

Ask HN: Is investment taxed? - legally

Is venture, angel, or friends and family investment taxed? Does the company receiving investment pay the tax or does the investor? Are there investment tax credits? I'm in the United States, but it would be interesting to see how it works elsewhere.
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simon_
Proceeds from investors (debt or equity) are not profits, and the company
receiving the investment will not pay taxes on the amount.

The investor will have to pay taxes on any capital gains / dividends /
interest she receives.

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faramarz
I'm not sure what the rates are in US, but I suspect here in Canada we would
pay more tax per capital gains.

In Ontario All capital gains and Canadian dividends are taxed at lower rates
than other income.

Interest income and dividend income are received or accrued each year, and are
_taxable in the year_ you receive or accrue the income. You have no control
over which year the income is paid. You are not taxed on capital gains _until
your investment is sold_ , so you have some control over which year you
receive the income, because you can choose when to sell your investments.

The tax paid on capital gains is low, because _only 50% of capital gains is
taxed_ , and the gains are not taxed until the investments are sold, except in
situations where there is a deemed disposition

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jacquesm
How it works 'elsewhere' depends greatly on where elsewhere is. In some
countries you can write off your investments when they tank, but in those
places you can expect to pay a healthy tax if they appreciate. In others both
the losses and the gains are not part of your taxes.

It also depends on what you qualify as an investment, for instance, investing
in real estate or antiques can be tax free but a business investment might be
taxed.

You can't really answer this question in a general way without at least
specifying locality and the specific kind of investment.

So the 'how it works elsewhere' portion of your question is not easy to answer
without a long list of examples and localities.

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dfranke
The profit you make on investment is taxed as capital gains. The law makes a
distinction between short-term and long-term gains: if there's less than a
year between when you invest and when you cash out, you pay the same tax rate
as for ordinary income. If there's a year or longer, then you pay the more
favorable tax rate of 15%. If you lose money investing, you can claim the
loses on your tax return and use them to offset gains in future years.

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jlangenauer
This is roughly how it works in Australia, except that the discounted capital
gains tax rate is 50% of the normal rate for investments held for over 12
months, and the discount is only available to individuals (and, I think,
trusts) but not companies.

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aristus
In California the assets of a corporation are taxed I believe, so the stuff
you buy with the investment has a liability.

