Will I have to pay tax on any capital gain?

Question from Clifton updated on 3rd April 2009:

Myself and ex-partner are both shareholders at 50% each of a property company that owns 4 properties. We are now separated and are thinking about winding up the company.One option would be for one shareholder do buy out the other. Is the capital gain on the selling of shares taxable as income for the seller? Or there is a better way to winding up the company in order to minimise tax?

Our expert responded:

New Zealand does not have any tax on capital gain. However, if you buy shares or property with the intention of on-selling those shares or property, then you are taxed on any gain made, in the same way as a supermarket buys a can of beans for $1 and sells it for $1.50. Assuming you bought both the shares in the company and the properties owned by the company with the intention of owning them long-term, then there will be no tax payable on the capital gain of the shares.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth.  She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.

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