|marcus hinkley <email@example.com>
|Sat, 28 Aug 1999 10:06:46 +1200
Ross W. Jardine wrote: > > Does anyone know of an online broker that accepts account from NZ to > trade in US shares? > > How easy is it to get set up with an account to trade both stocks and > options in the US? > > What are the tax implications of profits from trading in the US market > when I bring them back into NZ? > > Hoping to get some answers to these questions by Saturday morning. > > A Yank in NZ To a Yank in NZ. I can answer the question you pose regarding the tax implications of profits from trading in the US market, although don't take it as definitive, as I am not near the relevant texts this morning. The first issue is where you are a tax resident. The United States taxes on citizenship, and therefore as long as you are a citizen the States will require you to account to them (subject to some rules after a long period of time which I will assume are not relevant here), and double tax agreements. NZ on the other hand taxes based upon tax residence. You will be a tax resident of NZ if: You have been in NZ for more than 183 days in any 12 month period (basically 6 months)or, even if you have been in the country less, You consider that your permanent place of abode is NZ: ie: the place you live, matters such as social ties, economic ties, employment etc will be taken into acount. If you are tax resident of only US, the NZ Government will not tax you at all, but you will be liable in the US. If you are liable in both countries, the double tax agreement (DTA) between the two countries is relevant. The DTA aims to prevent double tax. In simple terms, the dta determines which country has the primary right to tax income. The first step of the dta is to determine which country you will be a resident of. There are "tiebreaker tests" in the dta and you need to check which country you will deemed to be resident of under these. I do not have the NZ/US dta handy so can't check this for you, but generally I think it begins with where you consdier home is (Permanent place type test). On this basis I think that the dta may deem you to be an NZ resident (assuming you were a NZ tax resident on the abov PPA test). If so, NZ will have the primary right to tax. The next step is to go to the specific dta clause on business profits. Business profits (which will include sharetrading) is generally the country of residence's right, subject only if you have a permanent establishment in the US. For sharetrading that normally will not be the case. My conclusion therefore (tentative due to lack of materials at home, and further facts) would be that if you are trading from NZ, and deemed an NZ tax resident, US will forgoe any taxes based on the dta. If you are not a tax resident of NZ yet, you may wish to consider using a trust to hold your offshoreincome producing assets, as a trust pre migration can avoid NZ tax for a considerable time on foreign sourced income. Without a trust, when you become tax resident of NZ you will be liable for NZ tax on your world wide income. As I say, take this as a guide at this stage. If you need assistance I am a tax lawyer in Hamilton, email on firstname.lastname@example.org. -------------------------------------------------------------------------- To remove yourself from this list, email email@example.com with "unsubscribe" in the body of the message.