Disclaimer: This guide is for general information only and does not constitute tax or legal advice. Tax rules change frequently. Always consult a qualified New Zealand tax advisor or chartered accountant for advice specific to your situation.
1. Trader vs Investor — Why It Matters
New Zealand has no capital gains tax in the traditional sense, but that does not mean trading profits are tax-free. The IRD distinguishes between investors and traders based on your intention at the time of purchase.
The Intention Test
If you buy an asset with the intention of selling it for profit — rather than holding it for long-term income (dividends, interest) — you are a trader and your profits are taxable income under the Income Tax Act 2007, sections CB 1-4.
| Factor | Investor | Trader |
|---|---|---|
| Intent at purchase | Hold for income (dividends) | Buy to sell for profit |
| Holding period | Months to years | Minutes to days |
| Frequency | Occasional adjustments | Regular, systematic trades |
| Knowledge | General market awareness | Technical analysis, charting tools |
| Time commitment | Minimal | Significant daily time |
| Profit taxable? | Generally no | Yes — income tax applies |
| Losses deductible? | Generally no | Yes — offset against income |
Key insight: Being classified as a trader has a significant upside — your trading losses can be offset against your salary income, reducing your PAYE tax. This is not available to investors.
If you're using Satis Omnibus to actively trade with technical analysis, automated signals, and short holding periods, you are almost certainly a trader in the IRD's eyes.
2. Income Tax on Trading Profits
Trading profits are added to your total taxable income and taxed at your marginal rate. New Zealand uses a progressive tax system:
| Income Band | Rate | Example (salary $70k + $20k trading) |
|---|---|---|
| $0 — $14,000 | 10.5% | Already covered by salary |
| $14,001 — $48,000 | 17.5% | Already covered by salary |
| $48,001 — $70,000 | 30% | Already covered by salary |
| $70,001 — $90,000 | 33% | First $20k of trading profit taxed here |
| $90,001 — $180,000 | 33% | — |
| $180,001+ | 39% | — |
Your employer already deducts PAYE from your salary. Trading profits sit on top, so they're taxed at your highest marginal rate. In the example above, a $70k salary plus $20k trading profit means the trading income is taxed at 33% = $6,600 tax on trading profits.
Independent Earner Tax Credit (IETC): If your total income (salary + trading) is between $24,000 and $48,000, you may qualify for up to $520/year. Above $48,000 it phases out. Above $70,000 it's zero.
3. Loss Offsetting
This is one of the biggest advantages of being classified as a trader. If your trading produces a net loss for the year, you can offset that loss against your employment income.
How It Works
Say you earn $80,000 salary and have $15,000 net trading losses after deducting all expenses:
- Taxable income becomes $80,000 - $15,000 = $65,000
- Your employer already paid PAYE on $80,000
- You've overpaid tax — you get a refund when you file your IR3 return
- At 30-33% marginal rate, that's roughly $4,500 - $4,950 back
Important: You can only offset losses if you're genuinely a trader (not an investor). Keep detailed records of your trading activity, strategy, and time commitment to support your trader status if the IRD ever queries it.
4. Provisional Tax
If your Residual Income Tax (RIT) exceeds $5,000 in a tax year, you must pay provisional tax the following year. RIT is the tax you owe after PAYE and other credits are applied.
Three Payment Methods
| Method | How It Works | Best For |
|---|---|---|
| Standard | IRD calculates based on prior year + 5%. Three instalments: 28 Aug, 15 Jan, 7 May | Stable, predictable trading income |
| Estimation | You estimate your own tax for the year. Same three dates. | Variable income — if you expect to earn less than last year |
| AIM (Accounting Income Method) | Pay as you go, every 2 months via accounting software | Irregular income — no underpayment interest risk |
Underpayment interest: IRD charges 8.97% interest on underpaid provisional tax. If you estimate too low, you'll owe interest on the shortfall. If unsure, use the Standard method or slightly overestimate.
In your first year of trading, you typically won't owe provisional tax because there's no prior year trading income. But set aside 30-33% of your profits during the year so you're ready for the tax bill.
5. ACC Levies
ACC (Accident Compensation Corporation) levies apply to all earners in New Zealand. As a day trader with employment, you'll pay:
| Levy | Rate (2025-26) | Notes |
|---|---|---|
| Earners' Levy | 1.75% | Deducted from salary via PAYE. Also applies to self-employed trading income. |
| Work Levy | Varies by industry | Only applies if you register as self-employed. Rate depends on your industry classification. |
| Working Safer Levy | 0.08% | Flat rate on all liable earnings. |
ACC levies are capped at a maximum earnings threshold (around $139,384 for 2025-26). If your salary already reaches this cap, you won't pay additional ACC on trading income.
