Does NZ have a capital gains tax?
The answer is No - BUT!
NZ does not have a CGT as such, but a tax on capital gains does arise in certain situations. These include:
- Share Traders
However since 1 April 2008 the tax on capital gains made on NZ and Australian shares is limited to 5% of the opening market value of the shares.
Unfortunately the 5% can also still apply if the shares have been sold at a loss or decreased in value. This depends on who owns the shares.
If you intend to be trade shares take advice first. - Gain on property purchased with a specific intention of resale at a profit is taxable.
- Gains on land subdivided within 10 years of purchase are taxable, with limited exemptions. N.B. The tax applies no matter when the land is sold. It is the commencement of subdivision within 10 years of purchase that triggers the tax issue.
- Gains on properties sold by builders within 10 years of completing any improvements to the property are generally taxable. This applies no matter how long the property had been owned prior to doing the improvement.
- Gains on properties owned by land dealers and developers are generally taxable.
- Gains due to zoning changes (or the prospect of such a change) can be taxable.
Note
a) In the case of points 4 and 5 above, profits on land sold by persons associated to a builder/dealer or developer can also be taxable. At present the definition of associated person is relatively restricted but this is due to change in late 2009. From that time on the associated person definition will catch most family situations.
b) Generally the profit on your own home is not subject to tax but this is not always the case if the home is owned by a company or trust or is on an area of land exceeding 4,500m2 (approximately 1 acre).
Tip
Seek professional advice before you sell any property, especially if it has been owned for less than 10 years and a subdivision is involved.
What rate of Tax Applies to Capital Gains?
Effectively it is your marginal tax rate.
This means that for a company the tax rate is 30% (28% from 1 April 2011) while for a trust it is 33%.
The highest rate for a gain derived by an individual is 33% from 1 April 2011.
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Contact Us
Tel: +64 3 578 0180
Fax: 64 3 578 0327
Disclaimer
The notes detailed on this page are of a general nature only and each person must seek specialist advice. This checklist is the property of Winstanley Kerridge Ltd and is not to be copied without express permission.
