Forum Archive Index - July 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi silverfox,
>
>Does anyone have a link to a website/websites that explain to some
>level of detail the tax implications of overseas investments (esp.
>US and Aussie shares)? I've tried the IRD website but can't see the
>wood for the trees.
> 
I presume you are talking about the tax implications for NZ 
investors investing in these countries?

You would probably have to look at the 'Income Tax Act 1994' and 
subsequent amendments to answer all of your possible questions.  You 
can find it at your central library.   But, this being a weighty 
legalistic tome,  I suspect looking at that will be more confusing 
than looking at any information that the IRD may have available to 
you.

I can tell you that for NZ investors there are dual taxation 
arrangements such that mean you are allowed to claim credits on 
your tax return for 'witholding tax' paid on Australian and USA 
dividends.  Somewhat perversely if the credit for tax paid is in the 
form of Australian Franking Credits, then you can't claim that.

The NZ IRD puts out a table with designated monthly exchange rates so 
that you can convert income from overseas shares into NZ dollars at 
the right rate.  You can use the nominal exchange rate that the IRD 
gives you, or the actual rate on the day you were paid the money.

If you sell shares in the Australian or USA markets and you bought 
those shares for the accumulation of income they give you (i.e. not 
as a trader), then no capital gains tax is payable by you.   Unless 
of course the 'you' is a professionally managed fund in which case 
the capital gain is assessed as part of your income.   Traders have 
to pay capital gains (treated as income) on their overseas trades 
just as they have to on their New Zealand trades.

Your question asked for a website, other than the IRD one.  I don't 
know of anything but I would caution you on using simplified 
information at face value.   Interpreting this sort of thing is why 
accountants are sometimes useful!  I don't know if I have answered 
any of the questions you have in mind, but ask again specifically if 
there is something particular on your mind that I haven't covered.
SNOOPY

(disclaimer:  This information is offered as what I have found from 
my own experience and part time detective work on the subject.  it 
should in no way be regarded as professional advice on taxation)

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