The main purpose of calculating your investment cost is to determine whether you fall under the Foreign Investment Funds (FIF) tax rules (i.e you've invested more than $50,000 NZD overseas). This impacts what you need to do at tax time in NZ. (See what’s included in your investment cost).
Our broker DriveWealth calculates your investment cost for us in USD on a first-in-first-out (FIFO) basis, and we use the end of day exchange rates from the European Central Bank (ECB) to convert to NZD, which we then display to you.
At any time during a tax year, you’ll be able to see whether you may have gone over the $50,000 NZD FIF investment cost threshold in the tax reports section in Hatch (we can’t be 100% sure though - see below).
What impacts my investment cost?
Your investment cost doesn’t include any gains or losses so it won’t be impacted by share price changes, but several things may have an impact:
Why is my investment cost only an estimate?
The investment cost we show is only an estimate because we use daily exchange rates instead of the exchange rate at the exact time your order was completed. It also doesn't include brokerage costs. In most cases these will result in only minor differences. If you’re near the $50,000 mark and are concerned about your tax situation then you might want to chat with a tax professional.
If you're near the $50,000 NZD threshold, and buy and sell the same shares in one day, our calculation may miss your highest investment cost. That said, in most circumstances it will generally provide a pretty good estimate.
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