Tax on forex trading nz
Reader who finds KiwiSaver nauseating has a scary list of things that could go wrong But another one applauds KiwiSaver, while sitting on the home ownership sidelines. Who's right, Gareth or me, on tax credit start dates? We find eight providers who will accept one-off payments into KiwiSaver. More winners of books. Man lives in NZ but his savings are in the US. When should he bring the money here, in light of the dollar's fluctuations?
More winners in our giveaway of "KiwiSaver: How to make it work for you". Rent control would do more harm than good. The cost of staying out of the housing market. Reader insists it's worthwhile to try to time foreign exchange movements. A year-old letter shows the danger in trying to predict what the Kiwi dollar will do "Plodders" wonder how to match the investments of their landlord friends Traders in shares beyond Australasia no longer pay the old tax on capital gains How about taxing rental property the same way as international shares?
Is the Kiwi dollar to blame for poor overseas investment performance? How foreign dividends will be dealt with under the new tax rules. Where to go for historical foreign exchange data - for tax purposes. A lionish company bites back. Should retired couple invest in a commercial property? Why take on that risk? Can we predict NZ dollar movements? When is it best to change money from US to NZ currency.
A US website that evaluates international charities. Yet another charity offers a Christmas gift programme. International index funds, a favourite long-term investment of mine, don't look good to one reader. Fortunately for me it was not a huge amount. Hopefully all the investors in index funds can wait that long! Is there an year cycle for industrial and resource shares? Why index fund of Aussie shares has done much worse than its index.
Limited submissions on tax changes not good enough. NZ shares, already favoured, shouldn't get still more favourable tax treatment. The situation of a reader may not seem relevant to many others. But there are lessons here for practically everyone. Don't rush to bring your shares back from overseas. Also in this issue: From the Mailbox - Giving the kids a great start with regular investing.
Buying things you don't really need Also in this issue: From the Mailbox - Should a young man buy himself a house? The pros and cons of self employment and income splitting. Comparing shares with property is tricky. How movements in the dollar affect investment in international share funds.
The taxable benefit is calculated as the difference between the market value of the share received and the amount paid for the share. The trigger point for the tax liability is generally the point at which the employee acquires the share, whether by way of grant, purchase at a discount, or exercise of an option. The grant of options is not a taxable event. The tax liability arises upon exercise of the options, or when the option is sold. A non-resident receiving a share benefit is taxable in New Zealand to the extent that the benefit relates to New Zealand employment.
Resident taxpayers are subject to specific regimes to prevent New Zealand residents from sheltering income offshore. Tax may be imposed on foreign income when it is derived by a resident or, in some circumstances, as it accumulates in a CFC or a FIF. In general terms, a foreign company will be a CFC where five or fewer New Zealand residents hold in aggregate more than 50 percent of the specified control interests in the foreign company.
A foreign company will also be a CFC where a single person resident in New Zealand holds a control interest of not less than 40 percent unless there is a non-associated, non New Zealand resident who has an equal or greater control interest in the foreign company.
Subject to certain exceptions, an interest in a FIF is defined as shares in a foreign entity, a right to benefit as a beneficiary or member of a FIF superannuation scheme or a right to benefit from a policy of life insurance entered into outside New Zealand. Several exemptions from the FIF rules exist including an exemption for certain shares in Australian resident companies listed on the ASX and a de minimis exemption for individuals with total FIF investments having an aggregate cost of NZD50, or less.
FIF exempt investments are taxable on distributions and on disposal, if held on revenue account e. Although there are several methods of calculating income under the FIF regime, the default method is the fair dividend rate FDR method. The FDR method assumes that a taxpayer earns income from the FIF investment equal to 5 percent of the investment's market value on the first day of the tax year.
If the actual return from a taxpayer's total portfolio of FIF investments is less than 5 percent, then tax can usually be paid on the lower amount losses are not deductible however. The majority of foreign superannuation schemes would not be considered to be FIF superannuation schemes. If the foreign superannuation scheme is entered into while the taxpayer is a non-resident, the taxpayer has an exemption from tax on any withdraw for the first 4 years of New Zealand tax residence.
The most common method to tax the withdrawal after the 4 year exemption period is under the schedule method. This method taxes a percentage of the withdrawal based on the time that the taxpayer has been a New Zealand tax resident.
A gross-up of income in the year of departure is not required. Therefore, lower marginal tax rates may apply if an individual leaves New Zealand early in the income year, or arrives late in an income year. As noted above, distributions from certain overseas superannuation schemes are generally taxable if received while a tax resident in New Zealand. As a general rule, if you expect to receive offshore pensions and superannuation benefits while a tax resident in New Zealand, KPMG New Zealand recommends that they should be reviewed and their tax status determined.
Gains from stock options and discounted shares are generally taxable if the price paid for the share is less than the market value of the share at the time of acquisition of the share. Gains from the disposal of stock options received by virtue of employment are also generally taxable.
Foreign exchange gains and losses arising on financial arrangements held by tax residents must be brought to account under the financial arrangements regime. Gains will be assessable. Losses will be deductible provided the interest deductibility criteria are met.
Depending on the taxpayer's personal circumstances, gains might be taxable on a realized cash basis or unrealized accrual basis. Losses are subject to the normal tests of deductibility. As New Zealand does not have a comprehensive capital gains tax regime, capital losses are generally not deductible.
