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If a person gets money from a settlement, is it taxable?

Thursday 24th January 2002

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Q: If a person gets money from a settlement, is it taxable? If it is, what is a good stock to invest in? If it's not taxable, what would be a good investment? If it is taxable, is there a way to get out of taxes?

A: When an investor receives the proceeds of a share sale only the capital gains component of the money is taxable. If you trade shares for a living you have to pay capital gains tax. I can't advise you which shares you should buy but as a general rule most NZ companies pay dividends which, in almost all cases, have already had the tax paid on them so there is no further requirement for the owner of the shares to pay tax on their dividend income.

Unfortunately the only two sure things in this life are death and taxes. You can't avoid paying tax but you there are ways to reduce the amount of tax you pay. An accountant or tax specialist is best to advise you on your particular circumstances.

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