Question: I regularly buy shares in overseas companies. I have always thought of myself as an investor rather than a share trader. I have been in a relationship for three years. We split last week. At what point will the IRD treat the profits from my share sales as taxable? Does it depend on how often I trade or why I bought the shares? If my share sales are taxable and I make a loss, can I claim that loss?
Answer: New Zealand does not have a general capital gains tax, so simply making a profit from selling shares does not automatically mean you have tax to pay. However, profits from selling shares can be taxable depending on why you bought them and how you are investing. Inland Revenue’s current guidance focuses particularly on whether the shares were bought with the dominant purpose of selling them.
Does my intention matter?
Yes. If your main purpose when buying shares was to later sell them, the amount you make from the sale will generally be taxable. You do not need to be a professional share trader for this rule to apply. Even someone who only occasionally buys and sells shares can have taxable income if those shares were originally bought for resale.
If you regularly invest in shares, the tax treatment of selling them may be less straightforward than you think — read the full NZ Herald Ex-Files article here to find out when IRD may tax your profits, and what this could mean for your investments.
