Is The Grass Really Greener On The Other Side?

by Shawn O’Grady
3 Minute(s) to read

Is The Grass Really Greener On The Other Side?

Once again the migration numbers are starting to flow back to Australia. It is timely to point out to those that have not immigrated to Australia in the past (and those that have forgotten). Unlike New Zealand Australia does have a capital gains tax. Most people think this only affects property in Australia. However, if you choose to become an Australian tax resident for the lower tax thresholds etc. this could affect your New Zealand house, even if you never sell it. With the government's exchanging data it is prudent to get some professional advice. Come and see us, or make an appointment with your accountant before you make up your mind and book your tickets.

Employee Share Options (ESO)

IRD is on the prowl again.

We are aware that ESO is back on the IRD hit list. IRD is proactively contacting NZ and international corporates to obtain details of all employees who have been granted share options in the last 5 income years.

IRD then crosschecks their records to identify and contact those who have not filed income tax return or failed to disclose the ESO in their tax returns.

ESO provides employees an opportunity (i.e. an option) to purchase company shares at a discounted price. Subject to the prevailing share price at the time, employees may:

  • Exercise the right to buy & hold the shares
  • Exercise the right to buy & sell the shares
  • Waive and forego the rights to buy

The taxing event is when you exercise to buy. It does not matter that you did not sell the shares and kept it as share investments. We can assist you and any of your friends/colleagues who are affected by this to make voluntary disclosures to IRD before they come for you.

 

Holding Gold

Can an investment in gold bullion create a tax liability? Inland Revenue (IRD) has recently released a statement on this specific point.

IRD consider that gold bullion purchased as an investment has been acquired with the purpose of eventual disposal, i.e. a purpose or intention of resale exists. Consequently, any gain that arises on its future sale is income and taxable. In IRD’s view, a commodity such as gold does not provide any annual return or income for the period of ownership, so it is hard to argue that the investment was for any purposes other than eventual disposal. 

The IRD considers the ‘reason’ for acquiring gold is irrelevant. Whether it has been purchased as an investment, or a hedge, this does not counter the underlying purpose of a future disposal. In comparison with other investments such as shares in a company, which may be held on capital account for the purpose of a deriving a dividend stream, gold has none of these features.

 

HAVE WE GOT YOU THINKING?

 

Give us a call on (04) 563 6965 or email: dennis@taxman.co.nz or shawn@taxman.co.nz

Keep an eye out for February’s article!



TAX DATES TO REMEMBER

  • 20th February. 2018 - monthly employers PAYE payment…
  • 15th February. 2018 - Bi monthly GST Return for Dec/Jan 2018…