I just need to correct what you've written here as it is spreading misinformation about the very precise tax system we use and I'm afraid if anyone tries to do their own taxes following this method, then they'd be in for a large shock.
Your capital gains are taxed at your own personal marginal tax rate. This means that if you made an extra dollar of income from your occupation, whichever tax bracket that dollar would fall in, is generally the tax bracket in which you will have to pay on your capital gains. For example, if you earn a $50k salary, your marginal tax rate for any further income (up to $120k) is 32.5%. This means if you make $10k in Capital Gains, you will pay 3.25k in taxes at the very most whilst in this bracket. You will not pay 50% on capital gains in this case. In fact, the most you will ever have to pay on your Capital Gains is 45%, and this is reserved only for income over $180k.
Similarly, the CGT discount comes into play, as you described, after owning an asset for 12+ months, but this does not mean that you will pay 25% tax on the Capital Gains as you described above. You will instead be given a 50% discount on the Capital Gains which you would have paid. To continue with the scenario above, if you made that 10k profit entirely in NZS stock, and you owned those NZS shares for 12+ months, then the 10k profit would only require taxes of (50% x 32.5% x $10,000) = $1,625. This is very different from the flat 50% and 25% which you described above.
This is not advice, I am just wanting to be clear on not spreading misinformation, particularly about taxes.
NZS Price at posting:
3.0¢ Sentiment: Buy Disclosure: Held
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