tax

[JackSprat]

Hi,

Appreciate it if someone could tell me as a superannuate how much tax I'd have to declare with any profit I make from shares over the year and/or does the IRD automatically send you a tax summary if you declare nothing. I hope to make a bit more from my shares than I get from my National super :)

Cheers

[fungus pudding]

Hi,

Appreciate it if someone could tell me as a superannuate how much tax I'd have to declare with any profit I make from shares over the year and/or does the IRD automatically send you a tax summary if you declare nothing. I hope to make a bit more from my shares than I get from my National super :)

Cheers

Your tax is assessed on the total you earn. That's easy to work out at the end of the year.

[CJ]

Dividends normally have imputation credits or withholding tax so you dont normally owe anything at the end, though you must complete an IR3 if you receive more than $200 in interest and divs I think.

There is no Capital gains tax in NZ, though if you buy with the intention of resale, that is deemed a income gain, not a capital gain.

If you have never done tax before, best to keep all your info in an orderly system, record all you divs on a spreadsheet and talk to a tax accountant at the end of the year. After one or two times, you may feel comfortable doing it yourself.

[Aaron]

I think tax on shares was covered in an earlier thread in the newbie section.
The big question is are you trading shares for profit or investing longer term for dividend income. The answer will greatly affect how you are taxed on gains in the value of shares.
It has been suggested earlier that if you clearly split your investment portfolio from your trading account (possibly using a company) you can both trade and invest for the long term without having to pay tax on all your capital gains.
Might pay to talk to an accountant or visit the IRD website.

[CJ]

It has been suggested earlier that if you clearly split your investment portfolio from your trading account (possibly using a company) you can both trade and invest for the long term without having to pay tax on all your capital gains.Unlike property, there is no 'tainting' with shares. Even so, it is best to have two separate accounts which makes it easier to prove your intention at the time (ie. you buy in the trade account, it is a trade but if in the long term hold account, it is a long term hold). Clearly document intention at time if you are doing this and ideally with something that has a time stamp so you can prove to IRD you haven't altered it after the fact. However, actions speak louder than words so if you act as a trader, no amount of "long term hold' talk with convince the IRD, or the judge otherwise.

[JackSprat]

Thanks for that guys.

[iKiwi]

I have a similar tax question if you don't mind me asking it in this thread.
I started investing some of my savings longer term and bought two stocks on ASX and NZX recently. A couple of weeks later I sold the ASX-listed stock which pays a smaller dividend, but that resulted in some gain as the price went up. There seems to be a bit of controversy about how the gains are taxed, so my question is... How is the gain on the Australian stock sale should be taxed? If my NZX-listed stock appreciates long-term over a period of 1-3+ years and I decide to sell it, how will those gains be taxed?

After a bit more research, it looks like the Australian stock might be not a bad long-term investment after all. The company has the potential to grow the dividends especially when economy starts to recover, so if I buy it again at roughly the same price or lower, how will that affect the taxes?
I appreciate your help, guys!

[Vaygor1]

Hi iKiwi.

It's always up to each individual but for me, I keep away from Australian stocks for 2 primary reasons. The 1st one is dividend is related only. The 2nd is dividend and gains related.

1) If the Oz company paying the dividend pays it out fully franked, then you have paid your tax to the Aussy govt. When it goes into your account in NZ (assuming you don't have an Aussy broker and security account) then guess what.. NZ taxes you again. The two countries have never knocked their heads together to sort this out and the situation is ridiculous.

2) Exchange rate risk. Why take it? Unless you plan on retiring in Australia you will want to bring your money back one day. You might win on Forex or you might lose. For me, there are plenty of opportunities in NZ. If I can remove a risk then I remove it. Forex is one of those risks.

I am not a trader. I am new to this forum but I have been doing exceedingly well (even if I might humbly say so myself) on the share-market for over 15 years. Never had a bad year, and unless forced to via a takeover or acquisition, I have hardly ever sold a share. My last sell was about 4 years ago, and a trifling amount. Taxation on Capital Gains depends a lot on your intent and your history of selling what you buy in a short or long timeframe. The tax department have a hard time proving intent but they can easily prove your actions and history of buying and selling. In all this, there are large grey areas but if you step out of the grey, or spend too long in it, then tax you will pay.

My capital gains are truly tax free because my intent is clear, consistent, and proven by my actions.

I hope this helps, and if you want I can throw you a couple of examples.

Regards,

Vaygor1.

[Corporate]

Vaygor

Thanks for your post. Interested to know what NZ shares you think are good value currently?

Cheers,
C


Hi iKiwi.

It's always up to each individual but for me, I keep away from Australian stocks for 2 primary reasons. The 1st one is dividend is related only. The 2nd is dividend and gains related.

1) If the Oz company paying the dividend pays it out fully franked, then you have paid your tax to the Aussy govt. When it goes into your account in NZ (assuming you don't have an Aussy broker and security account) then guess what.. NZ taxes you again. The two countries have never knocked their heads together to sort this out and the situation is ridiculous.