6. GST Considerations
You do not need to register for GST on trading income. Financial services (including buying and selling financial instruments) are exempt from GST under the Goods and Services Tax Act 1985.
The $60,000 threshold for mandatory GST registration applies to taxable supplies of goods and services. Trading profits are exempt financial services, so they don't count toward this threshold. However, if you also run a separate business (e.g., freelancing), those revenues do count.
7. Home Office Deductions
If you have a dedicated space at home for trading, you can claim a portion of your household expenses. There are two methods:
Method 1: Floor Area Percentage
Calculate the percentage of your home used for trading:
Trading room area / Total home area × 100 = Your claim percentage
Example: 12m² trading room in a 120m² house = 10%
Apply this percentage to these costs:
| Expense | Annual Cost (example) | 10% Claim |
|---|---|---|
| Rent or mortgage interest | $24,000 | $2,400 |
| Electricity | $2,400 | $240 |
| Internet | $1,200 | $120 |
| Home insurance | $1,800 | $180 |
| Rates (council) | $3,000 | $300 |
| Total | $32,400 | $3,240 |
Method 2: IRD Square Metre Rate
The IRD publishes a per-square-metre rate each year. For the 2025-26 year, this is approximately $57.30 per m².
Example: 12m² trading room × $57.30 = $687.60
This is simpler but usually gives a smaller deduction than the actual cost method.
Requirements: The space must be identifiable (a distinct room or clearly defined area), regularly used for trading, and necessary for earning income. A desk in the corner of your bedroom qualifies — a laptop on the couch does not.
8. Equipment & Technology
Equipment used for trading is deductible. Items under $1,000 can be fully expensed in the year of purchase. Items over $1,000 must be depreciated over their useful life.
| Item | Depreciation Rate (DV) | Useful Life | Example |
|---|---|---|---|
| Computer / laptop | 50% DV | 4 years | $2,500 laptop: Year 1 = $1,250, Year 2 = $625... |
| Monitors | 50% DV | 4 years | $800 monitor: fully expensed (under $1,000) |
| Office furniture (desk, chair) | 20% DV | 10 years | $1,200 standing desk: Year 1 = $240 |
| Phone / tablet | 67% DV | 3 years | Claim business-use percentage only |
DV = Diminishing Value — you apply the rate to the remaining book value each year. Alternatively, you can use Straight Line (SL) depreciation which spreads the cost evenly (e.g., 40% SL for computers = equal deductions over 2.5 years).
Dual-use items: If you use a device for both personal and trading purposes, only claim the trading percentage. A reasonable split (e.g., 60% trading / 40% personal for your main computer) should be documented and consistent.
9. Other Deductible Expenses
Beyond home office and equipment, you can claim these trading-related costs:
| Expense | Deductible? | Notes |
|---|---|---|
| Trading platform subscriptions | 100% | TradingView, data feeds, Satis Omnibus subscription |
| Market data fees | 100% | Real-time data, Level 2 access |
| Brokerage commissions & fees | 100% | These reduce your net profit automatically |
| Trading courses & books | 100% | Must be directly related to your trading activity |
| Accountant fees | 100% | For preparing your tax return and trading advice |
| Internet (trading portion) | Partial | Claim the percentage used for trading (see Home Office) |
| Phone (trading portion) | Partial | If you use your phone for trading alerts, broker apps |
| Stationery & printing | 100% | Trade journals, record keeping supplies |
| Software (charting, analysis) | 100% | TradingView, Excel/Sheets, trading journals |
Not deductible: The capital you invest (it's not an expense, it's an asset), personal living expenses, clothing (even if you call it "work from home" attire), commuting to a co-working space (unless it's your principal place of business).
10. Cryptocurrency & CARF
Crypto is treated the same as any other financial asset for tax purposes. If you trade crypto with the intention of profit, gains are taxable income.
Taxable Events
- Selling crypto for NZD/fiat — gain or loss is calculated as sale price minus purchase price
- Trading one crypto for another — treated as a disposal; gain/loss calculated at the NZD value at the time of trade
- Using crypto to buy goods/services — treated as a disposal at NZD value
- Staking rewards / airdrops — taxable as income at the NZD value when received
- DeFi yield / liquidity mining — taxable as income when received
CARF — Crypto Asset Reporting Framework
From April 2026, New Zealand is adopting the OECD's Crypto Asset Reporting Framework (CARF). This means:
- Crypto exchanges operating in NZ must collect and report user transaction data directly to the IRD
- Reports include your identity, transaction amounts, and asset types
- International exchanges will share data with NZ under automatic exchange agreements
- The IRD will be able to cross-reference your declared income with exchange data
Bottom line: With CARF, the IRD will know what you traded. Ensure you're declaring all crypto income. Non-disclosure penalties range from 20% to 150% of the tax shortfall, plus interest.
