KFL - discount to diluted NAV

[alokdhir]

yes long term markets rise but who know's how long long term is
but what happens if dividend's decline in the short term

What happens if Putin decides to nuke rest of the world ...lol

We all live and play on probabilities ....probability of NAV going much below and stay below is much lower than it going up in even medium term ...imo in a years time SP will be over 1.50 and u wud have got 11 cents dividend also ....sounds good to u mate or its chicken feed for your capital ...maybe u can make 10 times more by rotating your funds 100 times by then ...but I dont have or aspire to have 12 screens mate ...maybe one day will visit your 12 screen set up to get inspiration :p

[alokdhir]

Good to see KFL in gainers list ....hopefully some got on board ......

I am sure Bull is waiting for below 1 ....as he is always optimistic ...lol

[ronaldson]

I usually take up shares via the DRP. Just grateful the current price is marginally above the most recent DRP allocation. This doesn't seem to be the case for some other holdings at the moment given general malaise.

Hoping the broader NZ market lifts this week in the run up to y/e 31 March when the tale will finally be told for ETFs, KiwiSaver accounts, managed funds and the like. Done and dusted for most I would say, my own portfolio included!

[alokdhir]

As per my model ...yesterdays NAV is 1.39+ as many important stocks of KFL like MFT had a great day ...its still at a very good discount to NAV with great prospects ahead ...imo safest way of investing in NZ market ....No one is perfect in stock pickings ...U pick 10 ...end with 1-2 bad apples too ...even good ones like HGH / STU etc end up at 52 weeks lows ...so I prefer peace of mind of KFL rather then trying to follow W69's advise on different stocks ...lol ...as most time to really understand what he means ...need help from Rawz ...lol :p

[Sideshow Bob]

NAV today is $1.3978, trading at $1.33 - discount 4.85%,

[alokdhir]

Value Investor Mr B also sees value in KFL at present levels ...as per him ...he is ready to overlook its fund fees etc based on current discount to NAV SP ...which is another endorsement that KFL is great value at current SP

Buying great portfolio at 6% discount shud attract any long term investor . Premiums should be sold and discounts shud be bought ...mantra of KFL

Now buyback starts at 6% discount to NAV after accounting for changes in NZ50G ...that shud provide support around 1.32 !!

[Rawz]

Value Investor Mr B also sees value in KFL at present levels ...as per him ...he is ready to overlook its fund fees etc based on current discount to NAV SP ...which is another endorsement that KFL is great value at current SP

Buying great portfolio at 6% discount shud attract any long term investor . Premiums should be sold and discounts shud be bought ...mantra of KFL

Now buyback starts at 6% discount to NAV after accounting for changes in NZ50G ...that shud provide support around 1.32 !!

Just wait for the 15% discount like the good ole days.. it could very well happen

Further rates go up the more the discount

[alokdhir]

Just wait for the 15% discount like the good ole days.. it could very well happen

Further rates go up the more the discount

15% discount happened only when well in the money warrants are close to being exercised ...not normal to have 15% discount mate ...as mentioned before also

Also maybe u missed the point that they have share buyback now starting from 6% discount ...used to be 10% then became 8% and now its just 6% ....

But u may get lucky one fine day to get some much below 6% as they limit their buybacks on a particular day ...

I am perfectly happy to buy close to 6% ...just like famed value investor Mr B ...lol

[777]

Waiting around for a sizeable discount is nuts. If the market moves up in the mean time then so will the share price and you would miss the gain.

[alokdhir]

A question for tax experts here ....if one has only income from KFL of $ 48000 ( included part ) with tax credits of $ 13440 @ 28% .

Then if that person files IR3 as he has excess tax credits then tax payable ie $ 8237

Will he include KFL income in PIE income or NZ Dividends income ....as if he includes in PIE income then tax credits come under PIE Tax credits and he can get refund of excess paid ie 13440 - 8237 = $ 5203 cash back

If he includes KFL income under NZ dividends head then he gets back nothing but carry forward imputation credits of $ 5203 ...so no cash back but carry forward imputation credits

Which option is right ? As clearly all will like to get immediate cash back then just carry forward imputation credits !!!

[SPC]

I discussed this with my tax accountant. He said don't put these listed pies anywhere near your Ir3. By doing so you are raising your base income, irrespective of credits/ tax paid, which raises your overall tax footprint. This affects all other areas of your tax obligations including KiwiSaver nominated PIR, bank RWT interest etc.
I'm fully self funded off listed pie investments and 'retired' many years ahead of my peers.
IRD are happy to ignore listed pies from your tax footprint on the basis your pie shares income is taxed at the corporate rate of 28%. If you want to get fancy by putting them in then it cuts both ways as far as IR are concerned. IRD are well aware of listed pie income for each client whether you include it or not and their policy is to ignore it given the default tax rate of 28%.

[justakiwi]

If this is the case why is PIE dividend income not listed under my income details? Dividends from my other holdings are - they are apparently automatically submitted to IRD, but my PIE holdings are not. So it does not seem that IRD are aware of this income, unless I tell them about it.


IRD are well aware of listed pie income for each client whether you include it or not and their policy is to ignore it given the default tax rate of 28%.

[Snoopy]

A question for tax experts here ....if one has only income from KFL of $ 48000 ( included part ) with tax credits of $ 13440 @ 28% .

Then if that person files IR3 as he has excess tax credits then tax payable ie $ 8237

Will he include KFL income in PIE income or NZ Dividends income ....as if he includes in PIE income then tax credits come under PIE Tax credits and he can get refund of excess paid ie 13440 - 8237 = $ 5203 cash back

If he includes KFL income under NZ dividends head then he gets back nothing but carry forward imputation credits of $ 5203 ...so no cash back but carry forward imputation credits

Which option is right ? As clearly all will like to get immediate cash back then just carry forward imputation credits !!!


