Taxation of PIE income

[SBQ]

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

Yes i'm an ex-pat Canadian with a background in Finance studies + BA in Economics. Upon my arrival to NZ some 25 years ago, it was considerable learning experience going from a time where foreign investment gains were not taxable -> a full on mess we have today with FIF (what shares are FIF exempted or not), the ambiguity on PIE funds, management fees from top to bottom when a person speaks to a financial advisor (if that adviser takes what we call in Canada a "Trailer Fee" or basically a kick back by the managed funds for pointing their clients to buy their managed funds), front & back load fees, etc. One thing certain as Warren Buffet puts it, "There is no shortage of the helpers in the finance industry trying to sell you on investments that you don't need... and as a sum of the whole, more money has been sent to those helpers than the amount of returns that investors actually see" (i'm paraphrasing).

It's very interesting, the time when I left Canada was a period I hated the most about their taxation system. Income taxes were very high back then, likewise was GST/PST/HST in some provinces paying as much as 18%. Back then they had rules like a managed fund must not exceed 33% foreign content. Individuals had complex tax filing if they owned US equities directly. It was a mess but when I arrived in NZ, we had no tax on foreign investments. Not even a disclosure was required.

Unfortunately I must say the tables had completely turned around. Canada had reduced income taxes through scaling the income brackets. Indexed the tax free personal exemption limits (ie 1st $10K of income is 0% income tax). GST was reduced to 5%. Lowering of import tariffs. To multiple plans for savings and investments to suit individual needs. Those who were disabled were able to have RDSP where portfolio gains 100% tax free. Hensen Trusts for the disabled where a trust is not taxed at 45% but instead, incomes in the such a trust would be taxed at the individual's personal income tax rate (CRA has to approve of the person's disability). Uni education keeps rising so the gov't brought out RESP (again, the gains & dividends are tax free for when the child is finished highschool, they use those funds to pay for schooling). Then there's TFSA which is available for EVERYONE over the age of 18. Indexed to inflation, currently $6,000 a year you put to your investment account and all gains are 100% tax free. You can withdraw and not lose the reserve amount if you put back those funds later on.

When I look at what NZ has done over the past 25 years - it's certainly clear that they've only appealed to the rich and those owning houses. No plan to make education affordable - certainly giving 1st year uni tuition free is not a sustainable plan. Where are the savings incentives for those with disabilities? I saw NZ GST go from 10% to 15% in that same period. Now we have all sort of regulations that he FMA is trying to shove down people's throat. Stupid issues like "Oh you should not be putting your $ overseas in a foreign bank account because they should be licensed by the FMA". HELLO???? HELLOOOO?? NONE of the NZ banks have depository insurance! TDAmeritrade / Charles Schwab has the standard SIPC $500K coverage in addition to $150 MILLION coverage per account holder! Yet the NZ FMA believes they are the authority in protecting individual's assets invested abroad?

Ok I think my rant is getting too serious. All i'm asking is there needs to be more clarity in the NZ financial industry from both investment & TAXATION point of view. And the FMA needs to quit creating an illusion that NZ is not the centre of the world in terms of investment choices.