Cost Basis Methods
The IRD accepts FIFO (First In, First Out) or Weighted Average Cost methods. Pick one and use it consistently. Crypto tax software (Koinly, CryptoTaxCalculator) can automate this.
11. Investing — Passive & Long-Term Rules
If you also hold long-term investments alongside your active trading, different tax rules apply to each type of investment income.
Dividends & Imputation Credits
New Zealand company dividends come with imputation credits — tax the company already paid at 28%. You include the gross dividend (cash + imputation credit) in your income, then claim the imputation credit against your tax.
| Scenario | Cash Received | Imputation Credit | Gross Income | Tax (33%) | Net Tax After Credit |
|---|---|---|---|---|---|
| Fully imputed dividend | $720 | $280 | $1,000 | $330 | $50 extra to pay |
If your marginal rate is 28% or lower, fully imputed dividends result in zero additional tax (and you may get a small refund).
Interest & RWT
Interest from bank accounts, term deposits, and bonds is subject to Resident Withholding Tax (RWT). Your bank deducts RWT at your nominated rate. Make sure your RWT rate matches your marginal tax rate:
| Income Range | Correct RWT Rate |
|---|---|
| $0 — $14,000 | 10.5% |
| $14,001 — $48,000 | 17.5% |
| $48,001 — $70,000 | 30% |
| $70,001+ | 33% |
| No IRD number provided | 45% (default penalty rate) |
Always provide your IRD number to your bank. Without it, they withhold at 45% — well above even the top marginal rate.
PIE Funds & KiwiSaver
Portfolio Investment Entities (PIEs) are tax-efficient for high earners. PIE income is taxed at your Prescribed Investor Rate (PIR), capped at 28% — even if your marginal rate is 33% or 39%.
- KiwiSaver funds are PIEs — contributions and returns taxed at your PIR (max 28%)
- Managed funds structured as PIEs get the same capped rate
- PIE income is not included in your taxable income — it's a final tax
- This makes PIEs significantly better than direct share ownership for anyone earning over $70,000
Property — Bright-Line Test
Residential investment property is subject to the bright-line test. If you sell within 2 years of purchase (reduced from 10 years in 2024), the gain is taxable income. The main home exemption still applies to your primary residence.
12. Foreign Investment Funds (FIF)
If you hold foreign shares or funds (including US stocks, ETFs like VTI/VOO, or international managed funds) worth more than $100,000 in total cost, the FIF rules apply.
Budget 2026 change: The FIF threshold was doubled from $50,000 to $100,000 in Budget 2026. If your foreign holdings are under $100,000 in total cost, the FIF rules don't apply and you only pay tax on dividends received.
FIF Calculation Methods
| Method | How It Works | Best For |
|---|---|---|
| Fair Dividend Rate (FDR) | Pay tax on 5% of the opening market value each year, regardless of actual return | Most people — simple and predictable. Cap at actual gain. |
| Comparative Value (CV) | Tax on the actual increase in value plus dividends received | If the investment lost value or gained less than 5% |
| Deemed Rate of Return (RAM) | IRD publishes a prescribed rate applied to average holdings | Very simple — used by some managed funds |
FDR example: You hold US shares worth $150,000 on 1 April. FDR income = 5% × $150,000 = $7,500 taxable income, regardless of whether the shares actually went up or down. At 33% marginal rate, that's $2,475 tax.
Strategy: If your foreign shares dropped in value, use the CV method for that year (you can switch year to year). If FDR would charge you 5% but the shares only gained 2%, CV only taxes the 2% actual gain.
13. Record Keeping
The IRD requires you to keep records for 7 years. For trading, this means:
- Complete trade log — every trade with date, asset, quantity, entry price, exit price, fees, and profit/loss
- Broker statements — monthly or annual statements from all platforms
- Expense receipts — for all claimed deductions (subscriptions, equipment, home office costs)
- Bank statements — showing deposits/withdrawals to/from trading accounts
- Trading journal — documenting your strategy and reasoning (supports trader classification)
- Home office records — floor plan measurements, lease agreement, utility bills
Satis Omnibus helps: The platform logs every signal, trade, and execution with timestamps. Export your trade history from the dashboard for your records. Your broker also provides downloadable statements.
