Forum Archive Index - October 2001

["Wedde, John" <John.Wedde@weltec.ac.nz>]

Hi Jefley,

You are not automatically a trader simply because you sell soon after
buying. The most important consideration, as with many aspects of the law,
is INTENTION. If you intended to "quick flick" then you are a trader and
profits are taxable, losses tax deductible. If you intended to hold as a
long or even medium term investment but the share rose in price immediately
you purchased it, you could sell and take a quick profit, and indeed it
would be in many ways logical to do so. Because this was not your original
intention however you should argue with the IRD [if it came to an argument!]
that your profit was a capital gain, not a trading profit, as you are, by
intent, an investor, not a trader, The profit is, arguably, therefore not
taxable. You'd most probably be on shaky ground with this argument if you
had a record of regular short term trades however. Just where the
distinction between trading and investment lies is of course often difficult
to ascertain and the subject of much litigation with the IRD I'm sure.

Cheers,
John




                -----Original Message-----
                From:   Jefley Aitken [mailto:jefley@xtra.co.nz]
                Sent:   Wednesday, 3 October 2001 19:25
                To:     'sharechat@sharechat.co.nz'
                Subject:        [sharechat] selling strategies: itc, cli

                would any clever souls who bought these shares recently
(some sharechatter 
                bought cli at 2.37) care to share their thoughts on selling
strategies.
                i've never actually been in the situation where something
that i've bought 
                has jumped 10+% between buying and paying.
                if one does take the money and run, does this make one a
"trader"?  how 
                often does this have to happen before the tax department
would want  in on 
                the act?  -- perhaps that should be rephrased: before the
tax department is 
                entitled to get in on the act?
                thoughts please, regards, jefley


        
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