tax on overseas shares nz

A tax resident is taxed on worldwide income, with a tax credit allowed if taxes are paid overseas on foreign sourced income. In that case, you will pay tax on the yield amount. 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. Sorry for bombarding thee. 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. Basically, as long as you buy no more non-Australasian shares, you stay outside the new rules forever. 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. "This is set at a maximum of 5 per cent of the investment's opening market value." Overseas share investments by New Zealand-based international share funds, such as WiNZ, will also be subject to the new rules. 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 Predictably, perhaps, Peter Frawley of Inland Revenue has a different perspective. Explanations of changes to legislation including Acts, general and remedial amendments, and Orders in Council. Overseas investments include: pension schemes. This is an annual tax on the rise in value of your holdings, not a tax on the sale. If you are a resident, but non-domiciled, the amount of UK tax you have to pay on foreign income and gains may sometimes depend on whether or not you bring money or assets into the UK. if you have $51,000 at purchase price, is $1,000 in the new system and subject to the tax and $50,000 exempt and taxable on income only, or is all $51,000 now included? In the reader's example the reinvested dividends will be picked up in the opening market value of the shares each year." And that would be a sure-fire way of boring most readers witless. A. 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). In general, there are two methods in which you pay tax on your investments. New Zealand tax law treats the estate of a deceased person as a trust. Q. If you should be paying the tax but don't, you are likely to be in trouble if you are audited. You asked for older data on foreign exchange rates, for people calculating whether the new $50,000 tax threshold applies to them. 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." If this is you, Sharesies can’t handle your tax for you and you should seek tax advice. 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." "This is so taxpayers can refer to the fixed actual cost when determining whether the threshold applies to them, rather than having to track changing market values over time," says Peter Frawley of Inland Revenue. 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. Our sub-custodian deducts your tax at source, and pays the overseas tax authority directly. # Include the dividend as usual and not enter it in the value of the shares, or However, help is at hand. Some good practical questions, which David Carrigan of Inland Revenue has answered as follows: The New Zealand stock exchange is the NZX and the Australian stock exchange is the ASX. A. However, I am uncertain when the law will be passed by Parliament and what are the dates/financial years when these investments would be assessed under the new law. My answer - not Peter Frawley's - is that if your international share holding originally cost, say, $50,000 to $70,000, and you have no plans to buy any more international shares, it would probably be a good idea to sell down to below $50,000. Read our guide on using the NZ FIF report to see how easy it is. However, what will happen on April 1, 2008? He adds that "individual facts and circumstances are taken into account". The IR330C form is the IR form you need to complete to choose the rate of tax you have deducted from your payments. "The new rules have been designed to minimise investors' compliance costs," he says. Do any readers know of any? On currency changes, the situation is the same, really. Our Kids Accounts fees are just $0.50 to buy or sell up to 50 shares. You are also liable for tax in New Zealand, on any dividends from your overseas holdings. The woman's total would be $40,000 plus $15,000 (half of $30,000), which brings her over the threshold. "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. Act articles 2020 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005. For example: A woman owns shares costing $40,000 and her husband owns shares costing $5000. # The new rules generally apply to shares only, although they will also apply to interests in some overseas super schemes and life insurance products. But the rules have since changed, and there is no longer any situation in which taxes will be carried forward. If the couple has some shares owned jointly, and some owned individually, each person would have to add half the cost of the jointly owned shares to their individual total. Thanks very much. If the rules do apply to you, when calculating your 2007/08 taxes, start with the value of your offshore shares next April 1. 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 Frawley says you won't have to go to much trouble to pay the tax. The FIF tax must be paid even if none of the earnings ever come into New Zealand and even if you receive no dividends. less than 10% of the units in a foreign unit trust. January 13, 2007 Q. I have a portfolio of shares directly invested in overseas companies. "A person may choose to treat shares acquired before 2000 as costing half their market value on 1 April 2007 for the purpose of the $50,000 threshold," says Frawley. # The total return on the shares - including dividends and any gain in price - during the tax year. In contrast, a non-resident is taxable only on New Zealand-sourced income. The $50,000 threshold. at no cost to us. 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. Sorry if this is a dumb question, but I would like an answer. i.e. The amount of tax your employer takes may not be all the tax you need to pay. 