Errrm, could I suggest you have a cup of coffee and rewrite your post? I find it very difficult to understand what your position is. You have all your income coming from KFL(?), including 'part' (of what?).

Then you have excess tax credits (which means you don't have enough untaxed income to utilise them), but you also have a tax bill to pay (which suggests you are short of imputation credits(?) The facts you supply, as communicated, I would charitably describe as 'baffling'.

To comment on the general gist of your question, I think you are asking whereabouts in your tax return to declare your PIE income. Do you declare it as 'regular income' (IR3 Q14), or as part of the PIE income stream under IR3 question 36?

If the PIE tax rate saves you money (and it will if your regular incremental tax rate is 30% or more), then you should put it under question 36. But it looks like you are saying that if you put this income under IR3 question 14, it will reduce your tax bill to pay. I am not sure there is a 'right' answer to your question - it depends what you want to achieve.

A1/ If you want to maximise your cashflow for this year, put the income in Q14 (that should reduce your coming provisional tax payment) BUT
A2/ If you ultimately want to minimise the tax you pay, then put the income in Q36.

Not really sure I understand your position, but HTH.

SNOOPY

[SPC]

JAK, no they are well aware of it but under the listed pie regime they don't explicitly report it through. It does exist in the background but not reported in your IR3. IR are well aware of listed pie income as they get the dividend data from the fund manager......but but but....it is classified as a 'distribution' under listed pie tax legislation (edit update...the term distribution reflects that some of the payment might be capital return as well as taxable profit, but the profit part is a dividend for tax purposes). KiwiSaver pie regime is different and based on multi rate tax legislation specific to KiwiSaver. KiwiSaver IS reported in your IR3, along with normal bank interest and non pie dividends.
The two schemes operate independently i.e fixed rate 'listed' pies taxed at 28%, and multi rate KiwiSaver pies ( where you determine your individual PIR tax rate based on gross income from all sources).

[alokdhir]

Errrm, could I suggest you have a cup of coffee and rewrite your post? I find it very difficult to understand what your position is. You have all your income coming from KFL(?), including 'part' (of what?).

Then you have excess tax credits (which means you don't have enough untaxed income to utilise them), but you also have a tax bill to pay (which suggests you are short of imputation credits(?) The facts you supply, as communicated, I would charitably describe as 'baffling'.

To comment on the general gist of your question, I think you are asking whereabouts in your tax return to declare your PIE income. Do you declare it as 'regular income' (IR3 Q14), or as part of the PIE income stream under IR3 question 36?

If the PIE tax rate saves you money (and it will if your regular incremental tax rate is more than 30%), then you should put it under question 36. But it looks like you are saying that if you put this income under IR3 question 14, it will reduce your tax bill to pay. I am not sure there is a 'right' answer to your question.

A1/ If you want to maximise your cashflow for this year, put the income in Q14 (that should reduce your coming provisional tax payment) BUT
A2/ If you ultimately want to minimise the tax you pay, then put the income in Q36.

HTH

SNOOPY

My question was simple mate ....If a person have just one investment ie KFL and he gets included part of KFL income of $ 48000 as only income for the year ...included means what has imputation credits attached at 28% rate ...if u are aware KFL gives two kinds of income in dividend statement ...one is called " INCLUDED Income " with tax credits at PIE rate 28% which is to be included in IR3 if one opts to and second is " EXCLUDED " income which no need bother about

So if u get only one income from KFL of $ 48000 with tax credits of $ 13440 then if u file IR3 and include that in PIE income then u get refund of $ 5203 while if u put KFL as NZ Dividends then u get $ 5203 carry forward credits ...

Yes please pay attention ...person does not have any other income ...ONLY KFL income ...so no use of carry forward imputation credits or cant offset them against any other income like rental etc

Now your suggestion is to use KFL income in PIE income head and not NZ Dividends head ?? As in this case u get CASH $ 5203 REFUND and not carry forward credits !!!

[alokdhir]

I discussed this with my tax accountant. He said don't put these listed pies anywhere near your Ir3. By doing so you are raising your base income, irrespective of credits/ tax paid, which raises your overall tax footprint. This affects all other areas of your tax obligations including KiwiSaver nominated PIR, bank RWT interest etc.
I'm fully self funded off listed pie investments and 'retired' many years ahead of my peers.
IRD are happy to ignore listed pies from your tax footprint on the basis your pie shares income is taxed at the corporate rate of 28%. If you want to get fancy by putting them in then it cuts both ways as far as IR are concerned. IRD are well aware of listed pie income for each client whether you include it or not and their policy is to ignore it given the default tax rate of 28%.

Mate u missed the main point ....this person has ONLY income from KFL ...no other income ...so he wants to take advantage of the excess tax credits he has attached to KFL dividend

[winner69]

I’d say the person alokdhir is trying to help out visit a tax accountant and get a proper answer …and maybe get the accountant to file his tax return for him as well (IRD believe the numbers then they say?)

[SPC]

No mate I get your point entirely. I've been down this road and on good advice did a u-ey. Don't you have bank accounts and KiwiSaver?. Increase your income and all these are potentially affected.
99% of my income is from listed pies and I'd be paying the top tax rate if they were included. I'm on personal rate 10.5 %. Yes my listed pies are taxed at 28% but I don't give a rat's about that as the real story is about my absolute PIR which is10.5%
I suggest you make that 2 coffees... supersize Turkish 😉.Then go and pull some weeds.

[justakiwi]

So I have no legal obligation to include these? I do, because I'm low income so I can claim the imputation credits. But you're saying, I do not have to?




JAK, no they are well aware of it but under the listed pie regime they don't explicitly report it through. It does exist in the background but not reported in your IR3. IR are well aware of listed pie income as they get the dividend data from the fund manager......but but but....it is classified as a 'distribution' under listed pie tax legislation. KiwiSaver pie regime is different and based on multi rate tax legislation specific to KiwiSaver. KiwiSaver IS reported in your IR3, along with normal bank interest and non pie dividends.
The two schemes operate independently i.e fixed rate 'listed' pies taxed at 28%, and multi rate KiwiSaver pies ( where you determine your individual PIR tax rate based on gross income from all sources).

