Taxation of PIE income

[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?

[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.