One of my clients is a farmer, who also owns and trains a number of standardbred racehorses. He has been enjoying some success with the horses and for the year ended 31 March 2000 he received close to $70,000 from stud fees, training fees and stake money. He has also recently been offered $20,000 for one of his stallions. We have been treating his interest in racehorses as a hobby but, now that the amounts of money involved are getting larger, I am concerned that he could be facing a tax liability. ANSWER
Earlier this year we learnt that taxpayers who had loans from Australian banks in respect of investment properties that they had bought in Queensland (in particular) were required to deduct withholding tax from the interest prior to the interest being paid to the Australian bank. What was or is the rate of the withholding tax and is it applicable to a loan from the Bank of Melbourne? (The Bank of Melbourne is a division of Westpac.) ANSWER
I am a Brierley shareholder and purchased my 60,000 shares at $4.00 each (total investment $240,000). The shares held by me are on capital account and are currently trading at 45c each (current value $27,000). I have heard that I may have to account for any subsequent capital gain in the shares now that Brierley is a foreign company. Furthermore, I understand that I will not be able to obtain a deduction for the difference in the purchase price and the current market value of the shares. Is this correct? ANSWER
My client is a New Zealand resident investor in an Australian technology investment fund. The fund is listed on the Australian Stock Exchange and is set up as a limited liability trust. My client receives regular investment statements from the fund which are split into the following categories: dividends; interest; trading gains; investment gains; and foreign exchange gains. Are the investment gains taxable in New Zealand? ANSWER
A client wants to forgive a debt owed by his family trust. The trust is a discretionary one and has a broad range of beneficiaries and the power to vary the trust contained in the deed. I am aware of the recent publicity about “natural love and affection” and forgiveness of debt but do not know the details. What is the current position? ANSWER
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