How does one calculate the conversion to NZ dollars? # Will investors now have to give a statement of assets each year to the IRD? US tax: $1.50 USD (one-off), $0.50 a year A one-off $1.50 USD fee is deducted from your first deposit to cover the set-up, and after that, a $0.50 fee is deducted from your account each year to sort your US taxes for you. See www.rbnz.govt.nz/keygraphs/graphdata.xls and click on Excel tab 8. Dividends/income received from such investments are not directly taxable. They facilitate international tax compliance in accordance with New Zealand tax law. It also covers managed funds held overseas and … We have a couple of shares which were bought some years ago for around 2000 and are now worth 55,000. You will simply be asked if they cost more than that, in which case you will pay the tax. Let's say a person with several US shares and a portfolio worth over the $50,000 threshold has several of these stocks placed in company dividend reinvestment programmes. 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. New Zealand's capital gains tax applies only if you hold shares in companies not based in New Zealand or the Grey List countries, which are Australia, Canada, Germany, Japan, Norway, Spain, the UK or US, says Pippos. Investments in overseas companies and managed funds costing less than NZ$50,000 and Australian shares not included in the FIF regime will usually be treated under the normal income tax rules, when on the basis the shares were not acquired with an intention of disposal, shareholders only pay tax on dividend income they receive. 4) Would you recommend a couple to sell down to $99,999 at purchase price in order to avoid the considerable problems of proving each year that shares purchased perhaps 40 years ago were indeed purchased at a seemingly low price? It seems that on April 1 we can look at the original purchase price of things to determine if we are under the $50,000 for tax purposes. If you do sell and then repurchase your shares, under the new fair-dividend-rate rules shares bought during a tax year, and dividends on those shares, aren't taxed, says Frawley. The idea is to be able to recognise certain franking credits for New Zealand tax purposes. A. # The total return on the shares - including dividends and any gain in price - during the tax year. Carrigan adds, "The $50,000 exemption does not generally apply to trusts and estates. Key features of New Zealand’s tax system include: 1. no inheritance tax 2. no general capital gains tax, although it can apply to some specific investments 3. no local or state taxes, apart from property rates levied by local councils and authorities 4. no payroll tax 5. no social security tax 6. no healthcare tax, apart from a very low levy for New Zealand’s Accident Compensation injury insurance scheme (ACC). Example Take for example, a New Zealand tax resident who: » Acquires shares in USCo with a cost of $40,000 on 1 July 2013 » Acquires shares in UKCo with a cost of $20,000 on These investments are usually called FDR prohibited or CV enforced investments. In effect, then, part of the tax will sort of be on capital gains. 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) at no cost to us. Dividends/income received from such investments are not directly taxable. The foreign investment fund (FIF) taxation regime in New Zealand is broadly designed to prevent taxpayers from using investments in offshore entities to avoid or defer their tax obligations. So you would be taxed under the current regime, which means your dividends would all be taxed. Q. I have a portfolio of UK shares over the $50,000 threshold and therefore due to fall prey to the new foreign investment wealth tax. Still, I don't know your circumstances, and it may make good sense for you. However, help is at hand. But if you bought your shares before the early 1990s, using this shortcut will probably give you considerably higher share costs than were in fact the case - although as long as the total is still under $50,000, that doesn't matter. That means that if the cost of your overseas shares is $51,000, all of those shares are subject to the new rules. And over the years, there'll be ups and downs. : You will pay tax on 5 per cent of that value, unless the shares have yielded less than 5 per cent - in dividends and share price rises. Q. But the rules have since changed, and there is no longer any situation in which taxes will be carried forward. "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. "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. The answer to your third question is: "Yes, you can ignore the tax." A. Pre-register here! # The $50,000 applies separately to each investor. 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? Merger considerations and certain other corporate actions may be deemed dividends, resulting in withholding tax being payable on the capital value of your shareholding. # If tax due is accrued is it still to be wiped upon death? From reading the answers you got from Peter Frawley, I understand that the $50,000 threshold operates on the original cost of purchasing the shares. If this is you, Sharesies can’t handle your tax for you and you should seek tax advice. March 10, 2007 Q. I follow your columns on taxing of overseas shares because I have shares and unit trust investments in Canada. Go to www.rbnz.govt.nz/statistics/, click on "Exchange rates" on the left side, and then on "B1 historical series". If the rules do apply to you, when calculating your 2007/08 taxes, start with the value of your offshore shares next April 1. As the new tax regime on shares in countries beyond Australasia takes effect, many taxpayers seem to think it's tougher than it really is. will be your status as a New Zealand tax resident. # The Aussie exemption doesn't include companies that are not resident in Australia, even if they are listed on the Australian stock exchange. A. They don't apply to overseas property, bonds or cash. Mary Holm is a seminar presenter, author and publisher. 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 … If you should be paying the tax but don't, you are likely to be in trouble if you are audited. Any method which involves carrying forward amounts (whether gains in excess of 5 per cent or tax losses) would be much more complex than the new method." There will be market-crash years when we are glad we are in the new regime rather than the current one. Do I have to revalue on April 1, 2008 or does the $50,000 exemption last forever? Each quarter a dividend investment statement is mailed stating the gross dollar dividend value, federal tax taken and then the net amount. less than 10% of the units in a foreign unit trust. They come into the regime the following year. 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. Unfortunately, in your case that means that your shares don't qualify for the threshold. 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. Simply the best portfolio management tool for DIY investors. Income Tax Act 1994, ss CF 6, LC 6, NG 1(2)(a). Note that if you have invested less than $50,000, so that you are under the threshold, you will continue to be taxed on dividends - as well as realised gains if you are a trader - as in the past. 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. In that case, you will pay tax on the yield amount. However, the exemption will apply for a limited period to trusts created on a person's death, so that trustees have sufficient time to deal with the deceased's estate under the will." Basically, as long as you buy no more non-Australasian shares, you stay outside the new rules forever. To make things easier for those working out their eligibility for the threshold, Inland Revenue has come up with a compromise. But even if we ran nothing else for weeks, I couldn't answer them all in the column. # The new rules generally apply to shares only, although they will also apply to interests in some overseas super schemes and life insurance products. According to the IRD website, a foreign investment fund (FIF) is an offshore investment held by a New Zealand-resident taxpayer who holds: less than 10% of the shares in a foreign company. In many cases, Resident Withholding Tax (RWT) or PIE tax is automatically deducted from you at a certain point in time, like when the income is paid – in the same way PAYE tax is deducted from your salary or wages. FIF-Exempt Overseas Income & Overseas Tax Credits Content also available for tax entities or on our global site.. Richard Prebble: China has silenced New Zealand, NZ regulator issues Bitcoin warning: Be prepared to lose all your money, It's mother vs. son in Britain's priciest divorce war, 'It's desperate down there': West Coast town hanging on for Govt help, Police seek skipper and yacht last seen in the Marlborough Sounds. Inland Revenue has recently published two papers clarifying a lot of the issues people are asking about. By compiling all your portfolio data in one place, Sharesight eliminates the paper-chase and headaches normally associated with performance and tax reporting. Different perspective the dividends into account Sharesight account and add your holdings headaches normally associated performance... Adds that `` individual facts and circumstances are taken into account '' a pity that you had any purpose! Calculate the tax bill, taxes could be carried forward long as the person owns the investments the! 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