... Yeah right!

Well said. Stamp Duty is a pernicious illogical tax which belongs in the 15th century from which it came.

And capital gains tax has not stopped the property frenzy and crash in Australia. The tax just got factored in to prices, and buyers figured they'd get it back when they sold down the track.

[The Stranger]

I'm no accountant (I leave that to the WifeAccountantPorcupinePillionist), but I believe the loan payments they are making on their properties and other costs are effectively higher than their rental income, so the trust is effectively making a loss, offset against the income the trust gets from their salaries. This is just a guess - all I know is that the trust is set up as a loss-making venture, but the nett result is they effectively pay very little tax, are much better off than us - despite having a similar gross household income - and will have four wodges of Auckland property at retirement.


For us, integrity and conscience come before the mighty dollar. Sorry kids... you will just have to envy your wealthy cousins...

At a guess they are claiming depreciation on the properties, which in many cases allows one to effectively turn any profit into a loss and yes you can claim the "loss" against other income. It should be noted that depreciation is clawed back upon sale, should the property prove to NOT have devalued.
I suspect that the trust is nothing more than a vehicle and not in and of itself responsible for a beneficial tax position. Though there are circumstances where a trust can assist your tax position, I suspect that most can't/don't avail themselves of that benefit. There can be many good reasons to use a trust beyond tax avoidance - which of course is illegal in NZ anyway.

It almost appears you harbour some small malice toward these people. Why?
It appears to me they are only taking prudent action that is available to all of us to provide for their kids and retirement etc.
Indeed I can only conclude that the laws are structured the way they are to encourage this. Were they not who would supply the ever increasing demand to accommodation?

We all have a duty to pay as little tax as necessary - noting again that both tax evasion and avoidance are illegal in NZ.

There will be NO medals at the end for falling on your sword. If you have some equity in your own home there is NOTHING stopping you from using this to purchace a rental property or two.

[ManDownUnder]

Saw this in the herald today and I'm way pleased the house is gone. I wonder if they'll provide a tax rebate if property values fall....

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10576312

Yup - and they always have. Depreciating a house as an asset is the oldest trick in the book, until you sell it and pay the clawback to the IRD. Which actually isn't so bad because in the meantime it was an interest free loan... and there were ways to work around the clawback too - till the IRD really started to clamp down on them

[Winston001]

Trust law was originally designed to protect family properties (such as farms, or heritage homes) from potential mortgagee sale or the like, so the beneficiaries of the trust (kids, grandkids, etc.) were protected. Loopholes allow the greedy and unscrupulous to manipulate things so the property in trust, and income directed into the trust, is beyond the reach of the IRD.

Unfortunately, this state of affairs will continue on until there are no longer so many politicians, judges, lawyers, etc taking advantage of it. In other words, indefinitely, or forever, whichever comes first.



Just for clarity. Trusts arose in the 11th century when noblemen went on Crusades. Women and children could not own land, and furthermore some types of land such as fee tail could not be sold - the land was always inheirited. I believe the royal family holdings and others are still held this way today.

Anyway, the noble gentleman setting off to battle the Moslem hordes would transfer the land entrusted to the local bishop, or neighbouring knight, or whoever. The land was to be held for the benefit of the wife and kids until his lordship returned - which could be any years later.

The whole point of a trust is to protect assets - usually property.

Today trusts are often set up for disabled children, widows, and charitable purposes. Nothing wrong with that.

[Winston001]

However what Viffer alludes to is the discretionary family trust which has been flavour of the decade. Mostly this simply owns a house to protect against creditors.....such as rest home fees. Common, but not for everyone.

Then there are trusts which trade - and that is what you refer to. I can say that some lawyers are uncomfortable with this but accountants have enthusiastically embraced the idea. It seems quite contrary to trust law to engage in business risks - but its done.

Most people including those in the "professions" cannot take advantage of this because the law does not allow tax splitting with the trust. There's a case of a dentist who found this out. :D Took one for the team. :niceone:

Dr Cullen was no fool and he changed tax law to remove loopholes with trusts, as well property investment. Indeed Bluechip may be a victim of those changes.