[SPC]

JAK, If you can use the imputation credits to offset other tax payable then it can be advantageous but remember that by declaring them you have to include the Gross dividend which could potentially push you in to a higher tax bracket based on total gross income. It may not in your case but would with me from bottom to top.
Listed pie income is not populated by IR in your return as they already have visibility of it in the background. You can choose to populate it and then those figures determine your overall tax picture. I choose not too and that is fully compliant with existing legislation around listed pie tax compliance.
PS do a trial return on paper both ways and see where you land.

[Snoopy]

My question was simple mate ....If a person have just one investment ie KFL and he gets included part of KFL income of $ 48000 as only income for the year ...included means what has imputation credits attached at 28% rate ...


OK, thanks for clarifying what you mean by 'included' in this instance.



if u are aware KFL gives two kinds of income in dividend statement ...one is called " INCLUDED Income " with tax credits at PIE rate 28% which is to be included in IR3 if one opts to and second is " EXCLUDED " income which no need bother about


The 'excluded' income is most likely from the sale of shares or rights. It is 'excluded' because it is actually the fund selling assets and giving you your own capital back. That is why the IRD are not worried about it. IIRC, KFL have a a higher dividend yield than the sum of their constituent component companies yield that makes up the fund. So they periodically have to sell assets to top up their 'yield' to meet fund holder expectations..



So if u get only one income from KFL of $ 48000 with tax credits of $ 13440 then if u file IR3 and include that in PIE income then u get refund of $ 5203 while if u put KFL as NZ Dividends then u get $ 5203 carry forward credits ...

Yes please pay attention ...person does not have any other income ...ONLY KFL income ...so no use of carry forward imputation credits or cant offset them against any other income like rental etc

Now your suggestion is to use KFL income in PIE income head and not NZ Dividends head ?? As in this case u get CASH $ 5203 REFUND and not carry forward credits !!!


Something is wrong with this picture. If the person you are talking about has only KFL income and is paying tax at the PIE rate of 28%, then that PIE rate is too high. They should contact the provider and get their PIE rate reduced.

Declaring PIE income on your IR3 tax return is a relatively recent change. It was put there to address exactly this kind of problem. It is a way of giving PIE fund holders money back if they were put on the wrong PIE tax rate for some reason. If the person you speak of was on the right PIE rate to start with, then there would be no need to file an IR3. The correct PIE tax would have been taken out at source.

However, from what you are saying, it seems all this person has to do is file an IR3 and put their PIE income into the PIE question (no. 36 in the IR3). That will allow the IRD to refund them their overpaid PIE tax in cash. That seems like the sensible solution, if I am following correctly the information you have given.

Forget all thoughts of declaring this income in Q14 so you can bring the PIE income into the same pool at this person's other income (you say they don't have other income anyway) and so try and use those excess imputation credits already paid in another way. This has no relevance in this case

SNOOPY

[Grimy]

This is at the bottom of PIE companies distributions (in this case from Argosy, December 2022 distribution). There has always been this advisory note on PIE distributions I have received.

NZ Tax Information
The rules regarding the treatment of distributions received from ARG are included in section CX 56(3) of the Income Tax Act 2007. Under the Tax Administration Act 1994 a listed Portfolio
Investment Entity is not required to provide investment income information to the Commissioner of Inland Revenue. Therefore distributions paid by ARG to investors will not be recorded in
the myIR online portal. Accordingly, investors that choose (or are required) to include this distribution income in their tax return (as outlined below), will need to ensure that this income is
included in their tax return.
Excluded Distribution
New Zealand resident investors should not include the Excluded Distribution in their income tax return. This amount is not taxable.
Fully Imputed Distribution
New Zealand resident individuals and New Zealand resident trustees may choose but are not required to include the Fully Imputed Distribution in their income tax return. Generally we would
expect that only investors with a marginal tax rate of less than 28% may choose to include this in their tax return. Other New Zealand resident investors must include the Fully Imputed
Distribution in their income tax return. For those investors that choose to or are required to include the Fully Imputed Distribution in their income tax return the amount shown below should be
included in their annual tax return.

[777]

Snoopy there is no PIR choice for listed companies.

[Snoopy]

Snoopy there is no PIR choice for listed companies.


Seriously? I must admit I did not know that. That would disadvantage earners in those lower tax brackets, unless those same people did fill in an IR3 to get their excess tax money back. And here I was thinking that the PIE investment umbrella was there to keep things simple!

I guess the answer for those people is to put their money in the Fisher Funds NZ Growth Fund, the non listed 'cousin' of KFL managed by the same people. I am fairly sure you can ask for a lower PIE tax deduction rate in that fund. Or if you don't want to change, just fill in an IR3 once a year (sounds onerous but if your only income is from KFL, not too difficult).

Alokdhir says $48,000 gross income from KFL. That includes $13,440 in PIE tax already deducted:

$13.440 / $48,000 = 28% (the undifferentiated PIE tax rate)

Alokdhir goes on to say that filling in an IR3 will produce a refund pf $5,203 from that $13,440 PIE tax deduction, meaning you end up paying:

$13,440 - $5,203 = $8,327 in tax

$8,327 / $48,000 = 17.2%

That sounds closer to the mark of the amount of tax that an income earner solely reliant on KFL income should be paying with a KFL gross income of $48k. I am genuinely surprised to learn that you have to jump through that IR3 form tax hoop to get your excess tax paid back though.

SNOOPY

[Grimy]

Not being able to choose your PIR for listed PIEs and having the choice of including your PIE income (or not) in your return has been like that for what seems like forever.

