Paying Tax on Australian Shares

[ENP]

What I'm wanting to know is how to figure out how much tax to pay when it ticks over 31st March.

I own two Australian companies on the ASX and have done since the start of this financial year. I've got 2 dividends from each company since buying them. My total Australian holdings total $26,000 roughly.

In the last financial year, I also bought 2 other companies which I have sold. I originally planned to hold them for longer but I mis-judged my analysis of the companies and sold out within 3 months of purchase. I got a dividend from one of them.

So obviously I have to pay some tax on the dividend income I received.

However, since I sold the other 2 companies shortly after purchasing, will IRD look at me as a trader and tax me on that capital gain?

I also made another decision to take out a loan to buy more shares in the middle of 2012. I borrowed $15,000, but paid the entire loan back after 3 months when I sold one of the companies. Can I use the interest payments from that loan to offset my income and reduce the tax I will pay? I paid 3x monthly payments.

I also bought and sold a New Zealand company in 2010 which I didn't get a dividend for and made perhaps $100 capital gain. I have no paperwork for this, do I need to pay tax on this?

[ENP]

http://www.ird.govt.nz/online-services/service-name/services-i/online-ir3-2012.html?id=righttabs

I will be completing one of these after March 31st 2013.

[777]

If that is all you have done then you are hardly a trader therefore just pay tax on the dividends.

[ENP]

If that is all you have done then you are hardly a trader therefore just pay tax on the dividends.

If that is the case, can the loan interest be offset against my dividends?

[percy]

Yes,but you are most probably openning Pandora's box.Leave it closed and don't claim the interest.

[ENP]

So pay tax on the dividends.

Don't pay tax on capital gains.

Forget about the loan interest payments.

:confused:

[CJ]

Agree to not being a trader but be careful when buying and selling as it can technically be on a share by share basis. While I would never point the IRD to this forum, your intention from the posts I have seen is to buy for long term and any quick sells are just you finding yoru feet.

International shares though up extra issues but you only had ASX shares (assume they were Australian tax resident) and were under $50k so you fall under two of the exemptions so dont have to work out those complicated rules.

Therefore just taxable on dividends. Remember you cant claim the Australian franking credits but if they had withholding tax, you may be able to claim that. ON NZ shares can obviously claim IC's and withholding tax.

Technically I would say you can claim interest deductions - given you borrowed to receive taxable income (dividends). Given it is only 3 months, it is upto you to determine if you want to highlight it to IRD. You will probably fly under the radar anyway and would should have no issues if audited but would be put under extra stress should that happen - up to you.

Let me know if you have any other questions.

[JayRiggs]

Hi there,
I received some Australian dividends last year, which were deposited into an Australian bank account. When I'm doing my income tax return, how do I include my Australian dividends into the "Dividends" section?
Since the dividends received are in Australian dollars, I don't know how to work out what amount to put in there. I'm assuming I'm meant to convert the Australian dollars to NZ dollars, but I'm not how to do this, because AUD=>NZD rates change all the time.

Any help greatly appreciated.
Thanks!

[Jay]

Hi JR

I include the Aussie dividends as Overseas income. Yes you convert it to NZD, have a look at your Bank site, they may have historical FX rates and.or average rate of the financail year otherwise google histroical exchange rates to get the rate for day your received the dividend.

[CJ]

Oanda.com also does historical rates. I don't think it technically complies but IRD won't mind.

[G on]

When I did mine i used the Sharesight to get the daily exchange rate. I found this far easier than trying to chase down historical exchange rates. just type in the date of the received dividend and voila!

[POSSUM THE CAT]

Download from IRD the official rates you can use it is a lot simpler

[CJ]

Download from IRD the official rates you can use it is a lot simplerI think they only do monthly averages??

[JayRiggs]

Nice, thank you to everyone who replied.
CJ I looked up Panda.com, but it didn't exist. I think you meant Oanda.com?

I will give Sharesight a try sometime, looks cool.

I looked up IRD.govt.nz and found

The Income Tax Act 2007 ("2007 Act") requires foreign currency amounts to be converted into New Zealand dollars applying one of the following methods:


actual rate for the day for each transaction (including close of trading spot exchange rate on the day), or
rolling 12-month average rate for a 12-month accounting period or income year (see the table Currency rates 12 months ending 31 March 2013 - rolling 12-month average (http://www.ird.govt.nz/business-income-tax/overseas-currency-convert-nz.html)), or
mid-month actual rate as the basis of the rolling average for accounting periods or income years greater or lesser than 12 months (see the table Currency rates 12 months ending 31 March 2013 - mid-month actual (http://www.ird.govt.nz/business-income-tax/overseas-currency-convert-nz.html)).



I am curious, if IRD say we can do any one of those methods, then would that mean I can pick the rate that results in the lowest NZD amount after converting, and hence pay less tax on that?

[POSSUM THE CAT]

Jay Riggs you have to use the same one for the full year as applicable.

[aspar13]

Hi - the RBNZ website has the daily exchange rate. I have used this to calculate the AUD-NZD conversion and included as Foreign income.

[Cricketfan]

I just bought some shares in ANZ on the NZX. Are dividends from Australian companies on the NZX still considered overseas income?

[Jay]

I just bought some shares in ANZ on the NZX. Are dividends from Australian companies on the NZX still considered overseas income?

Income would only be counted as overseas income if you receive it in a foreign currency or it is converted for you from a foreign currency, that is they send you advice saying we paid you $100AUD dividend and this converted to $112NZ which we credited to your account xx-xxxx-xxxxxz-xx etc.
As far as I am aware ANZ would be paying didivends in NZ$ if you bought ANZ on the NZX.

[POSSUM THE CAT]

Posters It is still considered overseas income as the company is Australian but it it may in some cases give you a small NZ imputation credit if they have paid some NZ TAX