quote:
Originally posted by Paper Tiger
Q. Does this mean you have to report all trades to the IRD to back up your tax return?
A. No. You just report your profit/loss on your and fill in your ?IR10? You also keep records of trades, bank accounts, receipts for expenses in case the IRD ever decide to check up.
you attach a summary of profit/loss for all COMPLETED trades. Trades still in progress are not included (optional?)
Q. Do you ever deliberately sell at a loss to reduce tax liability?
A. NO - I would rather earn more and pay more tax.
you can sell any losers just before 31st march, to offset any profits during the year...thats why there is often a sell off the last week in march
Q. With online trading I guess brokerage is not a significant factor - right?
A. Brokerage fees are a business expense and thus claimed in full. Brokerage can be a significant expense on a trade. e.g. I bought and sold NPX yesterday the brokerage fees swallowed more than half the capital gain on the actual shares.
Q. What's an average frequency of trades - one a day, one a week, or what?
A. For me it purely depends a) perceived opportunity to make money on a situation b) having the cash sitting in the account c) having the time to monitor the price i.e. not doing my other job. In the last 12 months I have bought/sold about 40 times.
Q. Are you paying 39% it and are you factoring this into the results of your year's trading?
A. You pay tax at the appropiate rate and yes
Q. Do you ever compare that outcome with that of an investor who might make, say, 6 to 10 sales a year, enjoying a tax-free capital gain, while also getting income from dividends, often fully imputed.
A. Someone doing 6 buy/sells a year may well be a trader in the eyes of the IRD. The definition is all about INTENT.
I trade as much for the fun/excitment as anything to be honest and have a company for said purposes. As a seperate taxable entity I also invest which so far as been a buy and hold operation and in absolute terms I have acheived greater gains from that.
as a trader, you also get the dividends and imp credits if you are holding the share at the time. you dont pay extra tax on these, since tax has already been paid by the company.
Q. What deductions can the average trader claim - for computer equipment, use of home/office premises, magazine & newspaper subscriptions etc?
A. yes to all. you can claim all expenses you are entitled to for any home based business.
Q. Are you registered for GST and able to claim back a percentage of phone/car etc expenses?
A. GST registered and I do not claim car expenses for internet trading. you CAN claim if you use your phone and car for share trading, eg phoning brokers, travel to shareholder meetings, postage etc
Does that answer you sufficiently?
Some questions for traders
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