[Snoopy]

Not being able to choose your PIR for listed PIEs and having the choice of including your PIE income (or not) in your return has been like that for what seems like forever.

I am sure it has. But if your marginal tax rate is 30% or more, and you are not a tax accountant, then there is no need to know such a fact.

SNOOPY

[SPC]

Declaring pie income must be done under pie income category on the IR3 not under general income such as MFT dividends for example. They are not the same. Declaring imputation credits only works if you have other tax payable in which you can offset the
Imp credits against that, otherwise they have no cash refund value. And they expire over time. Withholding tax paid by pies is more easily refundable but mostly the tax bite taken out of listed pie distributions are imputation credits as above.
777 is correct, no PIR choice possible, fixed at 28%.

[Grimy]

I am sure it has. But if your marginal tax rate is 30% or more, and you are not a tax accountant, then there is no need to know such a fact.

SNOOPY

That's why I need to know!

[alokdhir]

I have got some clarification from reliable sources ...KFL is a listed PIE thus one can include its income under PIE income and its attached tax credits under PIE tax credits which can result in Refund for someone below 28% marginal rate .

KFL distributions are not NZ dividends thus they are PIE distributions with fixed tax deducted at maximum PIE rate applicable to make it simpler for all ...thus all get the choice to include them on IR3 or not ...only if suits then it can be included and excess tax deducted be used or refunded

If one had excess tax credits from MFT then only DWT part can be refunded and imputation credit part carried forward for next 7 years maximum

Thus KFL dividends have some advantage over NZ companies dividends for low marginal rate people ....it seems

[SPC]

Yes all exactly correct and in accordance with my accountant advice from years ago.
I only hold listed pies for these reasons, a lot of them, and my EOY tax homework is zilch as IR have already done it for me.
All I do is tick yes and file.
Charities tax refunds are my only additional work once the IR3 is finalized.
As far as IR and rest of Gov are concerned I prefer to look poor rather than wealthy.
Listed pies are definitely your friend.

[alokdhir]

Today massive support came for KFL when SP dropped below 6% from NAV ....most likely Buyback was triggered ...we will find out soon when they appear as treasury stock in next weeks NAV report I reckon ...

Any buyback will have positive effect on NAV

[SPC]

Deleted. It's become to academic to try and explain it all.
KFL is great but you have to play it smart, not run with the standard game plan. Treat it as a share rather than a fund.

[xp04]

I have got some clarification from reliable sources ...KFL is a listed PIE thus one can include its income under PIE income and its attached tax credits under PIE tax credits which can result in Refund for someone below 28% marginal rate .

KFL distributions are not NZ dividends thus they are PIE distributions with fixed tax deducted at maximum PIE rate applicable to make it simpler for all ...thus all get the choice to include them on IR3 or not ...only if suits then it can be included and excess tax deducted be used or refunded

If one had excess tax credits from MFT then only DWT part can be refunded and imputation credit part carried forward for next 7 years maximum

Thus KFL dividends have some advantage over NZ companies dividends for low marginal rate people ....it seems

Your reliable source is largely correct. Usually if I have anything from PIE entities and my tax rate for the year below 28% I include it under PIE section when do returns. As for imputation credits can only be carried forward for 7 years maximum, my reliable source who worked at IRD over 30 years, said that it’s not true. You have 7 years to claim them, as pretty much anything related to your taxes and you need to keep records to prove it. Once you have got them its yours for as long as you wish.
Another point is that you can choose your PIR based on two previous years. If last year you had RWT 33% and year before that 10.5% you still can choose PIR 10.5% for current year. So, occasionally you can have high RWT and still keep your PIR 10.5% all the time. If your effective tax is below 28% and all your income from PIE entities with 28% you paying to much taxes.

[SPC]

The option to determine your PIR relates to the category known as 'Investment Pies' which primarily relates to KiwiSaver funds and also Bank Term Deposit pies but the imperative is that your PIR selection should not result in underpayment of tax.
IRD will intervene if you have set your PIR too low. As previously stated there is no PIR choice option for Listed Pies such as KFL, it's stablemates or the listed property funds that operate under pie structures.
Re the last point, as most listed pies issue tax credits as imputation credits rather than as withholding tax you have to have some other taxable income to offset the credits against otherwise they are useless as they cannot be refunded as cash.

[alokdhir]

As KFL income is PIE distribution in the eyes of IRD ...thats why its not reported to IRD as dividend income like all other companies do for their dividends and its already pre-populated on your online IR3 . KFL income if u want to include for claiming tax credits will come under the main head of other income with sub head of PIE distributions then its tax credits of any form attached with KFL dividends will go under General PIE TAX Credits ....their is no section of " Imputation Credits " on that page ...So I think XP04 is right to put them under PIE section and claim refund . If u put them under NZ Dividends then they should already have been there as all NZ companies need report dividend incomes to IRD !!!! But if u still do there then u get carry forward imputation credits as refund only not cash ...that was my original question ...where to put KFL income if it suits u to include it . Answer is PIE income in other income section with KFL attached tax credits as General PIE Tax credits and u get cash refund . Hopefully its right ...but XP04 has been doing so and got no objection from IRD so it must be correct

PS : As per XP imputation credits can be carried forward indefinitely ...so they also not bad then but cash is always king

[Rawz]

love the sharetrader tax talks. Always come away more confused than before.

[SPC]

It's because posters speculate rather than consulting a tax accountant.
When comes to IR - you don't poke the hippopotamus.

[777]

Today massive support came for KFL when SP dropped below 6% from NAV ....most likely Buyback was triggered ...we will find out soon when they appear as treasury stock in next weeks NAV report I reckon ...

Any buyback will have positive effect on NAV

54,378 last Thursday.

[Rawz]

It will be interesting to see what the SP does. Could now firm up or maybe the sellers will use the buyback and sell into it driving the SP down more.

