Smartfunds - tax

[rayonline]

I don't have these but out of interest. Are Smartshares capital taxable like a typical bank's investment fund? One person may just have Smartfunds for many many years as a savings programme - how they have a monthly debit regime.

Edit - sorry I meant Smartshares.


Thanks.

[FIsaver]

Hi, Not sure that I know the answer but I think yes you do pay tax

(I found this on super life and would assume that it applies to smartshares https://superlife.co.nz/faqs#Investment%20FAQ's)

Why is my investment return negative but I still pay tax?

The New Zealand tax laws are complex because investment earnings are taxed in one of three ways and not all investment earnings are taxable. An explanation of the tax treatment of earnings is here. (https://superlife.co.nz/allocation-of-investment-returns) With New Zealand shares, for example, tax is only payable on the dividends we receive. The market movement is not taxable. So if we receive a 6% dividend and the market goes up by 10%, your total return is 16% but you only pay tax on 6%. Likewise if the market goes down by 10%, your total return is -4% (i.e. 6% dividend less 10% market downturn) but you still pay tax on the 6% dividend. The same applies for Australian shares. Over the long term we expect the share market to go up and so you will pay less tax than you would if the total return was taxable, but over short periods you get strange looking results.
Overseas shares are more complex. With overseas shares we pay tax on 5% of the assets as if we always get a 5% return. This is irrespective of what return we get. Again long term we expect to pay less tax than your PIR rate but when the markets go down we still have to pay tax.





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