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  1. #31
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    I understand that an FIF under 50k is exempt from disclosure rules, but surely if you sell shares for a profit then you would be liable to pay tax in NZ, even if under 50k in value? I'm not talking about dividends from exempt Aussie companies here, but securities listed on the US markets.

  2. #32
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    Quote Originally Posted by couta1 View Post
    I understand that an FIF under 50k is exempt from disclosure rules, but surely if you sell shares for a profit then you would be liable to pay tax in NZ, even if under 50k in value? I'm not talking about dividends from exempt Aussie companies here, but securities listed on the US markets.
    If I understand your question correctly.

    The $50,000 threshold is across all FIF investments so you can't avoid it by having separate FIF investments of $49,000. My understanding is that when calculating income on your FIF investments by using the methods available (FDR or CV methods) this is the only income you get taxed on. Dividend income or gains or losses on sale are not included in your income tax return. I could be wrong.

    https://www.sharetrader.co.nz/showth...nd-(FIF)-taxes

    Check out this thread. Lizard thinks this is the case and she (I think) always came across as a smart cookie.

    If this is correct and you are a successful trader in American shares then the FIF regime is a boon for you from a tax perspective.

    On the other hand if you FIF investments are under $50,000 you will return income under the ordinary rules. The dividend income and in the case of a share trader any gains or losses on sale.
    Last edited by Aaron; 01-12-2017 at 02:47 PM.

  3. #33
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    You could try reading this but I don't think it will spell out the answer to your question.
    https://www.ird.govt.nz/resources/7/...dd2d/ir461.pdf

    I guess if you have FIF income you calculate the tax on that using the FIF rules and don't worry about anything else.

  4. #34
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    Thanks Aaron, it would seem that those with more than 50k in a FIF would pay less tax than those under 50k on a percentage basis, the latter would be paiying at their marginal tax rate. Certainly a mine field to get your head around.

  5. #35
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    Quote Originally Posted by couta1 View Post
    Thanks Aaron, it would seem that those with more than 50k in a FIF would pay less tax than those under 50k on a percentage basis, the latter would be paiying at their marginal tax rate. Certainly a mine field to get your head around.
    Your marginal tax rate would apply in both cases. There is not a separate rate for FIF.

  6. #36
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    Quote Originally Posted by couta1 View Post
    Thanks Aaron, it would seem that those with more than 50k in a FIF would pay less tax than those under 50k on a percentage basis, the latter would be paiying at their marginal tax rate. Certainly a mine field to get your head around.
    The FIF rules work out what to declare as income on your Foreign Investment Funds as 777 said marginal tax rates will depend on individual circumstances.
    For example FIF rules would be good if you found a FIF paying a dividend of 10% as you would only declare income of 5% of the opening value (1/4/20**) of your FIF each year. Although interest rate suppression by central banks would make this sort of yield almost unthinkable. I was going to suggest an example of a successful sharetrader but then I would need to understand clearly the quick sale adjustment rules which I don't. it is probably not that hard once you get a grasp of it but I have never needed to use it so am not sure exactly how this is done. Could be a nightmare for someone buying and selling regularly within a financial year.
    Last edited by Aaron; 01-12-2017 at 04:27 PM.

  7. #37
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    Given NZ$50k is only about US$34k now and dropping it is becoming much easier to be caught by the FIF regime if you hold any overseas company (or any Oz company with stapled securities and/or doesn't pay a franking credit).

    If held in a company I understand the $50k limit doesn't apply with tax charged on a flat 5% of your FIF holdings. If in your own name then you pay tax on the lesser of 5% of your FIF holdings and the gain in capital / dividends received. I don't have a trust and so haven't followed what applies to such a structure. FIF tax is not payable on the first year of ownership (April to March) if the shares are not sold (but buying and selling share in any year does make things more complicated).

    I find it is an annoyance but doesn't make that much of a difference. If the current market continues then tax on 5% of my holdings will be a small price to pay for the gains received. But please all of this with a pinch of salt as I an not an account.

    Having previously missed a large increase in a number of shares I held but sold to try to avoid FIF tax I now just hold and pay the tax. I do still try to make purchases near the beginning of the tax year rather than the end (all other things being equal).

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