[alokdhir]

It will be interesting to see what the SP does. Could now firm up or maybe the sellers will use the buyback and sell into it driving the SP down more.

Hope u know what buyback below 6% discount does to NAV ...it will go up ...thus buyback price will keep going up ...keeping all others things same ...I am happy if someone keeps selling at 6% discount and fund keeps buying ...benefits all holders slowly slowly ...

[Rawz]

Buy back isn’t unlimited… they are long term investors, wouldn’t make sense to sell e.g. MFT to raise cash just to buyback shares.

They should only buyback enough to hold for treasury stock to give out in the dividend reinvestment scheme.

Otherwise they should be buying using what cash they have while everything is so cheap.

I recall reading that the fund can borrow up to 20% (by memory) to invest. Never seen that done before but that would be an interesting move

[alokdhir]

Last known cash position as on 31st Dec 2022 was 5.4% of the total portfolio that shud be enough to keep it going for long ....but eg Thursday they bought just over 54000 KFL while total vol was 724K ...point being they bring overall market support at these buy back prices . Once the selling drys up which shud as one invests in KFL for long term and not as speculative buy ...selling at these levels is mostly emergency or better use reasons .

Jan 2021 premium topped 11% to NAV and market topped too now it has come full circle to discount of over 6% ...so maybe indicative of market bottom soon !!!

[alokdhir]

More then 50% of KFL ie MFT / FPH / IFT / SUM / results in this qtr ...shud be interesting times for NAV ...:t_up:

[ronaldson]

Looks as if buyback is triggered at sub $1.30, while last reported NAV $1.3975.

[Not too Flash]

Looks as if buyback is triggered at sub $1.30, while last reported NAV $1.3975.

Buy- back can be at 6% discount - good buying

[alokdhir]

Now KFL has about 8% discount from todays NAV of 1.3980 ...SP is 1.28 ...bargain opportunity IMHO but me fully invested ...:(

[SPC]

Backed up to the loading dock today. Great hold for next few years.

[alokdhir]

"You can claim interest on money you’ve borrowed to buy shares or to invest, as long as that investment will produce taxable income."

If one borrows to buy KFL then does KFL produce taxable income to claim interest paid as expense ?

[SPC]

Yes of course, included dividends are taxable income if you choose to declare Listed Pie income in your IR3. The tax you are paying on the KFL div's is recorded as imputation credits which can be used against any amounts of final tax due at the bottom of the return, the remainder can be banked for later years.
Borrowing to buy shares....yeah nah.

[alokdhir]

Then it can lead to previous rental property type tax benefits ...ie for tax purposes u will be making a loss on KFL investment while for actual cash flow purposes it can be positive as long as your loan interest is below your overall dividend payment .

That tax loss can help one reduce his final tax bill ...even get refund if have all tax paid / paye income to record .

I am not sure if this type of Investment income / loan is ring fenced like investment property income is now ...so it can work like older time rental investment tax dynamics which made them so attractive to most landlords

[SPC]

Man you must be desperate to buy more KFL..

[777]

Spend some money and get expert advice. In my opinion, if borrowing, I would not bother deducting the interest because it's is a transaction that draws attention by the IRD to to all your share dealings.

[alokdhir]

Man you must be desperate to buy more KFL..

All shud be ...many reasons to be desperate ...Markets are depressed as rates high so valuations are low ...but rates wont stay high forever we all know

Secondly its at steep discount to NAV which also will reverse over 2-3 years period

Thirdly it has a great portfolio which will surely do well ahead

Also its a fund and not a single company share so risk is very mitigated

IMHO buying KFL now will bear great returns in next 2-5 years ahead

When it was trading 22 cents premium to NAV I was dead sure its a SELL ....but now I am dead sure it's a BUY ....Rest is DYOR stuff

[Rawz]

Alokdhir, i think its good buying at these levels but thats it. imo no way are we close to borrowing money to buy at these levels. Not even close to thinking about it tbh.

Come on we havnt even had the capitulation event yet... the pig farmer isnt buying..

[alokdhir]

Alokdhir, i think its good buying at these levels but thats it. imo no way are we close to borrowing money to buy at these levels. Not even close to thinking about it tbh.

Come on we havnt even had the capitulation event yet... the pig farmer isnt buying..

Only time will answer your question in a manner which will be easier to accept for all ...lol

OCA at 0.68 is not capitulation !!! SUM at 8.00 !! RYM at 5.00 ...think about it ....STU 1.05 etc etc

[Snoopy]

Only time will answer your question in a manner which will be easier to accept for all ...lol

OCA at 0.68 is not capitulation !!! SUM at 8.00 !! RYM at 5.00 ...think about it ....STU 1.05 etc etc


Maybe it depends what sectors you invest in? Most of my NZX shares I hold are at lower prices than they were a year ago. But when I look at my utility category investments, in gentailers and telecommunications companies, are they cheap, in terms of yield? Definitely not. I have been looking very seriously at my holdings in this space with a view to adding, and I just can't find value.

Then I go across to my 'clever exporters' Scott Technology and Skellerup. Both doing well but a PE of 15 is the starting point for getting into those. Definitely not cheap. Then I go across to my PGG Wrightson investment, supporting our farmers. If you forget last years blip upwards, it is still trading near all time highs from a PE ratio perspective. It is much closer to a 'reduce' price rather than an 'accumulate' price IMV.

I go across to Turners which I regard as a well run company. The share price is down a bit, but big ticket items generally do not do well going into a recession.

I have never invested in the retirement sector myself, because frankly I have difficulty understanding it. I cast my eye to offshore markets and don't see a plethora of high flying equivalents to Ryman and Summerset and ask myself, why is that? Why are these businesses rated so much more highly in NZ compared to elsewhere? I have a feeling it is due to the favourable tax treatment of property in NZ fuelled by (up until a year ago) twenty years worth of falling interest rates. Day to day cashflow in these businesses is actually pretty awful. You can judge 'real profit' by how much tax these companies pay.

