NZ Tax on Share Trading

Hey Folks,

How do you organise your taxes come tax time? The way I've been doing it is:

• If share has been purchased and sold < 90 days, then there's tax to pay
• If share has been kept longer than 90 days, then no tax to pay
• Dividends have tax attached, and I claim imputation credits

I trade as a personal trader and just fill out an IR3 tax return every year. I'm wondering if it would be better to create a company with the companies office and claim back some other expenses like internet... part of the home office, etc?

What's your approach?

There are a lot of knowledgeable tax people on here who will likely set you straight . Personally I would spend some money and see an accountant as you need to do this properly.
I think it comes back to your intention when you purchased them not how long you hold them . You say you trade as a personal trader ...sounds to me like every transaction is taxable/deductable .....
Like I say best get some professional advice , the advice to me was " it is very costly to get on the wrong side of IRD " Consequently everything is done through a company.
Good luck out there.

If you wish to be a person who buys and sells shares regularly the "intent " seems to be the criteria for deciding if you pay tax or not. It would appear that you can in fact have a trading account and a holding account even in the same shares providing there is visible separation. A designated trading account will be taxed on capital gains but any losses can be applied against future capital gains so there is some advantage there if some planning goes awry.

This demarcation is not in accordance with tax policy

see Minerbarejet.
I would just add that repeated actions also create implied intent. ;+)

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Originally Posted by kiwijay

• If share has been purchased and sold < 90 days, then there's tax to pay
• If share has been kept longer than 90 days, then no tax to pay

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there is a thread here somewhere with alot of discussion about this; i haven't found it again yet. My solution; I set up a trading account with one broker and have a share investment account with a separate broker; sorts out the intent clearly . I sleep easy and can wear two different hats and time frames and its alot of fun having that way smaller(in my case) trading account to take a lot more risk and hunt out the bargains;esp the microcaps.

JT I think you found this one http://www.sharetrader.co.nz/showthr...t=Tax+on+share
plus there is aslo http://www.sharetrader.co.nz/showthr...t=Tax+on+share

Quote:

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Originally Posted by stoploss

I think it comes back to your intention when you purchased them not how long you hold them . You say you trade as a personal trader ...sounds to me like every transaction is taxable/deductable .....

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Exactly. How long you hold is irrelevant (though can be used as proof of your intention by IRD).

I am in the process of transferring some of my shares into the wife's name, in order to stay one step ahead of the Tax Man, she is now a Gold Card holder like myself, but I am getting near of exceeding ($48,000.0) threshold, but she has some room to move before approaching this figure. There is an option of stating a value on the transfer for, should I put in a value or just leave it blank.

Quote:

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Originally Posted by waikare

I am in the process of transferring some of my shares into the wife's name, in order to stay one step ahead of the Tax Man, she is now a Gold Card holder like myself, but I am getting near of exceeding ($48,000.0) threshold, but she has some room to move before approaching this figure. There is an option of stating a value on the transfer for, should I put in a value or just leave it blank.

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Doesn't matter either way as the Tax man doesn't care about the value of the transfer but rather the total dividends generated along with the RWT and Imputation credit amounts per annum. One of the registries has an option to tick the transfer as a gift as well(Can't remember which one) which of course it could very well be.

Tax on dividends after imputation credits? Go to Newbies page.