In general, there are two methods in which you pay tax on your investments. Simply the best portfolio management tool for DIY investors. beyond Australia, mean just shares or does it include assets like property, bonds and cash? Find out whether you need to pay UK tax on foreign income - residence and ‘non-dom’ status, tax returns, claiming relief if you’re taxed twice (including certificates of residence) For NZ tax purposes I have always shown these dividends in my annual tax return. This way the opening value of overseas investment is zero. The FIF regime was introduced to prevent NZ taxpayers using offshore entities to avoid or defer their NZ tax obligations. Q. But it might be pretty hard to argue that you had any other purpose. # If tax due is accrued is it still to be wiped upon death? The new overseas tax legislation will affect many investors. You don't have to do any more calculations in subsequent years. While no general capital gains tax applies in New Zealand, tax on gains made may apply to NZ investors trading shares when: They purchase a property with the intention to sell it (this rule was introduced in 2016) They purchase shares or other investments with the intention to sell it at a profit (rather than hold the shares and earn income from holding them) In these … On currency changes, the situation is the same, really. Income Tax Act 1994, ss CF 6, LC 6, NG 1(2)(a). Our sub-custodian deducts your tax at source, and pays the overseas tax authority directly. : "The new fair dividend rate method seeks to tax an amount approximating a reasonable dividend yield on a person's investment each year," he says. Carrigan adds, "The $50,000 exemption does not generally apply to trusts and estates. "This is set at a maximum of 5 per cent of the investment's opening market value." The idea is to be able to recognise certain franking credits for New Zealand tax purposes. A. In that case, then, you will receive those dividends tax-free - putting you at an advantage, in those years, over people not affected by the new tax rules. That would save you some tax and some hassle. By compiling all your portfolio data in one place, Sharesight eliminates the paper-chase and headaches normally associated with performance and tax reporting. Basically, as long as you buy no more non-Australasian shares, you stay outside the new rules forever. Just to complete the picture, NZ-based share funds that invest only in Australian listed and based shares will not be subject to the rules. From there you can upgrade to an NZ Expert plan to run your FIF Report, as well as other premium features including: Traders Tax Report – Calculates taxable gains for individuals who hold shares on revenue account (i.e. Read our guide on using the NZ FIF report to see how easy it is. # Include the dividend as usual and not enter it in the value of the shares, or Only you can decide if the strategy is worth the hassle, costs and possibly sleepless nights. Thanks very much. This means a New Zealand resident receiving an inheritance from an overseas estate is treated as receiving a distribution from a foreign trust. A. Q. Q. # Will investors now have to give a statement of assets each year to the IRD? I hope many readers whose letters won't make it into the column can find answers there. In such cases income is calculated under the comparative value method for as long as the person owns the investments. Murray Brewer Partner, Tax D +64 9 922 1386 M +64 27 448 8880 E murray.brewer@nz.gt.com Greg Thompson Partner and National Director, Tax Some searching questions, answered here by Peter Frawley of Inland Revenue: 1) The $50,000 is a threshold. Some good practical questions, which David Carrigan of Inland Revenue has answered as follows: In effect, then, part of the tax will sort of be on capital gains. Haddon said he was not convinced the proposals were good for 'New Zealand inc'. The FIF tax must be paid even if none of the earnings ever come into New Zealand and even if you receive no dividends. Taxable gains on shares in New Zealand. But I guess investors will get used to noting the value of their international shares on April 1 each year, and keeping track of dividends. Inland Revenue has already published a summary of the new offshore tax rules on its website, www.ird.govt.nz (under "news and updates"), and it plans to publish a more detailed explanation of the rules on its website shortly. This is an annual tax on the rise in value of your holdings, not a tax on the sale. The rules apply when less than 10% of the shares in a foreign company are held, or units of less than 10% in an overseas unit trust. The authority has ruled that the man's family links and some property investments he kept in New Zealand counted against him. It won't matter whether the value of your overseas shares changes because of changes in the share price in the home country or because of currency fluctuations. You are also liable for tax in New Zealand, on any dividends from your overseas holdings. a New Zealand tax resident, or where the individual has previously returned income of the superannuation scheme under the FIF regime and elects to continue to do so. Some not-so-good news from Frawley: "The person in this example is treated, for the purposes of the $50,000 threshold, as having acquired the shares for their market value at the time they received the shares under their employee incentive scheme." will be your status as a New Zealand tax resident. IR330C - choose a tax rate for your schedular payments. "On-line calculators will be available on Inland Revenue's website which will calculate the tax answers for investors from the data they input," says Frawley. From what I've read it may be advantageous and legitimate to sell these on or before March 30 and buy them back in April. If I may ask one more thing, if the value of one's overseas investment fluctuates wildly due purely to currency changes (which is a big risk for the $) will we be taxed on the gain but not be able to claim the losses? There are also some costs for selling and buying and a risk of price movements in the meantime to take account of, but the benefits could outweigh these costs. If one spouse dies and leaves their assets to the survivor, and that causes the survivor's portfolio to exceed the $50,000 limit, the surviving spouse will then be subject to the new rules. Because of this, many New Zealanders invest only locally or in Grey List countries. To make things easier for those working out their eligibility for the threshold, Inland Revenue has come up with a compromise. They are all taxed under the new rules, as are New Zealanders' investments in UK investment trusts listed in New Zealand. A. But a capital gains tax on those shares could see investors move towards more investment in overseas shares. Merger considerations and certain other corporate actions may be deemed dividends, resulting in withholding tax being payable on the capital value of your shareholding. This may seem a trivial question, but it becomes important if the $50,000 is a threshold rather than an exemption and one is close to the $50,000 limit. 2) Is the $50,000 exemption or threshold based on the total cost of the shares including brokerage, or is it just the cost of the shares? It also covers managed funds held overseas and … If you have a job to come to, it is a good idea to open an account before you get here. If you get interest and dividends from overseas, there are different rules depending on your situation. Overseas investments include: pension schemes. You buy and sell shares through a stock broker To buy and sell shares on the stock exchange (called ‘trading’) you’ll need to place an order through a stock broker – this is a company licensed to … The new rules don't apply to individuals whose non-Australasian overseas shares cost less than $50,000. Probably the latter. 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