Capital gains tax to be outlined next week

Expect to see a huge brouhaha next week over tax - this time though it won't be about income tax cuts, but a discussion document proposing a capital gains tax on offshore managed funds.

The trigger for this will be a discussion document proposing that offshore-based funds are taxed under a comparative value method. The paper is being produced as the government has rejected the risk-free rate of return idea put forward last year by Craig Stobo.

Here's what's likely to be in the discussion document:

• Tax all offshore-based funds on a comparative value basis
• The tax rate will be on 100% on the change in comparative value of the funds
• Abolition of the grey list
• Have a threshold for individual investors. Investors below this level will be taxed only on dividends.