So yes, lots of companies trading at lesser prices than a year ago. But looked at on a price on taxable earnings basis I don't see 'cheap'. In fact I see the NZX right now, as a collective, as rather overvalued.

SNOOPY

[alokdhir]

Maybe it depends what sectors you invest in? Most of my NZX shares I hold are at lower prices than they were a year ago. But when I look at my utility category investments, in gentailers and telecommunications companies, are they cheap, in terms of yield? Definitely not. I have been looking very seriously at my holdings in this space with a view to adding, and I just can't find value.

Then I go across to my 'clever exporters' Scott Technology and Skellerup. Both doing well but a PE of 15 is the starting point for getting into those. Definitely not cheap. Then I go across to my PGG Wrightson investment, supporting our farmers. If you forget last years blip upwards, it is still trading near all time highs from a PE ratio perspective. It is much closer to a 'reduce' price rather than an 'accumulate' price IMV.

I go across to Turners which I regard as a well run company. The share price is down a bit, but big ticket items generally do not do well going into a recession.

I have never invested in the retirement sector myself, because frankly I have difficulty understanding it. I cast my eye to offshore markets and don't see a plethora of high flying equivalents to Ryman and Summerset and ask myself, why is that? Why are these businesses rated so much more highly in NZ compared to elsewhere? I have a feeling it is due to the favourable tax treatment of property in NZ fuelled by (up until a year ago) twenty years worth of falling interest rates. Day to day cashflow in these businesses is actually pretty awful. You can judge 'real profit' by how much tax these companies pay.

So yes, lots of companies trading at lesser prices than a year ago. But looked at on a price on taxable earnings basis I don't see 'cheap'. In fact I see the NZX right now, as a collective, as rather overvalued.

SNOOPY

My observation was mainly based on stocks in the KFL portfolio ...ie FPH / IFT / MFT / AIA / SUM ..etc ....Most of them are attractively priced individually too ....then getting them at 8.5% discount to current market prices ...makes them extra attractive to me at least .

History has shown KFL being a retail stock gets into limelight when markets are buoyant and looses its shine in downtrend which adds to further attractiveness at the moment .

KFL was trading at 22 cents premium in Jan 2021 ...market peak ....now it's at almost 13 cents discount ...in itself it's almost 20% gap to close as and when it gets closed in next 2-5 years ...while one waits ....we get dividends or distributions based on NAV and not current SP ...

[winner69]

A bit of self adulation in KFL newsletter with this headlines” We fought for a better outcome in the Pushpay takeover battle”. Good they fought the good fight

But had little faith in Push management so happy taking the money.

[Rawz]

KFL must be close to looking at MHJ as an addition to their portfolio.

Currently just fails the T(rack record) and E(arnings history) of STEEPP investment style.

Pass with flying colours S(trength of the business), E(earnings growth forecast), P(eople/management) & P(price/valuation.

Maybe get there in next few years.

Thoughts?

[ronaldson]

A potential near term Warrant issue is another current attraction for buyers of KFL currently.

Someone earlier in this thread asked if there is any (IRD) concern if Warrants are issued too frequently that impinges on the Managers ability to do so. I didn't see a response to that. Is it only acceptable once every two years, which seems to be pretty much what happens in practice? Does anyone have any insight?

[alokdhir]

A potential near term Warrant issue is another current attraction for buyers of KFL currently.

Someone earlier in this thread asked if there is any (IRD) concern if Warrants are issued too frequently that impinges on the Managers ability to do so. I didn't see a response to that. Is it only acceptable once every two years, which seems to be pretty much what happens in practice? Does anyone have any insight?

KFL will most likely bring out another warrants issue as soon as SP crosses $ 1.50 ...so that exercise price is just under 1.40 ...which shud make warrants very attractive and almost assured full participation in a years time ....when most likely KFL SP will be over 1.60 or so ....

[Snoopy]

My observation was mainly based on stocks in the KFL portfolio ...ie FPH / IFT / MFT / AIA / SUM ..etc ....Most of them are attractively priced individually too ....then getting them at 8.5% discount to current market prices ...makes them extra attractive to me at least .


Based on market Closing Prices 26th April 2023



Cheap?
FPHIFTMFTAIASUM


PER
63.36014.63016.640147.17.060


Dividend Yield
2.017%2.791%3.274%0%2.713%



SNOOPY

[JeffW]

My observation was mainly based on stocks in the KFL portfolio ...ie FPH / IFT / MFT / AIA / SUM ..etc ....Most of them are attractively priced individually too ....then getting them at 8.5% discount to current market prices ...makes them extra attractive to me at least .

History has shown KFL being a retail stock gets into limelight when markets are buoyant and looses its shine in downtrend which adds to further attractiveness at the moment .

KFL was trading at 22 cents premium in Jan 2021 ...market peak ....now it's at almost 13 cents discount ...in itself it's almost 20% gap to close as and when it gets closed in next 2-5 years ...while one waits ....we get dividends or distributions based on NAV and not current SP ...

In my opinion, the dividends are a complete red herring. The dividends can only be sourced from two sources:

1. Dividends received on the underlying investments, which will not be anywhere near the 8% or so that's paid out.
2. From effectively paying out capital (maybe from gains on sale of underlying investments) as dividends

The former is fine, but the latter is a little counter-productive, although admittedly less so being a PIE compared to an ordinary company as there is no DWT leakage

[alokdhir]

Based on market Closing Prices 26th April 2023



Cheap?
FPH
IFT
MFT
AIA
SUM


PER
63.360
14.630
16.640
147.1
7.060


Dividend Yield
2.017%
2.791%
3.274%
0%
2.713%



SNOOPY

Only FPH seems pricy but it was always a market darling stock ...if u compare to valuations on Jan 2021 date then u will notice the difference ....plus these being large caps growth stocks ...u need to ignore their dividend yield ...

KFL is an efficient tool to convert growth stocks portfolio to dividend stream for income

KFL NAV has outperformed overall market in long term

https://kingfish.co.nz/investor-centre/portfolio-performance/


PS. : Expecting a NAV of 1.405 today

[ronaldson]

Alokdhir - The outperformance table you have included in your post tells its own tale, being good news for holders.

But what is not included (I understand) is any benefit obtained by holders over the period identified from the regular Warrant issues. That benefit would be variable among individual holders according to whether warrants were exercised at a beneficial price on any occasion or alternatively were sold on market for value before the exercise date. In my time as a holder I have done both those things, with the result on each occasion of a positive outcome on a non-taxable basis in addition to the normal pie dividends paid quarterly.

The calculation will therefore be different for each holder but this extra benefit from KFL (indeed MLN and BRM too) should not be overlooked when measuring how this investment is performing.

[Rawz]

Chris Lee gave Fisher funds a bit of a serve in todays 'taking stock' news letter. Im sharing below for anyone that wants to have a read and doesnt subscribe to it. Maybe KFL will lower its fees? A bit in there about KFL's dividend policy. Anyways sharing is caring:

------------------------------------------------

THOUSANDS of NZ investors will be rejoicing at the news that the fee-hungry KiwiSaver funds run by Fisher Funds have been coerced into abolishing the absurd bonuses previously claimed.

The Auckland-based fund manager, having recently bought the Kiwibank KiwiSaver ledger, has announced that it is voluntarily ending its double dipping, explaining that it now has sufficient scale, after the Kiwibank purchase, to cope without second helpings of fees.

Of course the decision had absolutely nothing to do with market regulator signals that the regulator would be focusing on such fees with growing disrespect.

The ''voluntary'' cancellation of an utterly unreasonable, indeed rapacious, fee structure is good news for investors.

For Fisher Funds the proactive move solves a potential problem. Fighting regulators is expensive and unwise.

Formed decades ago by a then ground-breaking young woman (Carmel Fisher) with some corporate and fund management experience, Fisher Funds set out with a business model that somewhat resembled that of Money Managers.

For two decades, beginning in the 1980s, Money Managers had filled the pockets of its founder Douglas (Somers) Edgar, dominating a blue-collar retail market. It advertised heavily and invested heavily in Edgar's personal brand. Its fees were breathtakingly extravagant.

The Fisher Fund model was similar in that it relied on heavy advertising, the personal ''brand'' of its founder, charged hefty fees, and made headway by exploiting the media, both Edgar and Fisher becoming almost daily commentators on financial markets in much the same way that the Simplicity KiwiSaver founder Sam Stubbs does today.

Money Managers ramped up property syndication, in-house funds management and third-tier money lending, enabling Edgar to carve out sufficient rewards that he could retire as what some, vulgarly, refer to as a Rich Lister.

When Edgar was repositioning himself from a small Invercargill second-tier property investor to market guru, Fisher was at Prudential Insurance in the pre-1987 sharemarket, a trailblazer in that she was young, feminine, innovative and bright, carving out a bold approach to funds management concentrating on outsized holdings of illiquid stock. Risk taking was in her DNA.

By the time she founded her own company she had genuine experience and would have seen the success of Edgar's advertising concentration and noted his energy in developing a personal brand.

In later years she converted her company into an empire by using debt to acquire databases from the likes of Tower and Kiwibank.

Unlike Money Managers, her empire has been sustainable and now is her legacy.

She locked in large, repeating fees by cleverly listing various funds – Kingfish, Marlin and Barramundi – using the philosophy she had developed at Prudential, buying large chunks of low-cap shares, Pumpkin Patch being an example of a Kingfish target.

When anyone quickly builds a holding in an illiquid stock, they will initially record valuation gains. If you keep your finger on the ''buy'' button, you drive up the share price and will value your earliest, cheaper purchases at the last, high price that you have paid. The risk, of course, is that your strategy creates a market at an utterly unsustainable level, as happened with Pumpkin Patch.

Only for a short while did Kingfish, Marlin and Barramundi thrive under this model. Today, under the new management, the three listed funds have a different model, again unusual, in that Kingfish, for example, buys quality growth shares, collects very small dividends from those stocks, but pays the Kingfish shareholders high dividends, basing the dividends on the unrealised gains of the growth shares, not on income it receives.

This formula works well in a bull market, attracting shareholders who chase high dividends. Usually these are investors who have retired and need income.

The concept is hazardous in bear markets, an obvious issue being how such a model can fund dividends without leverage or dilution.

Kingfish's share price has fallen by 45% in the past two years, the market generally having fallen by less than half of that. Dividends must fall, by definition.

Fisher Funds, having been built on debt and acquisitions, has transitioned under its new owners, the American investment company TA and a TSB bank-developed Community Trust being the owners, TA being smaller but very much in charge.

The Community Trust investment is likely to be passive, with little strategic input on issues like fees, acquisitions and economic analysis. It is reasonable to assume TA's smaller shareholding has a full voice on all financial matters. Community Trusts are represented by people with social ambitions. TA is a hard, profit-focused organisation, with an American culture.

Carmel Fisher retired at a fortuitous time before the messes facing markets today had become simply toxic.

The new Fisher CEO is Bruce McLachlan, a mid-ranked banker, a divisional manager in the banks before a stint as CEO of the tiny Co-operative Bank.

McLachlan is not an analyst, a financial strategist, a sharemarket trader or an economist. He is a practical, pleasant fellow, well equipped to be the public face of an organisation whose American shareholders are best left to perform their work behind boardroom doors.

He will be highly attentive to the views of the regulators on such matters as bonus fees and incentive payments to executives, so may become an industry leader in addressing these subjects if he does so soon.

One has to hope all fund managers and KiwiSaver managers are paying attention.

