What is capital gain? Do I need to pay tax on capital gain?
A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realized on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price. Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.
In New Zealand, capital gain is tax free. Conversely, capital loss is not tax deductable.
Further, if a business is related to capital assets, like a construction company, it should pay tax on capital gains.
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