Losses on financial arrangements might be deductible under the financial arrangement rules. New Zealand does not allow deductions against employment income for private expenditure. Benefits-in-kind provided to employees are liable to fringe benefits tax FBT in the hands of the employer. Reimbursement of expenditure incurred as a consequence of employment can generally be reimbursed by the employer without the employee being subject to tax on the reimbursed amount.
The Inland Revenue has released a list of what relocation costs will be non taxable, such as the costs of finding a new property, moving personal effects, and immigration assistance. If so, please discuss? New Zealand does not have a comprehensive capital gains tax regime. Some forms of gain are subject to income tax under specific provisions of the legislation. Generally, the only deductions available to most individuals are for expenditure relating to tax return preparation and premium on certain loss of earnings insurance.
An employer will generally be required to make deductions of income tax from salary and wages and remit those deductions to the Inland Revenue Department either once or twice a month, depending on the size of the employer. If an employer does not deduct PAYE, tax deductions become the responsibility of the employee and can be accounted for as an IR 56 taxpayer, where the employee makes regular payments to the Inland Revenue.
A taxpayer that has income that is not subject to source deductions, such as investment income, might be required to make installment payments provisional tax during the tax year.
For example, monthly, annually, both, and so on. A provisional taxpayer may be required to pay provisional tax during an income year. This is generally done in three installments. A provisional taxpayer, for a tax year, is a taxpayer whose residual income tax for the tax year is NZD2, or more; or where a taxpayer makes an election to be a provisional taxpayer.
For example, a foreign tax credit FTC system, double taxation treaties, and so on. A tax credit is allowed for foreign tax which is paid on any foreign-source income. The tax for which a credit is sought must be similar in nature to New Zealand income tax.
The amount of the tax credit allowed cannot exceed the lesser of the amount of tax actually paid in the foreign jurisdiction, or the New Zealand tax liability on the foreign sourced income. If a tax credit is claimed and the foreign tax is subsequently refunded, the amount of tax credit claimed and refunded must be paid to the Inland Revenue within 30 days of the date on which the foreign tax was refunded. What are the general tax credits that may be claimed in New Zealand?
This calculation assumes a married taxpayer resident in New Zealand with two children whose three-year assignment begins 1 January and ends 31 December In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country. You've been a member since. Healthcare KPMG is committed to providing long term support to our clients as they tackle challenges. Insurance Our insurance practice comprises multi-disciplinary teams, led by senior partners with extensive experience.
Tax rates online The online rates tool compares corporate, indirect, individual income, and social security rates. Tax returns and compliance When are tax returns due? That is, what is the tax return due date? An annual income tax return if required is due on 7 July. What is the tax year-end? The tax year is to 31 March. What are the compliance requirements for tax returns in New Zealand? Residents Taxpayers who derive income other than income that has tax withheld at source, or who are non-resident for part of the income year, will be required to file a tax return.
Non-residents Non-residents are required to file an annual tax return if they have income that is New Zealand sourced. Tax rates What are the current income tax rates for residents and non-residents in New Zealand? Residents Both residents and non-residents are taxed in general using a tiered rate table as follows. Non-residents A non-resident is subject to New Zealand tax only on income earned or sourced in New Zealand regardless of where paid. Residence rules For the purposes of taxation, how is an individual defined as a resident of New Zealand?
Residents A New Zealand resident taxpayer is taxable on their worldwide income. For income tax purposes a resident individual is defined as a person: Transitional residents People who have not been tax resident in New Zealand for at least 10 years and return or move to New Zealand will be a transitional resident for New Zealand tax purposes. The general requirements for being a transitional resident are as follows: Non-residents A person who is physically absent from New Zealand in excess of days in any month period is deemed not to be resident in New Zealand from the beginning of that period of absence, provided they do not have a permanent place of abode in New Zealand.
Termination of residence Are there any tax compliance requirements when leaving New Zealand? There are no special procedures on termination of residence.
What if the assignee comes back for a trip after residency has terminated? Communication between immigration and taxation authorities Do the immigration authorities in New Zealand provide information to the local taxation authorities regarding when a person enters or leaves New Zealand? Filing requirements Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
Economic employer approach Do the taxation authorities in New Zealand adopt the economic employer approach 1 to interpreting Article 15 of the OECD treaty? A cash basis person is defined as someone whose:. If you fall within these rules it means that you only account for the foreign currency movements when they are realised.
While no currency is immune to this issue, this is causing headaches for taxpayers with British pound mortgages in — and now taxpayers with US dollar cash deposits between — to present; in fact, if you had bank accounts or a mortgage overseas, you need to make an assessment of your risk. As a starting point, a discussion with your tax advisor will determine whether you are likely to have an exposure.
Even if you consider yourself to be safe for the time being, it may be worth exploring some forward planning around how you could mitigate this issue in the future. Experience to date suggests there are still a large number of taxpayers in this bucket and additional Tax Department compliance procedures will likely identify the exposed taxpayers.
Home About Meet our team aaron-wallace ash-clarke fono-sosene graham-lawrence matt-bellingham mike-atkinson rachel-bradburn yuline-little Community commitment Careers Resources Our Work Contact. Unfortunately two further important tax adjustments need to be considered: