We are getting off topic here. But I got 'fined' by the IRD a couple of years ago, even though I followed the tax rules, because my 'income' (as a result of the FIF regime and asset value increases so no cashflow associated with my 'income' increase) increase was significantly more than the standard method 'previous years income + 10%' for estimating future income. Hence I underpaid my provisional tax. This year my 'income' has crashed (again mostly because of the lower FIF income input,- my cashflow is down but hasn't crashed) and now I have drastically over paid my provisional tax. according to standard IRD estimating procedures. In theory I will get interest from the IRD on my over paid provisional tax (that is what the IRD tax consultant told me when I talked to them about my fine from the previous year and they explained what would happen if I had paid too much tax as a counter example). But we shalll see.
The reason why I am mentioning this Seeweed is that provisional tax has a way of evening out. Yes if you make a good profit on A2 trading one year, you will pay a big whack of provisional tax for the next year. But that isn't 'extra tax'. It is a down-payment on next years tax. And if you do end up paying too much by following IRD rules, you should get your money back with interest. So by saving on provisional tax, by not cashing up your best trades, all you are doing is pushing a greatly increased mega tax bill out into the future. And the only way around that is to have a really bad year and actually lose money to wipe out your previous years of mega paper profits. Surely not a great investment objective to have? Then if you do have mega profits at the conclusion of your investment fling, you will suddenly find that everything is taxed at the top tax rate reducing your overall profit at the end. So to me this 'minimizing tax paid today' doesn't make much sense as eventually the IRD will catch up with you, as they always do. Just making these comments as I am wondering if you are really saving any money by forcing yourself to crystallize other trading losses today just to reduce your trading profit and hence tax bill today?
SNOOPY