However there are people who can use trusts to reduce tax. Not a lot of them, but since we probably all know someone who skites about it, it feels like there are many tax-dodgers.

[vifferman]

It almost appears you harbour some small malice toward these people. Why?
No, not I.
The WAPP spent many years working for the IRD, and although what they are doing is within the law, it's not strictly ethical. While there is no malice on her part either (it IS her sister and brother-in-law, after all), she disapproves of what they are doing, particularly when they complain about "how the gummint is spending our tax dollars".
BTW - tax evasion is illegal, but avoiding paying more tax than you have to (tax avoidance) is not.

[The Stranger]

BTW - tax evasion is illegal, but avoiding paying more tax than you have to (tax avoidance) is not.

Incorrect!
NZ is the only country in the world where tax avoidance is illegal.

[k14]

You don't get a hand out from IRD when if your bussiness makes a loss...why would they give you money if your house makes a loss??

I don't understand peoples thinking on this....
Or if your shares decrease in value, or if you had money in bridgecorp et al...

[The Stranger]

Or if your shares decrease in value, or if you had money in bridgecorp et al...

If your shares increase in value you are not taxed - unless you are doing this as a business, so if your shares decrease you can not write off the loss - again, unless you are doing it for a business, in which case you can write off your loss.

Your money you invest in bridgecorp is similar in that it is capital and is not increasing, hence no tax liability. There is of course tax on the interest you receive for use of that money, however if you don't receive the interest you aren't actually out of pocket.

[Winston001]

BTW - tax evasion is illegal, but avoiding paying more tax than you have to (tax avoidance) is not.

That used to be the way of it. The courts have always said that you are entitled to arrange your affairs to reduce your tax liability. But evasion was not allowed.

However for some unknown and stupid reason, the law now refers to avoidance of tax as unlawful. So two perfectly good and different words now mean the same in tax law. Idiots. :nono:

[discotex]

Hmm "sky will fall in" argument. Well ok, but you are offering ideas as to possible outcomes without knowing the details too of course. So if it's good for you to speculate on the possible situation I feel it is acceptable for me to also.

Absolutely. I have no issue with my suggestions of how it could possibly work being considered "polished turd" for the same reason.

Until someone proposes anything of substance it's just an ideological debate.

My other point re long term investers not feeling the pain is that while they will be taxed more on a gross long term gain the NET return will still be higher than other investment classes. Especially if you introduce a sliding scale based on length of ownership.

[Hitcher]

It. Is. Not. Going. To. Happen.

[RantyDave]

Richer get richer still,
Middle class try to catch them!
Poor are fucked again.

[steve_t]

That used to be the way of it. The courts have always said that you are entitled to arrange your affairs to reduce your tax liability. But evasion was not allowed.

However for some unknown and stupid reason, the law now refers to avoidance of tax as unlawful. So two perfectly good and different words now mean the same in tax law. Idiots. :nono:

This isn't true. You are not "entitled to arrange your affairs to reduce your tax liability". You are entitled to arrange your affairs to protect your assets etc and any tax advantage you receive is incidental. You are not allowed to do anything with the aim of reducing your tax - tax avoidance

Oh and Trusts are still taxed at 33% while companies are "only" paying 30%. Not sure how long this will be for

[Timber020]

Interesting to see who really pays for a capital gains tax.
The same people who pay all tax, those who can least afford it, low to middle income earners.

So I have an investment property, it is currently rented well below market value. I rely upon the capital gain for a return. They introduce a capital gain tax and I will be looking for top dollar on my rent instead, as will all other investors.
What effect will this have on rents?
How will increasing rents help the people looking for a first home? They have enough problems now without having to cover my tax burden for me.

Currently about 35% of our housing stock is rental. Not that long ago (about 30yrs if I recall correctly) that figure was 10%.
It doesn't make sense to fuck with that many people's lives.

That said, the cynic in me says that National are unlikely to introduce a tax in which many of them would be caught themselves.

Bull.

If there is a capital gains tax, houses will become less of an attractive option for investors, some will look elsewhere, reducing demand on houses, lowering house prices and meaning more people will be able to afford to own rather than get stuck renting. Rents will reduce as house prices do, they will have to as buying houses becomes more accessable.
"Im not paying that, I can get a house for x amount more a week" etc
There are more rentals now because houses are more unaffordable than ever and thats because there are so many people buying rentals. Its a firestorm feeding itself, its about time we stopped providing it so much easy fuel.

