Property trading tax?

Our Experts Answer:

Dear Megan thankfully, that is incorrect. Gains from taxable land transactions are taxable under the income tax act. The tax rates applied are in accordance with normal income tax rates. For trusts and individuals with incomes in excess of $70,000 the tax rate is 33%. Companies are taxed at 28% but when they distribute profits as dividends, a 5% top up is often required to get to the shareholder rate of 33%. Bear in mind also that the activity will require GST registration when it is continuous and regular. This means 15% is payable on sales but claimable on costs. The income tax is calculated on the profit net of GST. It is quite common for active property traders and developers to use companies but all the structuring options should be explored with your advisors to select the one that is most suitable for your circumstances.