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Originally Posted by winner69
It was about 60 transactions in one year they focused on. Never have many stocks at any particular time and most transactions would have been the total position.
Did it change the way I invest? Not really .....still hold while things are going up and sell when things start going down and collect divvies along the way but divvies are not generally the main motivation.
While "trader" might not be the right word for you, from what you have said I think you would have a hard time arguing that you hold on capital account.
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Just need to clarify an earlier post I made regards utilizing a company format. What I did not add was that as an individual you can be excused cap gains tax by investing as opposed to trading but using a company format is treated differently. if you have a cap gains it goes into a separate a/c on the company books if its a pre-existing company formed for your "normal business". Since you are trading as a company it is actually profit and will be taxed as such at some point (each year if your co is specifically set up for share trading) My understanding is that if you wound up company and were in a "no profit" scenario then the cap gains could be offset against the loss and there would be no tax due. However if there was a profit from regular trading then the Cap gains a/c will be added in to be taxed as per normal. I guess as a company might be other benefits such as home office, computer, memberships etc. etc. but would suggest strongly talk to accountant about intricacies. Apologies for earlier post..I will edit it accordingly.
Last edited by BIRMANBOY; 28-08-2012 at 09:50 AM.
Reason: trying to clarify
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I know cj ........that's the issue
Would say unless one buys and holds through good and bad and leaves things in the bottom draw forever you probably are a 'trader' of sorts .......and that's not fair or equitable.
I appreciate that essentially I haven't changed my approach but I don't see myself as a trader and my tax agent doesn't disagree (though acting on instructions) so I take that risk at the mo.
If things keep going up I can go long periods without selling and only buying ......but when the line on the chart doesn't.t look too flash I sell and sometimes (like a few years ago) that can cause a flurry of activity ......compounded when one starts buying back. I call this capital protection
My tax agent has clients who run both capital and revenue accounts but she does say that they are pretty active traders and the capital account their retirement money
It is not black and white but I wouldn't voluntary call myself a trader unless I was buying selling every day or week or because you feel you have to ..... Prob not good advice but I think chances of getting caught if guilty are pretty slim anyway
Noe we have debated in public IRD prob going to run a check on who sells their Mighty River shares in the first week ..... My excuse the wife bought them in my name without my permission
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Originally Posted by winner69
I wouldn't voluntary call myself a trader unless I was buying selling every day or week
I think that was my point. I dont think it is as simple as I am not a trader as the test isn't "are you a trader". If you investment strategy is to buy low and sell high, then you are investing for capital gains and therefore it isn't a capital gain, it is an income gain (screwed logic I know).
The issue is, everyone aims to buy low and sell high, they just pretend they do it for the dividend yeild.
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Well not as clear cut as that.. I buy for dividends...really, really, promise-not pretending. However I try and buy when those dividend producers are low SP. Every now and then I end up with cap gain as well(unrealized since I very rarely sell). There are considerable numbers of investors who supplement super and savings with dividends and prefer to have steady income stream as opposed to lump sum windfalls. At some point those cap gains will be realized I suppose (if they are still there) but not for number of years would be my guess.
Originally Posted by CJ
I think that was my point. I dont think it is as simple as I am not a trader as the test isn't "are you a trader". If you investment strategy is to buy low and sell high, then you are investing for capital gains and therefore it isn't a capital gain, it is an income gain (screwed logic I know).
The issue is, everyone aims to buy low and sell high, they just pretend they do it for the dividend yeild.
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Originally Posted by CJ
The issue is, everyone aims to buy low and sell high, they just pretend they do it for the dividend yeild.
Exactly CJ, you are not going to buy high and sell low beacuse there is a 10% yield.
I think the easierst and maybe the fairest is somethong along the lines of time holding a particular asset , whether it be a share a piece of art or a property.
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Originally Posted by CJ
The issue is, everyone aims to buy low and sell high, they just pretend they do it for the dividend yeild.
Not everyone. I buy for income and have no intention of selling.
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Originally Posted by Lizard
At about the point they appear to make enough money from capital gains to be worth sending someone around to check through their paperwork?
That about sums it up Liz
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