There’s been a boom in direct share investments since the lockdowns of 2020 with platforms like Sharesies, Hatch and InvestNow seeing thousands of Kiwis join up to buy shares. These straightforward platforms have democratised share market investment, helping New Zealanders grow their wealth and save for the future.
One question though: If you’re directly investing in shares, are you paying the right amount of tax?
TAX ON DIVIDENDS IS PAID FOR YOU
You need to pay tax on the income you make on your shares from dividends. Most share trading platforms pay tax on your behalf to Inland Revenue. When you get a dividend payment for shares in a company, the tax has already been deducted. Other types of shares have tax deducted by the fund provider, so once again, the dividends you receive already have the tax taken out. Check with your trading platform for more details.
TAX ON INTERNATIONAL SHARES
On international shares, New Zealand has tax treaty agreements with 40 other nations, so you don’t end up being taxed twice on the same investment. These nations includes the USA, Australia, the UK and China.
GETTING YOUR PIR RIGHT
You may be taxed at different rates depending on which types of shares you have invested in. It’s important to have the correct Prescribed Investor Rate loaded into your share trading platform. That means you will be taxed at the right rate, which causes fewer issues later on. You can work out your PIR here.
TAX ON CAPITAL GAINS
Own international shares in large quantities or Australian real estate ETFs? Capital gains tax applies to the sale of some shares, so talk to us if you think this might apply.
SEND US YOUR ANNUAL TAX STATEMENT
Don’t ignore that annual tax statement that gets emailed to you – send it to us! We’ll keep it on file and use it when we do your end-of-year tax calculations.
Any other tax questions, get in touch – we’re happy to help.