2.2 How to check if your profit from the share sale will be taxable
Profits from the sales of your shares would be taxable if you,
· originally bought the shares for resale or profit-making instead of long-term investment; or
· are in a business of dealing in shares; or
· have a pattern of buying and selling of shares; or
· are classified as a "trader" in shares (See 2.2.1)
If the profits are taxable, you will be taxed under the Foreign Investment Fund rules (See 2.4), or the same rules as apply to New Zealand taxable income depending upon your investments.
2.2.1 Work out if you would be classified as a "trader" in shares
It’s likely that you’re a “trader” in shares if you:
- have a high number of transactions
- spend a lot of time and effort managing your shares portfolio
- work on your shares portfolio on a fairly continuous basis.
There is no exact number of trades or frequency of your transactions to classify if you are a trader. You may need to consider the reasons for your transactions or whether your activity is organised and systematic.
If you are unsure if you’re a “trader”, please consult with your tax consultant or the IRD.
A. If you are a “trader”, any profits/losses from the sale of shares would be taxable. You will be taxed under the Foreign Investment Fund rules (See 2.4), or the same rules as apply to New Zealand taxable income depending upon your investments. Please refer to the flowchart (See 1) to check your tax obligations.
You may not have to pay tax in NZ for the earnings from the sale of shares using Tiger Trade if you are not a New Zealand tax resident (See 2.1).
B. If you are not a “trader”, you’ll still need to pay tax on any gains if you bought shares for the purpose of selling or exchanging them.
Disclaimer: The content of this page is for educational purposes only. It is designed to help you understand the potential tax obligations that may apply to you when investing in financial products. Tiger Broker does not provide any advice, including tax advice, and is not responsible for providing any guidance, opinions, or suggestions about tax for you. If you have any questions about your personal circumstances and tax obligation, we suggest you contact your tax advisor directly for more information.