Tax on Capital Gains: Trading vs Buy-and-hold
Hi There,
Vince has kindly opened up this new area for newbie intro's and questions.
I'm Stuart from Auckland. I have considered property investment for the last couple of years, but the figures never added up, so I found my way here. ;)
My question tonight is about tax on capital gains.
In property, some people use trust structures to separate their property trading activities from their buy-and-hold activities, with the goal of minimising their tax on capital gains.
Is share trading similar?
Can a share trader also have a buy-and-hold portfolio which is not subject to tax on capital gains? If so, what structures do you recommend to separate trading activities from buy and hold activities?
Regards
Stuart
separating investing entity from trading entity
There was discussion above about pros and cons of using a company for one of these. Costs to setup & run a company, and loss of 'cash basis', is enough for me to not set up a company to make the separation.
I was thinking to simply have two share trading accounts (perhaps with two different brokers or perhaps with the same broker). One called 'Joe Bloggs', the other 'Joe Bloggs Trading'.
Here's my question.
If I set up 2nd trading account with same broker (in my case ASB Securities), should I (or can I) have only one CSN & FIN (for NZ) and one HIN (for Aus) applicable to both accounts.
This would be enough to show distinction for IRD and would be less share registry paperwork & complication. It would mean I could have an investment in a company and then buy some shares in that same company to trade, and they would all be combined in the share registry summaries. I would have to keep track of how many are applicable to the trading (which would be easy because I'd have separate portfoilio records)