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  1. #11
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    Quote Originally Posted by peat View Post
    Quite a few are licensed as it turns out, including the one I use.
    https://www.fma.govt.nz/compliance/l...s%5B101%5D=101

    Your statement implied there were none.
    ?? My statement is clear that NZ residents must trade via FMA's licensing scheme - that list if it is of any indication of how many brokers are licensed is insignificant to the global market share of brokers. Not one I can see that is US based.

    What is apparent, FMA is telling investors that bogus or risky brokers overseas do exists.. yes I get that, in places like Zimbabwe. But over in the US, we see brokers that are bigger than ALL of the banks in Australia & NZ combined and offer real insurance protection to their clients.

  2. #12
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    I am reading the thread as well as the links provided but still confused. Perhaps someone can provide answers or confirmation to below?
    1. Trading futures does not fall under FIF but will any gains subjected to income tax (overseas income) here in NZ i.e 33% for over 70k?
    2. Investment returns from shares will be under FIF if over 50k of investment. How about if you are share trading and not holding long term positions? I assume it will not fall under FIF and just normal income tax as item 1?

    Thank you in advance for anyone who could confirm.

  3. #13
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    Quote Originally Posted by jorge_telosa View Post
    I am reading the thread as well as the links provided but still confused. Perhaps someone can provide answers or confirmation to below?
    1. Trading futures does not fall under FIF.....
    Generally futures are treated as a 'scheme of arrangement' for tax purposes and are taxed under 'scheme of arrangement' tax rules, not FIF.

    Quote Originally Posted by jorge_telosa View Post
    ....but will any gains subjected to income tax (overseas income) here in NZ i.e 33% for over 70k?
    Yes all schemes of arrangements are subject to income tax on both the 'interest' portion of your return and the 'capital' portion of your return.

    Quote Originally Posted by jorge_telosa View Post
    2. Investment returns from shares will be under FIF if over 50k of investment.
    Investment returns from non-exempt Australian shares will be under FIF if the total purchase price of your entire overseas portfolio was over $50k. Note it is the purchase price in NZD that determines if the FIF regime is triggered or not. The current market price is not a factor.

    Quote Originally Posted by jorge_telosa View Post
    How about if you are share trading and not holding long term positions? I assume it will not fall under FIF and just normal income tax as item 1?
    Trading in non-exempt foreign shares does come under FIF, but there are special 'quick sale' provisions if you buy and sell within a year. See page 2 of this document.

    https://home.kpmg/content/dam/kpmg/p...s-FIF-2015.pdf

    SNOOPY
    Last edited by Snoopy; 21-11-2020 at 05:55 PM.
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  4. #14
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    Quote Originally Posted by Snoopy View Post

    Investment returns from non-exempt Australian shares will be under FIF if the total purchase price of your entire overseas portfolio was over $50k. Note it is the purchase price in NZD that determines if the FIF regime is triggered or not. The current market price is not a factor.



    Trading in non-exempt foreign shares does come under FIF, but there are special 'quick sale' provisions if you buy and sell within a year. See page 2 of this document.

    https://home.kpmg/content/dam/kpmg/p...s-FIF-2015.pdf

    SNOOPY
    Hold on there... FIF has nothing to do with what 'purchase price' being under $50K. What triggers FIF is the TOTAL of ALL foreign accounts outside NZ. If a person had a UK broker + a US broker, the sum of these accounts if over $50K in value, will fall under FIF.

    I've explained this here with a link directly from IRD's pdf docuement;

    https://www.sharetrader.co.nz/showth...l=1#post857435

    Your KPMG pdf doc also explains FIF as a threshold limit with an example on the right column of 2nd last page. Initially the person bought USCo under the FIF limit but his account balance triggered FIF once he bought UKCo. Once your account passes over the $50K NZD total, FIF kicks in for that year.

    How about from IRD's point of view. Do you really think IRD will allow people to make multiple foreign share purchases in the amounts under $50K and let it compound 10 or 20 years which could end up over $500K or $1M and the NZ resident not pay a $1 in tax? I don't think so....
    Last edited by SBQ; 21-11-2020 at 10:14 PM.