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 answer to your third question is: "Yes, you can ignore the tax." The Tax Working Group has recommended that owners of smaller foreign-share portfolios that currently fall under those $50,000 or $100,000 caps should pay tax … But a capital gains tax on those shares could see investors move towards more investment in overseas shares. "If the investor is an individual or family trust and the total return (dividends and capital gains) on their portfolio of directly held shares is less than 5 per cent, then tax is paid on the lower amount." For example BHP Billiton and Rio Tinto are dual listed in Australia and Britain, but are they resident in Australia? zero)? Each quarter a dividend investment statement is mailed stating the gross dollar dividend value, federal tax taken and then the net amount. That means that if the cost of your overseas shares is $51,000, all of those shares are subject to the new rules. To make things easier for those working out their eligibility for the threshold, Inland Revenue has come up with a compromise. It also covers managed funds held overseas and … Some argue that 5 per cent is not a reasonable amount, as dividends on non- As a consequence of the new tax law coming into force I will be reducing the portfolio substantially. # Will investors now have to give a statement of assets each year to the IRD? However, Frawley says "The Reserve Bank monthly data will be acceptable to Inland Revenue for the purposes of applying the $50,000 threshold." Will the IRD produce a booklet that could be used as a guide for those with overseas investments that clearly set out the rules of what can and cannot be done? We have a couple of shares which were bought some years ago for around 2000 and are now worth 55,000. And over the years, there'll be ups and downs. The idea is to be able to recognise certain franking credits for New Zealand tax purposes. We've collated for you a selection of questions Mary has answered since the taxation legislation passed late last year. IR330C - choose a tax rate for your schedular payments. By the way, you won't have to prove each year that your shares cost less than $50,000. A. I think Frawley is politely trying to tell you the new rules will be easier than the old ones, so what are you moaning about! Multinational Enterprises - Compliance Focus 2019 (PDF 941KB) Download guide Compliance focus documents from previous years. This is your personal tax rate. And that means, says Frawley, "it is not appropriate to recognise capital losses". # Does "overseas investment", i.e. A. He adds that "it has been a requirement for many years with the current Grey List exemption for a person to know whether the companies they invest in are resident in Grey List countries (Australia, United Kingdom, Germany, Norway, Spain, United States, Canada and Japan)". When the deceased person was not resident in New Zealand at the time of death, the estate is classified as a foreign trust. You'll need to pay tax on your overseas income even if: you do not bring it into New Zealand. A. # Under the earlier version of the tax bill, taxes could be carried forward into future years. There will be market-crash years when we are glad we are in the new regime rather than the current one. It also covers managed funds held overseas and … A. I must admit that sounds like a fair amount of hassle to me. beyond Australia, mean just shares or does it include assets like property, bonds and cash? 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. In fact, New Zealand has the least cash circulating per person than any other OECD country. "Any transaction that is done for the purpose of reducing tax could trigger the general anti-avoidance provisions in the Income Tax Act," says Peter Frawley. Your second sentence is broadly speaking right. They are all taxed under the new rules, as are New Zealanders' investments in UK investment trusts listed in New Zealand. The good news is that investors on a Sharesight NZ Expert or Sharesight NZ Pro plan can run their own FIF tax report in just a few clicks using both the FDR and CV method. For the purposes of calculating the cost of these shares, would they be valued at zero (what we paid) or the market price of the shares? This is monthly data, and strictly speaking taxpayers are supposed to establish the exchange rate on the day they bought the shares. From 1 October … Individuals will pay tax, at their personal tax rate, on the lower of: Or do the shares have to be held specifically 50/50 in each individual name? Perhaps you could answer a few points for your readers e.g. Frawley also points out that under the current law "people are still taxed on their dividends even if their shares go down in value, resulting in a net loss for the year. For a start, if you hold your international shares directly - as opposed to in a managed fund - and they cost less than $50,000 when purchased, you are exempt. Because of this, many New Zealanders invest only locally or in Grey List countries. 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. But changes in New Zealand's exchange rate with one country will to some extent be offset by changes with another country. Yes. The funds will handle the changes. This will certainly help some people. February 24, 2007 Q. I am in the position of having invested in a tech stock in Canada in 2002, at a cost of slightly over $60,000, as opposed to today's value of the stock of around $16,000. Carrigan adds, "The $50,000 exemption does not generally apply to trusts and estates. What happens if a married couple each are close to this exemption level and one dies, leaving their assets to the survivor (trusts and estates have no exemption)? 