New Zealand Inland Revenue says in most cases the sale of gold bullion is taxable.
According to a “Questions we’ve been asked” published by Inland Revenue on 20 September, “in most cases gold purchased in bullion form will be purchased for the dominant purpose of disposal”.
That means in most cases a sale of gold bullion will be subject to income tax. If you sell it for more, that’s tax to pay. If you make a loss, that might mean less tax to pay on other income.
Inland Revenue reckons gold bullion is not known for providing benefits such as ongoing returns while it is held or voting rights etc. So, that means, generally, the dominant purpose for which gold bullion is purchased is its ultimate resale.
However, they accept there may be some cases where a taxpayer can demonstrate eventual sale of the gold was not a dominant purpose for which the gold bullion was bought.
The document gives some examples using cases from other countries. Inland Revenue explains the very limited circumstances they consider would not trigger a tax liability. For example, if the gold bullion is bought to extend and diversify a portfolio in the hope it would be a good long-term investment able to be used if the taxpayer became unable to work then tax might not apply to an eventual sale, particularly if the taxpayer can demonstrate they intend to work until a ripe old age. So it seems it probably needs to be a “just in case” or “rainy day” type of investment which is hoped never to be realised.
It is difficult to work out exactly where the line is drawn because some of the examples given by Inland Revenue seem to be somewhat at odds with one another.
You therefore need to think very carefully before assuming any gain you’ve made selling gold bullion is not subject to tax in New Zealand!
As Inland Revenue point out, the onus is on the taxpayer to prove tax does not apply. Given the taxable presumption Inland Revenue say they’ll apply in practice, you should expect resistance if you’re intending to argue your gold bullion is not taxable.
You can find the Inland Revenue document here