While New Zealand does not have a capital gains tax, it does have bright-line property tax rules, which can affect property speculators and mum-and-dad investors.
What is the bright-line property tax?
The bright-line rules were first introduced in 2015. They have been amended since then, and the current rules have applied for the past two years.
In their current format, simply, the rules state that if you sell an investment property within two years of purchase, any profit you make, less applicable deductions, will be taxed. The two-year period starts from the date the legal title is registered to you, and ends when you enter into a binding sale agreement.
Unlike overseas capital gains taxes, there's not a fixed rate of tax on any profit made, rather the profit is added onto your yearly income, and is taxed at your appropriate income tax rate:
Income tax rates in New Zealand
For each dollar of income | Tax rate |
|---|---|
0 - $15,600 | 10.5% |
$15,601 - $53,500 | 17.5% |
$53,501 - $78,100 | 30% |
$78,101 - $180,000 | 33% |
$180,001 and over | 39% |
You can download a full guide to the bright-line property tax rules here.
Does New Zealand tax shares and cryptocurrency?
New Zealand doesn't have a capital gains tax, but any profits you make buying and selling shares and cryptocurrencies are subject to tax.
Crypto
If you are buying and selling crypto with the purpose of making a profit, any money you make will be subject to tax. Additionally, if you earn interest through practices such as staking, it will also be subject to tax. However, any losses you make could be liable for use as a tax deduction.
When you fill out your income tax return, you need to declare any profits made from crypto assets in NZ$, regardless of whether you've cashed out your crypto into a fiat currency. These will be added to your income and taxed at the appropriate rate.
If you're in doubt about your cryptocurrency tax obligations, it's prudent to seek the advice of a tax expert in the field.
Shares
Profits made on share trading are also subject to tax. The IRD rules on this subject are complex so, if in doubt, consult a tax specialist.
If you're just dabbling in online share trading, some apps withhold tax on your investment income, but others don't. So it is prudent to check with your platform provider about your tax liabilities.