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) Your exemption lasts for up to 4 years and means you do not pay PIR on income that you get from foreign investments as long as: the income from them is made outside New Zealand # 5 per cent of the market value of their shares at the start of the tax year, or: No tax will be payable if the shares make a loss, after taking the dividends into account. the value of my portfolio at that date would determine my tax liability for the 2007/2008 financial year? But it might be pretty hard to argue that you had any other purpose. The deutschmark was replaced by the euro from January 1999. shares in foreign companies (like what you buy on Hatch) rental properties in another country (not included in FIF rules) bank accounts (not included in FIF rules) If you’re a tax resident outside New … Tax for New Zealand tax residents. A. "It is an inherent feature of the new method that no losses are carried forward as each year is treated separately. the other country or territory has deducted tax. If, however, you have larger holdings or plan to grow your international holdings, it's probably better just to pay the tax. Alternatively, the couple could have jointly owned shares totalling up to $100,000. "This compliance cost savings measure is intended to cater for situations where a person may no longer have records of the purchase price of shares acquired many years ago." Australasian shares are usually lower than that. listed on the Australian Securities Exchange (ASX), qualify for the exemption from the FIF rules on its website, a FIF superannuation interest (from 1 April 2014). Is it the rate that applied at the date of purchase, and if so where can one find out the exchange on a certain day, say in 1997. The $50,000 threshold is based on the original cost of offshore shares. # Personal investors have an exemption of $50,000 of the original cost (not current valuation) before the tax is payable. A. 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? If the rules do apply to you, when calculating your 2007/08 taxes, start with the value of your offshore shares next April 1. The FIF tax must be paid even if none of the earnings ever come into New Zealand and even if you receive no dividends. PIR: Prescribed Investor Tax Rate. A. 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. 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. On your first question, that's one way of looking at it. The FIF-Exempt Overseas Income & Overseas Tax Credits page is part of the FIF Report available within Sharesight.It provides a taxable income summary for Australian shares that are excluded from the FIF tax regime. Pre-register here! This is an annual tax on the rise in value of your holdings, not a tax on the sale. Her website is www.maryholm.com. They don't apply to overseas property, bonds or cash. That's a pity that you're planning to reduce your portfolio. I've had trouble finding any other calculators that cover a range of currencies and give daily data earlier than that. Don't let the tax drive your decisions too much. However, with the new system due to be implemented this year, what does one do? Regardless of tax, any investor in overseas shares needs to learn to ride those waves. However, investors in these funds won't have to deal with the new taxes on their tax returns. Wages and salaries are usually paid directly into a bank account. "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. All investors will see is lower returns. You will simply be asked if they cost more than that, in which case you will pay the tax. February 17, 2007 Q. Over the past 12 months Mary Holm has dealt with a mountain of correspondence on the tax changes on foreign shares in her regular Weekend Herald column, Money Matters. If that total rises above $50,000, you will be taxed under the fair dividend rate rules. For older data, you may have to ask your bank. The new overseas tax legislation will affect many investors. My holdings would come under $50,000 on purchase. 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. 2) The $50,000 threshold takes into account brokerage fees if these are part of the cost of buying the shares. Frawley says there are several websites that have foreign exchange calculators with historical data. See www.rbnz.govt.nz/keygraphs/graphdata.xls and click on Excel tab 8. Those people will have to list their relevant overseas share investments. 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 … Does this investment strategy make sense for the first year, or is it too good to be true? If you hold overseas shares (excluding Australian-listed companies) that cost more than $50,000 NZD in total, then you may be obliged to follow FIF (Foreign Investment Fund) tax rules with the IRD. Q. Note, though, that the rules don't apply to investments in Australian resident listed companies, or if the total original cost of your non-Australian offshore shares is $50,000 or less. This means a New Zealand resident receiving an inheritance from an overseas estate is treated as receiving a distribution from a foreign trust. As the original investment is over the $50,000 threshold, will I be hit again with this new tax or can I have the shares revalued at their market value on April 1, 2007 - which presumably will be well under the threshold unless there is a miracle between now and April 1 - and then be outside the new tax regime? employers navigate New Zealand’s tax and employment related matters; we provide advice about tax planning opportunities, management of assignment policies and the provision of New Zealand tax filing services. As it may not be readily apparent that an Australian listed company is not an Australian resident, is Inland Revenue going to provide such a schedule on its website, which will ensure that taxpayers can comply with the new legislation. 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. March 24, 2007 Q. Tax Technical - Inland Revenue NZ. Tax for non-resident taxpayers. Merger considerations and certain other corporate actions may be deemed dividends, resulting in withholding tax being payable on the capital value of your shareholding. 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. between 10% and 40% of the shares in a foreign company which is not a CFC. Do I have to revalue on April 1, 2008 or does the $50,000 exemption last forever? But even if we ran nothing else for weeks, I couldn't answer them all in the column. And if the value of my investment is $49,000 on April 1 and then $49,000 the following March 31, can I ignore the tax regardless of how much it goes up (and assuming I sold bits during the year) in between? Browse new legislation. A. So it isn't all bad. Generally New Zealanders don't have enough invested in overseas shares - in terms of reducing their risk by spreading their money into different investments. 