Generally, when you buy capital and later sell it, there is no tax payable on any profit. Unless you buy with the propose of selling the capital for a profit. That being the case, your buying and selling of the capital is engaging in an activity to generate income and tax is payable. It is the intention that matters and an evidentiary matter whether or not a capital transaction is made for the purpose of making a profit on the sale of the capital.
So far, so boring. But what this is where it gets interesting: John Key asked a bunch of questions to the Government (the answers to most of which would only have been read by him), he then bought shares in Tranz Rail, met with a prospective buyer, and tried to talk up the share price before selling them just five weeks later. He later stated that he had bought the shares simply to make money. Both the rapidity with which the sale followed the purchase and Key’s statement seem to show that Key bought the shares with the purpose of making a capital profit. That makes it taxable.
So, did he pay the tax?
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