The only looser to capital gains tax are the rental owners, everyone else wins.

If you own a rental you contribute to why so many young kiwi families are struggling or just failing to get into there first house, your fucking with other peoples lives.

[The Stranger]

Bull.

- snip most clap trap -

If you own a rental you contribute to why so many young kiwi families are struggling or just failing to get into there first house, your fucking with other peoples lives.

Bollox.
Laziness, ignorance, apathy and "me now" is what stops people from purchasing thier own place.
The place was rented cashflow positive to the same tenant for 5 and a half years. At any stage during this time they would have been better off buying their own home. Though that would have meant sacrifice of their life style to save a deposit. Hell, they could even have done a 101% loan to get a place eliminating the need for any deposit. I can't make that sacrifice for them, they must do it themselves.

Think it through - the entire tax burden always (well near enough always) falls on the low and middle income earners. It always does, it always will. The only way to alleviate that is to reduce the tax burden. Sugar coat it, say it comes from here or there call it company tax, a tariff or a surcharge or whatever, but YOU always pay!

For example, who really pays company tax? Not the insurance company. The insurance company passes this burden on to the consumer in their premiums. They simply act as a collection agent for the govt.

So wish for an additional tax all you like, but hey, you are the one who will be paying it. This is why the rich get richer and the poor get poorer.
But have it your way if you wish, I couldn't give a shit.

[popelli]

National are left floundering trying to keep both our economy and local businesses viable thanks to Labour's anti-business practices, and this will be one of the options Treasury want to make public so it can be shot down and replaced with something more insidious like 15% GST.


15% GST would be easier to administer and raise more revenue.............

the real problem is NZ has a social security system that they can't afford

national super is far to generous and was an electrion bribe back in 1976, nobody has been game to tackle this sacred cow since then

[James Deuce]

15% GST would be easier to administer and raise more revenue.............



Yes it would, and if you see other posts I've made in regard to this, I think it should be done, provided there are significant personal and company tax reductions made in tandem.

[The Stranger]

Yes it would, and if you see other posts I've made in regard to this, I think it should be done, provided there are significant personal and company tax reductions made in tandem.

You drink Tui do you?

[Winston001]

This isn't true. You are not "entitled to arrange your affairs to reduce your tax liability". You are entitled to arrange your affairs to protect your assets etc and any tax advantage you receive is incidental. You are not allowed to do anything with the aim of reducing your tax - tax avoidance

Oh and Trusts are still taxed at 33% while companies are "only" paying 30%. Not sure how long this will be for

Apples and oranges. I'm no tax expert and this isn't the place for comprehensive advice.

You are correct to the extent that tax avoidance must not be the objective of a structure. If there are other reasons, and tax is reduced as a sideline effect, then it isn't avoidance.

But you are certainly allowed to reduce your tax liability - its called tax efficiency. A Loss Attributing Qualifying Company (LAQC) does that. Distributing Trust income to adult beneficiaries at their marginal rate is lawful - and can avoid the 33% trust tax.

[James Deuce]

You drink Tui do you?

Not by choice. It seems to have become the drink du jour however.

[The Stranger]

Apples and oranges. I'm no tax expert and this isn't the place for comprehensive advice.

You are correct to the extent that tax avoidance must not be the objective of a structure. If there are other reasons, and tax is reduced as a sideline effect, then it isn't avoidance.

But you are certainly allowed to reduce your tax liability - its called tax efficiency. A Loss Attributing Qualifying Company (LAQC) does that. Distributing Trust income to adult beneficiaries at their marginal rate is lawful - and can avoid the 33% trust tax.

An LAQC for example (and there are other examples) is explicitly allowed and therefore does NOT fall foul of section 99, which is general in nature.
A specific law will take precidence over a general law - as the IRD thankfully found out at the Privy Council.
As an aside, given the then highest 2 courts in the land couldn't work out that rather simple concept it would be interesting to see if the current one would have done any better. I dare say not.