14. Business Structure
You have two main options for structuring your trading activity:
Option 1: Sole Trader
| Setup cost | Free — just start trading |
| Tax rate | Personal marginal rate (10.5% - 39%) |
| Loss offset | Can offset against salary income |
| Compliance | Simple — file IR3 individual tax return |
| Best for | Most traders, especially those starting out or with variable results |
Option 2: Company (LAQC or Standard)
| Setup cost | $150 registration + $1,500-3,000/year accounting |
| Tax rate | 28% flat on retained profits |
| Loss offset | Cannot offset company losses against personal salary (LAQC rules changed in 2011) |
| Compliance | IR4 company return, annual accounts, Companies Office filing |
| Best for | Consistently profitable traders earning 39% marginal rate who want to retain and reinvest profits at 28% |
Option 3: Trust
| Setup cost | ~$1,500-3,000 to establish + annual accounting |
| Tax rate | Trustee income 39% (since 1 Apr 2024); a $10,000 de-minimis is taxed at 33%. Income distributed to beneficiaries is taxed at each beneficiary's own marginal rate. |
| Loss offset | Trust losses stay in the trust and carry forward — they can't offset a trustee's or beneficiary's personal salary. |
| Compliance | Files an IR6 trust return, needs its own IRD number; trustees have AML/CFT and record-keeping obligations. |
| Best for | Asset protection and holding family/investment wealth; income splitting to beneficiaries on lower marginal rates. |
Recommendation: Start as a sole trader. The loss offset advantage is valuable while you're learning and your results are variable. Consider a company once you're consistently profitable at a 33-39% marginal rate (the 28% rate saves 5-11% on retained profits). A trust is mainly about asset protection and estate/family planning rather than a lower rate — trustee income is now taxed at 39%, so the tax case is weaker than it once was. Always confirm the right structure with an accountant.
Set your entity type in the app: on the Business page, choose Individual, Sole trader, Company or Trust. Satis then estimates your tax at the right rate (IR3 / IR4 / IR6) on your realised trading profit — as a planning guide, not tax advice.
15. Common Mistakes to Avoid
Not Declaring Trading Income
With CARF (crypto) and automatic exchange of information (foreign brokers), the IRD increasingly has visibility into your trading. Non-declaration risks penalties of 20-150% of the shortfall plus interest. It's not worth it.
Mixing Trader and Investor Classification
Be consistent. If you claim trader status for losses but investor status for gains, the IRD will notice. Pick one and apply it consistently to each type of activity.
Not Setting Aside Tax
Trading profits feel like "free money" until the tax bill arrives. Set aside 30-33% of net trading profits in a separate savings account immediately. Don't reinvest it all.
Forgetting Provisional Tax
If your first year of trading is profitable, your second year will require provisional tax payments. Many new traders are caught off guard by having to pre-pay tax based on last year's income.
Poor Record Keeping
Reconstructing 500 trades from memory at tax time is impossible. Export trade logs monthly. Use accounting software. Keep receipts.
Not Claiming Deductions
Many traders miss legitimate deductions — especially home office costs, equipment depreciation, and software subscriptions. These add up to thousands of dollars per year.
16. Your Action Plan
- Get an IRD number if you don't already have one
- Set up a separate bank account for trading funds and tax savings
- Start recording everything — trades, expenses, receipts, time spent
- Measure your home office and calculate your claim percentage
- Register as a sole trader with the IRD (you can do this online via myIR)
- Set aside 30-33% of trading profits for tax each month
- Find a tax accountant who understands trading income — they'll save you more than they cost
- File an IR3 return at the end of the tax year (31 March) — your accountant can get an extension to 31 March the following year
- Check your provisional tax obligations after your first year
- Review your RWT rate at your bank to match your total marginal rate
Pro tip: A good trading-savvy accountant typically costs $500-1,500/year and is fully deductible. They'll identify deductions you'd miss and ensure you're compliant. Ask for one who understands crypto and share trading.
17. Resources
| Resource | What It Covers |
|---|---|
| IRD — Income from selling (IR420) | Official guide on when asset sales are taxable |
| IRD — Provisional tax (IR255) | Provisional tax methods and payment dates |
| IRD — Working from home expenses | Home office deduction rules and rates |
| IRD — Depreciation rates | Official depreciation rates for all asset types |
| IRD — Cryptoassets | Tax treatment of cryptocurrency in NZ |
| IRD — Foreign investment funds | FIF rules, thresholds, and calculation methods |
| Chartered Accountants ANZ | Find a qualified accountant near you |
| myIR (ird.govt.nz) | File returns, check assessments, manage tax affairs online |