In New Zealand, there’s no tax on capital gains from shares. But if you’re a share trader, you may have more tax obligations than what’s outlined in our tax help centre article.
What’s a share trader?
You may be a share trader if you’re in the business of dealing in shares. Meaning, you buy and sell shares often, to make a profit, and with a level of professionalism (like being a broker or fund manager).
You may also be considered a share trader if you buy shares with the main intention of selling them, instead of holding them for the longer term to earn dividend income.
Intention can be a tricky thing to measure! Something to ask yourself could be:
When do I expect to benefit from these shares?
(a) When the price goes up and I sell them for a profit.
(b) Gradually, through regular dividend payments (or expected dividend payments in the future). And down the line when I need my investment money, I’ll hopefully be better off than when I started.
If you’re unsure whether you’re a trader, seek professional tax advice. We do not provide tax advice at Sharesies.
What happens if I am a trader?
If you’re a trader, any money you make or lose from selling your shares will count towards your total taxable income for the year. This means you may need to pay more or less tax on your income for the year.
As a trader, the regular tax obligations from investing also apply to you.
How do I tell IRD that I’m a trader?
If you’re a trader, you must tell Inland Revenue (IR) so they can make sure you’ve paid the correct amount of tax for the financial year.
Once you’ve been contacted by IR at the end of the financial year, you can report your gains (or losses) by filling out an income tax return (IR3 form). You can find your gains and losses for the year through your Sharesies trading history report. Go to Portfolio > Investments > Manage > Download reports and select ‘Investment report (PDF)’.
In the IR3 form—or when you’re asked to confirm your income by IR, tick ‘other income’ when indicating where your income for the year came from, and say the income is from ‘share trading’.
You are responsible for ensuring you pay the correct tax, if you’re still unsure whether you’re a trader, seek professional tax advice. We do not provide tax advice at Sharesies.