sharetrader
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  1. #21
    Member
    Join Date
    May 2003
    Location
    Wellington, , New Zealand.
    Posts
    103

    Default

    Jessie you are right that a preference share is an exempted financial arrangement. However I dont think this gets you off the capital gains tax hook. It seems clear to me if the issuer redeems or the pref is sold and you have purchased at a discount the gain on sale or redemption should be taxable on genral principles of what constitutes income. Its all about intent: if you intend to sell than the gain or loss on sale is taxable. This is unlike a rental property where I think it can be more readily argued that gain on sale was incidental to the primary purpose of gaining rent.
    Success is the ability to go from one failure to another with no loss of enthusiasm

  2. #22
    Member
    Join Date
    Mar 2006
    Location
    New Zealand
    Posts
    63

    Default

    Dubdee, I'm not so sure. OCFHA has no redemption date. I would buy it purely for its income in the form of interest. Any rise or fall in capital value would be incidental. It is no different to buying a dividend-paying share. This same argument would apply to a number of other perpetual preference shares such as BNSPA. However, because IFTHA is not a preference share it is not an excluded financial arrangement. Therefore, I am assuming that capital gain on IFTHA is always taxable.

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