Capital vs Revenue Tax Calculator NZ
This calculator estimates the tax difference between a gain being treated as revenue, and therefore taxable, or as capital, which in New Zealand is generally not taxed, so you can see what the classification is worth. New Zealand has no general capital gains tax, but that does not mean all gains are tax-free. The key question is whether a gain is on capital account, a one-off increase in the value of an asset held for investment, or on revenue account, a profit from a business activity, from trading, or from buying an asset with the intention of resale. Revenue-account gains are fully taxable at your marginal rate, while capital-account gains are generally not taxed at all, so the classification can make an enormous difference to your tax bill. This tool quantifies that difference. You enter the gain and your marginal tax rate, and the calculator shows the tax if the gain is on revenue account, the tax if it is on capital account, which is generally nil, and the difference between the two. The results update as you type. Use it to understand the stakes of the classification, to estimate tax on a potential sale, or to see why the revenue-versus-capital question matters so much. The tax on a revenue-account gain is simply the gain multiplied by your marginal rate; on capital account it is generally zero. Crucially, this is an estimate of the tax difference, not a determination of which account your gain falls on. That classification depends on the facts: your intention when you acquired the asset, the frequency of similar transactions, whether you are in a business of dealing in such assets, and specific rules like the bright-line test for residential property. The line can be genuinely difficult, and getting it wrong is costly, so always seek professional advice on how a particular gain should be treated.
Revenue-account gains are taxable at your marginal rate; capital-account gains are generally not taxed in NZ. Classification depends on intention, frequency and specific rules. Get advice.
How it works
The tax if the gain is on revenue account is the gain multiplied by your marginal tax rate, since such gains are fully taxable. The tax if it is on capital account is generally zero, as New Zealand has no general capital gains tax. The difference between the two shows what the classification is worth.
Worked example
On a $50,000 gain at a 33 percent marginal rate, the tax if the gain is on revenue account is 33 percent of $50,000, which is $16,500. If the same gain is on capital account, the tax is generally nil. So correctly classifying the gain is worth $16,500 here.
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