IRD goes stag hunting
IRD confirms its position on investors who trade Auckland International Airport shares.
Tuesday, July 28th 1998, 12:00AM
The Inland Revenue Department has confirmed it will be on the lookout for any investors who stag the Auckland International Airport (AIA) float.Investors caught selling their shares soon after purchase will be classified as 'traders' and will be liable for capital gains tax on any gains made.
The ramifications of being caught stretch beyond just the airport float as the 'trader' status will also apply to all their other investments.
In a statement IRD says, "monitoring the dealings of these purchasers will be in keeping with IRD's ordinary business practice."
"For the average small time investor who has purchased shares in the Auckland International Airport as an investment, it is unlikely that there will be any tax liability. In the main, tax will only be payable if the purchaser brought the shares for the purpose of resale," the department says.
"If tax is payable Inland Revenue will recover it in accordance with its standard collection procedures."
AIA's share price finished at $2.05 at the end of the first day's trading after peaking at $2.08.The closing price is 25c above the issue price and represents a 13.8 per cent premium.
Considering most retail applications were scaled back to the minimum $1000 allocation the capital gain, pre-broker fees, is fairly small at around $130.
In total 68,000 New Zealanders bought airport shares, with 48,000 of the investors being new to the sharemarket. The Government will realise $390m from the sale of its stake, with another $70m from a special dividend.
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