Forum Archive Index - January 2003

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

Hi Bill

> 
> 
>Good advice to Pat. Excellent.
> 
>Do Local Bodies still issue something similar? 
>


I see Pat has already answered this question (yes).


>
>Govt Bonds are you liable for tax if you sell 
>for more than you payed?
> 


Yes.   Of course the upside of this is that if you sell a bond for 
less than you paid for it that difference comes off your income, thus 
reducing your income tax.  I quote from page 44 of the IR3 individual 
return guide for 2002.

"SALE OR MATURITY OF FINANCIAL ARRANGEMENTS"

"You must do a 'wash up' calculation known as a base price 
adjustment, when a financial arrangement (in this case a bond) is 
sold remitted or transferred.  The calculation ensures that the total 
gains or losses from the financial arrangement are brought to 
account.  This applies in every case- you don't have to be in the 
business of buying or selling financial arrangement, or have bought 
them for the purpose of resale, as you would with shares."

"When calculating the income and expenditure on sale you can use the 
sale or disposal of financial arrangements ( IR 3K ) form."


SNOOPY


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