Question
Ana is a recently qualified accountant who is saving up for a deposit for a house. She decides that the best way for her to
Ana is a recently qualified accountant who is saving up for a deposit for a house. She decides that the best way for her to accumulate the money for the deposit quickly is to invest in the stock market.
As she is still living with her parents, she can afford to invest $1000 a month, and, because she has finished her studies, can dedicate two hours a day to investigating and keeping track of her investments.
Ana considers that holding 20 different shares will provide her with a sufficiently diversified portfolio.
In the period 1 April 2020 to 31 March 2021, Ana invests in 30 companies and sells shares in 10 of them to maintain her portfolio mix of 20 investments.
Anas portfolio performs very well and the value of her $12,000 investment increases to $16,000. She also receives $2000 from the sale of shares.
Required:
Explain whether Ana is subject to income tax: (a) On the increase in the value of the portfolio.
(b) On the $2000 amount received on the sale of shares under:
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(i) Income Tax Act 2007 section CB 3; or
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(ii) Income Tax Act 2007 section CB 4; or
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(iii) Income Tax Act 2007 section CB 5.
You should support your explanations with references to case law, if you can. The questions and answers based on Income Tax Act 2007, New Zealand
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