Tax on Capital Gains: Trading vs Buy-and-hold

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Originally Posted by gonnfishing

I am not sure on the tax implications of what I am doing, I usually buy and hold, but do fiddle around the edges skim a few off when in need of cash or find another stock I'm interested in. ...
Am I liable to pay tax in NZ on unrealized capital gains on ASX small caps each year irrespective of weather I am a trader or longer term investor?

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You need to determine if you are a long term or a trader. If you want to be both, keep both separate (ie. separate brokerage accounts). Gains on your shares bought (and sold) for trading will be taxable but if bought for long term should not be subject to tax. Mix the two together and they will all be taxable.

I know this thread is quite old, but I had a quick question about my tax implications:

I started investing in August 2013. I bought into Xero at $16 after hearing all the hype in the news. My question now is, if I wanted to sell these shares and buy in to a different company would I have to pay tax? and if so, what would the tax rate be? I am a university student, and I also have a part-time job (8 hours a week). Would it just be my income tax rate? 12%?

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Originally Posted by hummerh40

I know this thread is quite old, but I had a quick question about my tax implications:

I started investing in August 2013. I bought into Xero at $16 after hearing all the hype in the news. My question now is, if I wanted to sell these shares and buy in to a different company would I have to pay tax? and if so, what would the tax rate be? I am a university student, and I also have a part-time job (8 hours a week). Would it just be my income tax rate? 12%?

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What was your purpose when you invested. To ride the hype and earn a nice 'capital gain'?

Given the short time frame, on the face of it it would be taxable. The tax rate is your marginal tax rate so probably 10.5% since I dont think you pay ACC on share profits. http://www.ird.govt.nz/how-to/taxrat...etaxrates.html

I am not sure if you would have complete a IR3 or if there is a short cut method to advising IRD.

My view would be that realised capital gains on Xero shares up to this point would almost certainly be considered income by the IRD due to the fact that Xero has no dividend policy and is unlikely to pay a dividend in the foreseeable future. This would make it very difficult to claim that the shares were purchased for the income yield.
To avoid that tax it would be necessary to say you purchased them for the very long term dividends in the very distant future, but that some other factor has now changed your view of the company's prospects. Pretty unlikely to get away with this in my opinion.
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Thank you for your replies, but in light of the current situation, I may just hold on to those Xero shares..

Only thing im abit confused about is with this link http://www.ird.govt.nz/how-to/taxrat...etaxrates.html say you earn 48k a year as a wage would any capital gain you make simply be taxed at 30% or do you divide that up among the progressive rates

Heres another but not the one I'm looking for. A couple of rare leftover posts from the redouble Phaedrus (please come back).

I wonder if hummer held onto his Xero shares from $16 dollars all the way up to $40+ then back to $16 again?!

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Originally Posted by tosspot

Only thing im abit confused about is with this link http://www.ird.govt.nz/how-to/taxrat...etaxrates.html say you earn 48k a year as a wage would any capital gain you make simply be taxed at 30% or do you divide that up among the progressive rates

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The total you earn is taxed as if earned from one source. So follow the progressive tax steps. e,g anything over 70k is taxed at 33%.
Here is a calculator that gives the answers.


http://www.ird.govt.nz/calculators/k...-tax-rate.html