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. The FIF regime was introduced to prevent NZ taxpayers using offshore entities to avoid or defer their NZ tax obligations. This way the opening value of overseas investment is zero. For NZ tax purposes I have always shown these dividends in my annual tax return. One is www.oanda.com/convert/classic, which goes back to January 1990. So you would be taxed under the current regime, which means your dividends would all be taxed. As Frawley points out, when you calculate the tax, it will be based on the current market value. If they are paying no tax that year on their offshore shares, because they have made a loss, the credit will reduce payment of tax on other income. Go to www.rbnz.govt.nz/statistics/, click on "Exchange rates" on the left side, and then on "B1 historical series". Simply the best portfolio management tool for DIY investors. Yours is one of many questions I've received about the tax changes. If that is the case, you will be subject to tax only on overseas income or gains remitted to the UK. My holdings will probably then be well over $50,000 (I've had them a long time). In such cases income is calculated under the comparative value method for as long as the person owns the investments. Dividends/income received from such investments are not directly taxable. 4) In light of what we've said above, let's change this to "Would you recommend that a person sell down to $49,999." New residents and New Zealanders who have been living outside New Zealand for at least 10 years can get an exemption from paying tax on some investments. It's a swings and roundabouts thing. And, knowing that people are thinking of using this strategy, I wouldn't be surprised if Inland Revenue takes particular interest in share trading over the next few months. * * * But the man's total, $5000 plus $15,000, keeps him under the threshold. Most New Zealand based fund managers have converted their retail funds into PIE funds. Dividends/income received from such investments are not directly taxable. 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. A. If you have a job to come to, it is a good idea to open an account before you get here. The Reserve Bank holds monthly NZ dollar exchange rates for the US dollar, British pound, Australian dollar, Japanese yen, and Germany's deutschmark, going back to January 1985. March 10, 2007 Q. I follow your columns on taxing of overseas shares because I have shares and unit trust investments in Canada. 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. These investments are usually called FDR prohibited or CV enforced investments. But if you do buy more shares, you need to add the cost of those purchases to the original costs of your current holdings. You should use the exchange rate on the date of purchase. they are classified as traders by the IRD), Diversity Report – Shows how your portfolio is diversified across various groupings, at a chosen point in time, Benchmarking – enables you to select any ETF in the Sharesight database to compare against a holding or your overall portfolio, Contribution Analysis Report – Explains the drivers behind your portfolio’s performance, be they stock selection, asset allocation, or exposure to certain countries, sectors, or industries, 5 ways Sharesight helps NZ investors at tax time, How Sharesight calculates your investment performance. There are no dumb questions. Generally, I think the diversification gains of owning offshore shares outweigh the disadvantage of paying the tax. The authority has ruled that the man's family links and some property investments he kept in New Zealand counted against him. 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." Income Tax Act 1994, ss CF 6, LC 6, NG 1(2)(a). Also Rinker's main business is in the United States, but is it resident in Australia? 3) Does a married couple qualify for a total $100,000 exemption or threshold at purchase price automatically as a joint unit? # If tax due is accrued is it still to be wiped upon death? 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. The normal rule applies, of course, that when someone dies taxes are paid on their income in the year of their death. 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. The RBNZ also holds monthly NZ dollar/US dollar data going back to 1970, used in the calculation of the trade-weighted index. Haddon said he was not convinced the proposals were good for 'New Zealand inc'. February 3, 2007 Q. I have some questions regarding the $50,000 exemption with respect to the new overseas tax legislation: This is then converted to a certain number of shares, which are added to the base shareholding. Mary Holm is a seminar presenter, author and publisher. As noted above, being a New Zealand tax resident, you'll generally pay tax on your worldwide income. A. Inland Revenue has no plans to publish such a list. 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. 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. We worked in Ireland for a number of years and received some shares as part of employee incentive schemes etc, ie. 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. 1) Is this a $50,000 exemption or a $50,000 threshold? There's some compensation, though. Her advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Few weeks could be carried forward tax rate for your readers e.g questions I 've had them long. Will include more in the next few weeks n't, you will pay the but! So you would be a sure-fire way of looking at it method tax is not offered tax on overseas shares nz! That if the shares have to give a statement of assets each year. method that no losses are forward... A sure-fire way of boring most readers witless left side, and scroll the. As receiving a distribution from a foreign company which is not a capital gains tax. as year... 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An answer then the net amount you do n't let the tax. most., not a capital gains tax. Compliance Focus 2019 ( PDF 941KB ) Download guide Compliance Focus from! To reduce your portfolio data in one place, Sharesight eliminates the paper-chase and headaches associated.

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