Mike Hosking: A lesson in life, the taxman is never far from your pocket

From our rock and a hard place file comes the revelations, if that’s not too strong a word, over the tax price you pay if you help your kid out buying a house.National's Andrew Bayly has been making the headlines with this one and he is onto something many hadn't thought about or thought through. It doesn't help that the government already look greedy this week with the revelation, and that’s not too strong a word, over the number of people their new top tax rate grabs.39 percent for those over $180,000 was barely going to affect anyone was the impression Grant Robertson gave at the time. That, of course, led to the question, why bother? They said it would pull in half a billion dollars, was that really worth it?Turns out the answer was yes, given another 44,000 people are actually captured by the tax. It was 44,000 more than they thought.How did they not know this? Or did they? Did it just not suit the narrative to tell us? Either way, tax is not to be encouraged because too often it's wasted. And no one wastes more tax than this Government, who not only have spent all the tax but borrowed another $50 billion on top of that.Anyway, back to the parents and buying houses for kids. You are captured by the bright-line test. Question is, is that unfair? Well, depends. Even though you did it for the right reasons, like helping a young person get into a house, what you also did was take a stake in a property and that property is not your primary residence, and as such, you are open to the bright-line test.Say the house is a million dollars, you lend your child $300,000 so you own about a third. Now they decide to sell, they sell for $1.5 million and you get a third of the profit. At that stage surely your good deed in helping your child becomes an investment with a return? And as such, it's taxable.The fact you thought it was for your child doesn’t really matter and the fact you thought you were doing a good deed doesn’t really matter. As any accountant or lawyer will tell you, ignorance is not a defence. Doing something for good intention doesn’t excuse taxability.The whole bright-line thing is a scam, of course, especially given the Government said they wouldn't do it and yet did. But it’s a lesson in life, isn't it? Even though the Government have been abject failures on housing and all you are doing is trying to find a solution, the gargantuan hand of the taxman is never far from your pocket.Could they change the law and carve out an exemption? Of course they could.Will they? Don’t be silly.See omnystudio.com/listener for privacy information.