Taxation of PIE income

[herbert240]

This PIE income is very tricky. I do my 90 year old mothers tax return. She has a my IR I set up with IRD. She has a PIE investment with Fisher Funds and has a PIR of 17.5%. I notice the IRD includes PIE income in her my IR.

As an aside I have been claiming expenses (monitoring and admin) for years as advised by her Fishers investment adviser. However this year she got a message from IRD saying the expenses were "denied" quoting a section of the Income Tax Act. I have been scrambling around trying to get a definitive answer from Fishers and others who should know. At this stage it looks as though the IRD may be right. Am not sure if they will go back and reassess past years tax returns! Does anyone on the forum have any experience/knowledge of this issue? Sorry I don't mean to hijack this thread.

[777]

My guess is that the expense was due to PIE income and you were deducting it from taxable income.

[herbert240]

My guess is that the expense was due to PIE income and you were deducting it from taxable income.

I am still a bit confused 777. Adviser from Fishers says "The PIE system will take the taxation at your prescribed PIR rate and deduct from the figure the amount of fees that have been paid" I guess this means I have been "double dipping" and should not have claimed expenses resulting in refunds?

[777]

I am still a bit confused 777. Adviser from Fishers says "The PIE system will take the taxation at your prescribed PIR rate and deduct from the figure the amount of fees that have been paid" I guess this means I have been "double dipping" and should not have claimed expenses resulting in refunds?

A reasonable summation I think. I am surprised that Fishers give tax advice though.

[herbert240]

A reasonable summation I think. I am surprised that Fishers give tax advice though.

Yes, in a way I am surprised too 777. FNZ ,Custodian for Fisher Funds Investments (and other coys also I imagine) send out their Tax User Guide with their Tax Report to assist with tax return preparation. They repeatedly state that investors should seek advice from a professional tax adviser. I have difficulty knowing who that brilliant person would be. I asked my accountant but he wasn't sure and said he would have to go to a third party (not sure who) and that while it would be a definitive answer it would cost $150.00!! Beats me why it has to be so difficult. In the guide FNZ say they assume fees and charges are deductible (item 20 in the report )and even show what box to put item 20 expenses in the IR3! Hello?!

I think I may have opened a "can of worms" and I wonder how many other Fisher Funds investors have filed incorrect tax returns over the years which IRD have accepted... up until now!

[SBQ]

Yes, in a way I am surprised too 777. FNZ ,Custodian for Fisher Funds Investments (and other coys also I imagine) send out their Tax User Guide with their Tax Report to assist with tax return preparation. They repeatedly state that investors should seek advice from a professional tax adviser. I have difficulty knowing who that brilliant person would be. I asked my accountant but he wasn't sure and said he would have to go to a third party (not sure who) and that while it would be a definitive answer it would cost $150.00!! Beats me why it has to be so difficult. In the guide FNZ say they assume fees and charges are deductible (item 20 in the report )and even show what box to put item 20 expenses in the IR3! Hello?!

I think I may have opened a "can of worms" and I wonder how many other Fisher Funds investors have filed incorrect tax returns over the years which IRD have accepted... up until now!

No surprise here - I can assure you if you lived in Canada or in the US and had a CFP handling your investments, they would know exactly of your tax situation. I don't know why in NZ CFPs here will not give advice on taxation. It's almost like they're so useless to begin with yet the NZ FMA insists these groups of people need to be regulated by them when they offer little advice to begin with. I will tell you, if more widely knowledge in NZ was provided to investors into say Kiwi Saver or managed fund, you will find more and more would not bother and go with the investing in residential property way. What i've seen is the way shares and KS has been marketed in NZ, the complexities of it adds to it's appeal (maybe?).

$150 is cheap - I know accountants that charge $400/hr.

[herbert240]

No surprise here - I can assure you if you lived in Canada or in the US and had a CFP handling your investments, they would know exactly of your tax situation. I don't know why in NZ CFPs here will not give advice on taxation. It's almost like they're so useless to begin with yet the NZ FMA insists these groups of people need to be regulated by them when they offer little advice to begin with. I will tell you, if more widely knowledge in NZ was provided to investors into say Kiwi Saver or managed fund, you will find more and more would not bother and go with the investing in residential property way. What i've seen is the way shares and KS has been marketed in NZ, the complexities of it adds to it's appeal (maybe?).

$150 is cheap - I know accountants that charge $400/hr.

I hear ya SBQ! I find it so frustrating to have to go "digging" for info that should be clearly available without any ambiguity. As far as the $150 goes I agree. But i was bemused why an accountant who should be on top of my query should have to go to a third party to find out about my issue and then charge me back!

[fungus pudding]

No surprise here - I can assure you if you lived in Canada or in the US and had a CFP handling your investments, they would know exactly of your tax situation. I don't know why in NZ CFPs here will not give advice on taxation. It's almost like they're so useless to begin with yet the NZ FMA insists these groups of people need to be regulated by them when they offer little advice to begin with. I will tell you, if more widely knowledge in NZ was provided to investors into say Kiwi Saver or managed fund, you will find more and more would not bother and go with the investing in residential property way. What i've seen is the way shares and KS has been marketed in NZ, the complexities of it adds to it's appeal (maybe?).

$150 is cheap - I know accountants that charge $400/hr.

SBQ - I'm mildly curious. Are you Canadian, or did you just live there for some time?

[fungus pudding]

No surprise here - I can assure you if you lived in Canada or in the US and had a CFP handling your investments, they would know exactly of your tax situation. I don't know why in NZ CFPs here will not give advice on taxation. It's almost like they're so useless to begin with yet the NZ FMA insists these groups of people need to be regulated by them when they offer little advice to begin with. I will tell you, if more widely knowledge in NZ was provided to investors into say Kiwi Saver or managed fund, you will find more and more would not bother and go with the investing in residential property way. What i've seen is the way shares and KS has been marketed in NZ, the complexities of it adds to it's appeal (maybe?).

$150 is cheap - I know accountants that charge $400/hr.

SBQ - I'm mildly curious. Are you Canadian, or did you just live there for some time?

[777]

Snoopy I am sure you are wrong in interpretation and this year is no different than previous years. Once filing your return, if your selected PIR is wrong, they will communicate that with you.

One thing I noticed is only my PIE income from funds and term funds have been noted on my IR. All the PIE distributions from listed shares are not there. The only reason that PIE income is on myIR is for the IRD to check that the correct PIR is being used.