Forum Archive Index - February 2000

[Nigel McCarter <n.mccarter@clear.net.nz>]

Harley, Damien, Mark et al

There is one other point on capital gains taxes and the IRD.  
If you are a classed as a trader and you set out to make a profit on the
trades, then you can charge any expenses incurred in making that profit
against tax.  This includes brokerage fees, subscriptions to journals, for
example the NBR, and I suspect depreciation on your computer, telephone
charges isp charges and so on.  They are all legitimate expenses, although
you have to keep records to show that they are legitimate.

If you buy shares for value investing, with the specific intention of
holding the shares over the long term in order to gain dividend income,
then you cannot charge brokerage and losses on share trading against tax.
Under certain circumstances other expenses are allowable, but at this point
you need an accountant.

This is a very important distinction since your tax liability can make a
very substantial difference to your net profit at the end of the year, that
is how much money you have to spend on lollies.

If in doubt, you would have to check with the IRD or an accountant ... not
forgetting that the penalaties for getting it wrong are severe.

Nigel McC
Nigel McCarter

Shorten the Odds 
The Short Portfolio
Box 23 019 Hamilton
Phone 64 7 858 2429 Fax 64 858 2689
Mobile 025 274 8560

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