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Originally Posted by SPG
Has anyone had any recent luck opening an account with an offshore brokerage that provides option trading? Currently trying to get a Tastyworks account opened...would have preferred TDA with their thinkorswim platform but seems they don't want to offer derivatives to kiwis now.
My strategy is to acquire a select few stocks, but may exit and re-enter positions on swings. I will buy longer term options for insurance, and sell shorter term options to hopefully bring down my cost basis / generate cash-flow to reinvest. Right now I have just under NZD 50k available to invest, but given this mixed strategy I’m not sure how to identify any tax considerations to keep in mind...appreciate any tips/tricks/insights from anyone doing something similar.
As you have read in this thread, the problem is brokerage firms dealing with the NZ FMA. NZ based brokers basically lobbied the gov't to ensure NZ residents to go to NZ brokers to do options and FX trades. You could go to Australia as stoploss mentioned but then again, they would have to be still licensed by the FMA. Many NZ brokers have affiliates in Australian so they may be able to offer NZ residents within the FMA licensing framework. Want to play US equities, then expect to pay more for those trades, especially options trades as the NZ broker would take a cut on top of the US broker. BTW, no NZ broker trades direct with NYSE or Nasdaq. They use a brokerage account abroad no different than what a customer would use having account there to trade. Their fees get transferred on top of their fee cut to the NZ client.
$50K NZD is pretty much the limit you're allowed under FIF to be exempt of taxes. Once you cross over that amount on foreign shares then you have to do complex tax reporting of the account (ie FDR / CR / quick sale / buy calcs). You could open up a joint account and have up to $100K NZD of FIF exemption.
On the grand of things, the NZ gov't has signaled to the international investment community what they want by restricting where NZ residents can invest their $. In return, major firms like GS, TD Ameritrade, and dozens of others have stopped accepting any NZ clients and for some brokerage firms, they've taken retaliation response by not allowing NZX trades. Hence why the dwindling liquidity in the NZX. So when the brokers themselves abroad shut out the NZ equity market, the losers are going to be the listed NZ companies and their investors (look to why Xero left the NZX). It's a very different approach to how Canada & US dealt with cross border trades. I remembered a time in Canada that portfolios must not exceed more than 33% foreign content... now it's wide open and both sides can invest either way and the exchange rates convert with little or no commission.
Whereas in NZ, the introduction of the AML has done nothing to deter cash handling by illicit operations (drugs, gangs, etc in NZ). As my bank manager told me, the ones that suffer under AML are the legit customers through red tape and compliance. Kinda like gun regulations.
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