  5. #15
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    Thank you Snoopy and SBQ for the answers. As I understand from your examples, am I correct that it will only be under FIF if at one time all outstanding investments reached over 50k? So if I am day trading and buying less than 50k during the day but also selling it on that day, then I will not be subjected to FIF since I dispose the shares. Even if I invested 49k in a day and sold it for 55k, it will still not be subjected to FIF, correct? But as Snoopy mentioned, I might be subjected to quick sale adjustments but FIF will always be zero if daytrading with less than 50k purchases. I am only trading US stocks and only 1 stock a day.

    Seems like it is better to be under FIF rather than paying 33%, or am i wrong?

    So in my case:
    1. Future trading gains will be subjected to income tax (i.e. 33% if over 70k)?
    2. Share “day trading” will not be subjected to FIF if total purchase is below 50K. But subjected to quick sale adjustment? This is better cause you are going to pay less rather than the income tax thresholds.
    Last edited by jorge_telosa; 22-11-2020 at 08:08 AM.

  6. #16
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    Quote Originally Posted by SBQ View Post
    Hold on there... FIF has nothing to do with what 'purchase price' being under $50K. What triggers FIF is the TOTAL of ALL foreign accounts outside NZ. If a person had a UK broker + a US broker, the sum of these accounts if over $50K in value, will fall under FIF.
    Yes, you have to add all of your FIF liable accounts together. And if the total that you put into them is over $50k then the FIF regime applies. That is what I said.

    Quote Originally Posted by SBQ View Post
    I've explained this here with a link directly from IRD's pdf docuement;

    https://www.sharetrader.co.nz/showth...l=1#post857435
    Yes and I use the same quote that you referenced from the IRD pdf

    -------

    Page 15 from the horse's mouth:

    IF:

    "NZ$50,000 threshold is exceeded at any time in the year when you're a New Zealand resident (for a natural person), or any time in the year for the trustee of an eligible trust"

    THEN:

    all your offshore interests are subject to the FIF rules - the first NZ$50,000 is not exempt.

    ----------

    Up until you spend up to $NZ50k , FIF does not apply. After that FIF does apply to all of your FIF investments. There is no exemption for the first $50k investment you made that subsequently does fall under FIF. (I may not have made that clear). If your total FIF investment of over $50k shrinks in value to below $50k, then FIF still applies, because your historical triggering of the $50k purchase threshold cannot be reversed on those investments. Of course you could sell these investments at a loss, then start again with a new purchase total under $50k and the FIF regime would not apply to that new investment.

    Quote Originally Posted by SBQ View Post
    Your KPMG pdf doc also explains FIF as a threshold limit with an example on the right column of 2nd last page. Initially the person bought USCo under the FIF limit but his account balance triggered FIF once he bought UKCo. Once your account passes over the $50K NZD total, FIF kicks in for that year.
    You have misinterpreted what was written. Read the bold bit again. FIF was triggered with a purchase. It is only the sum of the purchase prices that matter, not the market balance.

    Quote Originally Posted by SBQ View Post
    How about from IRD's point of view. Do you really think IRD will allow people to make multiple foreign share purchases in the amounts under $50K and let it compound 10 or 20 years which could end up over $500K or $1M and the NZ resident not pay a $1 in tax? I don't think so....
    No.

    But the IRD will allow multiple foreign purchases for a total of under $NZ50,000. And provided you don't put more than $NZ50k into those investments in total or add any other subsequent investments that may fall under FIF, then you are not subject to FIF. If your $50,000 subsequently grows to $500,000 you can bring it back to NZ tax free with no need to declare any FIF interest along the way.

    SNOOPY
    Last edited by Snoopy; 22-11-2020 at 12:05 PM.
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  7. #17
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    Quote Originally Posted by jorge_telosa View Post
    Thank you Snoopy and SBQ for the answers. As I understand from your examples, am I correct that it will only be under FIF if at one time all outstanding investments reached over 50k? So if I am day trading and buying less than 50k during the day but also selling it on that day, then I will not be subjected to FIF since I dispose the shares. Even if I invested 49k in a day and sold it for 55k, it will still not be subjected to FIF, correct? But as Snoopy mentioned, I might be subjected to quick sale adjustments but FIF will always be zero if daytrading with less than 50k purchases. I am only trading US stocks and only 1 stock a day.

    Seems like it is better to be under FIF rather than paying 33%, or am i wrong?