2) Exchange rate risk. Why take it? Unless you plan on retiring in Australia you will want to bring your money back one day. You might win on Forex or you might lose. For me, there are plenty of opportunities in NZ. If I can remove a risk then I remove it. Forex is one of those risks.

I am not a trader. I am new to this forum but I have been doing exceedingly well (even if I might humbly say so myself) on the share-market for over 15 years. Never had a bad year, and unless forced to via a takeover or acquisition, I have hardly ever sold a share. My last sell was about 4 years ago, and a trifling amount. Taxation on Capital Gains depends a lot on your intent and your history of selling what you buy in a short or long timeframe. The tax department have a hard time proving intent but they can easily prove your actions and history of buying and selling. In all this, there are large grey areas but if you step out of the grey, or spend too long in it, then tax you will pay.

My capital gains are truly tax free because my intent is clear, consistent, and proven by my actions.

I hope this helps, and if you want I can throw you a couple of examples.

Regards,

Vaygor1.

[Vaygor1]

Vaygor

Thanks for your post. Interested to know what NZ shares you think are good value currently?

Cheers,
C

Hi C.
Thanks for the response.
It appears you are (or have been) quite into Oil companies in the ASX.
Not for me as it's too much like gambling. Exciting it would be, and you certainly have the chance of making it big.
The way I see it, Oil Strike = BIG win. No Oil Strike = lose it all (or nearly it all).

For me at the moment, I value RYM at well over $5, if not $6. But it may take a while longer for the market to realise that.
I think ALF will take off hugely in the next 8 months. You can see my posts on the ALF column on that.
TEL should do very well with Simon Moutter in charge, but that might take a year or more to be seen in the market.
I am comfortable with holding some CVT but I think this year wont produce a spectacular result for them. Big potential long term.

Hope this helps.
Good Luck!

Vaygor1

[tosspot]

wait so If I buy and sell a stock on the ASX say through asb securities. I will have to pay income tax rate of gain to Australia government. then whats left of my gain pay income tax to New zealand government. thats bull

[Jay]

No. Not what vaygor1 said at all.
Vaygor was talking about dividends, taxed in Australia then taxed in NZ as well - however only on the net amount your receive convertd to NZ$'s

[tosspot]

No. Not what vaygor1 said at all.
Vaygor was talking about dividends, taxed in Australia then taxed in NZ as well - however only on the net amount your receive convertd to NZ$'s
Yea I realise that but im talking about capital gains. how exactly does that work

[POSSUM THE CAT]

Tosspot depends where you are tax resident & the rules there. And if your using a NZ broker or an Australian one. As this could alter the Tax locality. Get professional advice on your own circumstances for all tax.

[tosspot]

Im a New zealand citizen using asb securities and am looking at some asx shares short term. just wondering the general tax rule. do you get double taxed on capital gain

[Jay]

Im a New zealand citizen using asb securities and am looking at some asx shares short term. just wondering the general tax rule. do you get double taxed on capital gain
No you would not if in the eyes of the IRD you are a NZ tax resident, do not have to complete an Aussie tax return as you do not live/a resident there.


DYOR

[POSSUM THE CAT]

Tosspot get professional advice it depends on a lot of things Including how long you hold which shares your intent & a lot of other things.

[tosspot]

Tosspot get professional advice it depends on a lot of things Including how long you hold which shares your intent & a lot of other things.
Im at trader so all is short term for profit.

[POSSUM THE CAT]

Tosspot even more you need professional advice as capital gains are regarded as income & you may to end up on the other tax scheme which I think was titled FIF

[noodles]

Tosspot even more you need professional advice as capital gains are regarded as income & you may to end up on the other tax scheme which I think was titled FIF

I read that fif does not apply if you are a trader...
http://www.ird.govt.nz/toii/fif/how-taxed/how-tax-threshold/

[Lizard]

I read that fif does not apply if you are a trader...
http://www.ird.govt.nz/toii/fif/how-taxed/how-tax-threshold/

That only appears to apply to the $50k de minimus level in the link you posted. Did you have another reference regarding the use of fair dividend rate? Would be interesting to know - it has been sometime since I read through the regulation, but I thought it did not materially distinguish.

[david298]

I have a tax query. I trade stock options in the US market so have exchange rate (ER) complications. I am calculating tax on monthly profits/losses based on the varying mid month ER value provided by the tax dept. Is this correct?

Also, how must any ER advantage/disadvantage from opening bal to closing balance in my trading account for the the tax year be taken into account? Is this shown as a tax gain/loss or taken into account in my books of account as a capital gain/loss.

Any advice much appreciated thanks

[CJ]

Also, how must any ER advantage/disadvantage from opening bal to closing balance in my trading account for the the tax year be taken into account? Is this shown as a tax gain/loss or taken into account in my books of account as a capital gain/loss. Do you hold the account in your own name or in a company/trust. is the balance of all your financial arrangements under $1m?

If in own name and under $1m (the threashold might actually be higher) then you will be a 'cash basis holder' so only return gains as you receive them. I have no idea how that would work as I assume you would only receive the benefit once you close down the account which if you have lots of ins and outs, will be impossible to track the forex component.