    So in my case:
    1. Future trading gains will be subjected to income tax (i.e. 33% if over 70k)?
    2. Share “day trading” will not be subjected to FIF if total purchase is below 50K. But subjected to quick sale adjustment? This is better cause you are going to pay less rather than the income tax thresholds.
    No it would be worse than FIF. Regardless of amount invested, every $1 of gain of profit you make from frequent trading (hyperactive day trades, monthly, weekly, etc) would be subjected to RWT rates. The distinction here is you're 'speculating' with the 'INTENT' to profit and not necessarily the intent for retirement savings. Of course this can be disputed by picking 5 accountants in NZ, and not all will agree. Some will say it's only FIF ; but my guess is siding on the 'intent' aspect. For eg. have a look at NZ's managed funds under PIE and none of them practice the habit of day trading so they can maintain FIF standing. I'm certain that would all change if the fund manager changed their scope to doing ultra short term profits vs long term retirement gains. Then their funds would be subjected to corporate tax rates.

    The 'quick sale' calculation ONLY applies under FIF. The key determination why FIF came about is to address overseas emphasis of capital gains vs in NZ, the share emphasis is on paying dividends which results in lower capital gain.

  8. #18
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    Quote Originally Posted by jorge_telosa View Post
    Thank you Snoopy and SBQ for the answers. As I understand from your examples, am I correct that it will only be under FIF if at one time all outstanding investments reached over 50k?
    If you mean 'reached' in the sense of adding up all the dollars you invested, and the total dollars you invested added up to less than $50k then you are correct. The FIF regime is not triggered.

    Quote Originally Posted by jorge_telosa View Post
    So if I am day trading and buying less than 50k during the day but also selling it on that day, then I will not be subjected to FIF since I dispose the shares.
    You are correct in that you won't be subject to FIF, but your reasoning is wrong. You won't be subject to FIF because you haven't invested more that $NZ50k. The fact that you have bought and sold the shares within the same day is of no consequence.

    Quote Originally Posted by jorge_telosa View Post
    Even if I invested 49k in a day and sold it for 55k, it will still not be subjected to FIF, correct?
    Correct, because the cash you outlaid for the trade was less than $NZ50k. Whatever you sold the shares for is of no consequence as regards the FIF regime..

    Quote Originally Posted by jorge_telosa View Post
    But as Snoopy mentioned, I might be subjected to quick sale adjustments but FIF will always be zero if daytrading with less than 50k purchases. I am only trading US stocks and only 1 stock a day.
    As long as your total active investments from all potential FIF sources add up to less than $NZ50k at any one time, then FIF does not apply.

    Quote Originally Posted by jorge_telosa View Post
    Seems like it is better to be under FIF rather than paying 33%, or am i wrong?
    I have extensive personal experience with FIF, but I should add I have always held through a year and therefore never invoked the quick sale provisions myself. But from my reading of that KPMG summary it appears you would benefit from being under FIF if you made -on average- more than 5% on all your trades for the year. Yet you have to remember that FIF does not apply to single trades. You cannot pick and choose what trades you do under FIF and what you don't, and it applies to all trades as 'one transactional collective' for the year. As a day trader, I think it is very unlikely you will be able to average 5% return on all trades. So by far the most likely result is that you will end up paying tax on the actual net profits you make from your trades

    Quote Originally Posted by jorge_telosa View Post
    So in my case:
    1. Future trading gains will be subjected to income tax (i.e. 33% if over 70k)?
    Yes

    Quote Originally Posted by jorge_telosa View Post
    2. Share “day trading” will not be subjected to FIF if total purchase is below 50K. But subjected to quick sale adjustment? This is better cause you are going to pay less rather than the income tax thresholds.
    If your total purchases are less than $50k there is no quick sale adjustment, because you are not in the FIF scheme.

    And don't be mislead my those apparently low FIF tax percentages. If FIF did apply then 5% of your total trade purchase value would be the dollar amount of your income from FIF. If you are in the top tax bracket. Then that income is taxed at 33%, exactly the same income tax rate that you would be taxed at as a non-FIF trader. There is no 'lower income tax rate' for FIF scheme participants.

    SNOOPY
    Last edited by Snoopy; 22-11-2020 at 12:57 PM.
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  9. #19
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    Well explained snoopy.

  10. #20
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    Thank you Snoopy. Spot on answers. Appreciated.

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