The industry's annual fees are already extreme, even without the double-dipping bonus fees, especially in those businesses that perform no or minimal research, instead aping an index or double-intermediating by use of Exchange Traded Funds, a model that adds virtually no value.

Value-add must surely be the new mantra of all KiwiSaver and managed funds.

Prime Ministerial salaries and bonuses ought to be the victim of investor demands for a fairer balance between returns and internal costs.

The late Brian Gaynor's Milford brand has a significant appetite for fees but has regularly delivered value-add, though the current environment might be challenging.

Harbour Asset management has set the standards for genuine intellectual analysis (AND no bonus fees).

Perhaps Fisher Funds will now aim at a high tier of respectability by being the first to accept that bonus fees should play no role in an era of difficult conditions.

[SPC]

This rant is all a bit of a yawn. I've been to several CL presentations and his audience appeared very much to be of a certain generation and the messages catered for that group. It's all just a cup of warm Milo, the late Brian Gaynor dished up hot strong coffee.
I certainly know who I preferred.

[alokdhir]

All long term investors of KFL fully understand its Dividend or distributions policy ....I hope so ...it's not truly a dividend but a distribution based on 2% of NAV of that quarter which is funded thru actual dividends received with attached tax credits and capital transactions .

If one is worried about capital erosion in bear markets as mentioned by Chris Lee then one can opt for DRP which reinvests quarterly distributions into KFL shares at 3% discount to SP thus increasing holding numbers while NAV drops thus not resulting in any capital erosion at lower levels .

Its appeal to retired people needing tax efficient and hassle free income stream is supreme as it converts growth of large cap blue chip stocks to quarterly distributions ...fully tax paid in the hands of a NZ resident individual

Its distributions are based on NAV thus when NAV falls so does quarterly dividends

Just an example to illustrate how nicely it works ...if one invested in KFL on 1st April 2010 at 91 Cents ...when term deposit rates were 7% for 5 years ...one wud have got appox 10 cents dividends per year and still have some growth of capital at present SP of 1.30 ...it wud have worked much better then locking at term deposit rate of 7% pretax ...so buying at right time does matter ...which usually is the case when rates are high and SP is at big discount to NAV ...

I

[777]

Seems to me that he is more concerned that the people he is talking about have a higher profile than he does.

[SPC]

Yes reminds me very much of a Kris Faafoi opinion piece, alot about nothing in particular and generally after the fact.
I don't know why either gets printed...

[Sideshow Bob]

NAV as of Friday was $1.4069.

Still trading at $1.30

[dabsman]

I picked up a few in the last week. Just a small start. If you reinvest and participate in warrants (when economic to do so), you quickly build a decent holding. My BRM is now my biggest holding and I have only held them for 3 years.

Will be the bread and butter of my retirement income these 3 fishy funds.

[SPC]

Welcome to the Fish pond Dabsman.
They have kept me fed.

[winner69]

NAV 1.3965

Seems they pretty useless investment fund …must have too many losers or ‘hope’ shares

[777]

NAV 1.3965

Seems they pretty useless investment fund …must have too many losers or ‘hope’ shares

Explain to us what shares they hold that are losers or "hope" shares. There is only around 13 shares in the portfolio. Go on give it ago.

[winner69]

Explain to us what shares they hold that are losers or "hope" shares. There is only around 13 shares in the portfolio. Go on give it ago.

Just over a year ago NAV was over 1.70

You know the stocks that been losers since …..and the ones they are hoping’ will recover

No worries, no doubt beating the benchmark

[ronaldson]

Another monthly update (as at 30 April) released today.

Holders may be interested in a recent dive I did into the Warrant history for this share, given we live in hope just now for another one.

The first warrant issue (then called an option) coincided listing in March 2004 on a 1 for 1 basis, and could be exercised on any of 31 March 2006, 2007 or 2008.

The next warrant announcement was on 23 July 2010 on a 1 for 2 basis, again with multiple possible exercise dates in 2011 and 2012.

Then the situation "normalised" with the issue of warrants on a 1 for 4 basis with a single exercise date as follows:-

Announcement Date Exercise Date

28/10/2014 06/11/2015
18/04/2016 05/05/2017
02/07/2018 12/07/2019
05/02/2020 12/03/2021
18/10/2021 18/11/2022

So the gap between the previous warrant exercise date and the announcement date for the next warrant issue (the announcement date is followed by a record date to determine entitlement, and an allotment/listing date after that) for the sequence listed has been about 6 months, 14 months, 7 months and 7 months respectively.

We are now about six months after the last exercise date, so whilst any activity in this space is obviously director dependent some expectation is reasonable.

[mshierlaw]

Another monthly update (as at 30 April) released today.

Holders may be interested in a recent dive I did into the Warrant history for this share, given we live in hope just now for another one.

The first warrant issue (then called an option) coincided listing in March 2004 on a 1 for 1 basis, and could be exercised on any of 31 March 2006, 2007 or 2008.

The next warrant announcement was on 23 July 2010 on a 1 for 2 basis, again with multiple possible exercise dates in 2011 and 2012.

Then the situation "normalised" with the issue of warrants on a 1 for 4 basis with a single exercise date as follows:-

Announcement Date Exercise Date

28/10/2014 06/11/2015
18/04/2016 05/05/2017
02/07/2018 12/07/2019
05/02/2020 12/03/2021
18/10/2021 18/11/2022

So the gap between the previous warrant exercise date and the announcement date for the next warrant issue (the announcement date is followed by a record date to determine entitlement, and an allotment/listing date after that) for the sequence listed has been about 6 months, 14 months, 7 months and 7 months respectively.

We are now about six months after the last exercise date, so whilst any activity in this space is obviously director dependent some expectation is reasonable.

Great post, thanks.

Look back at 2017 -2018 14 months & the longest period between issues. In may 2017 SP was at 14 month low. July 2018 SP was at 20 month high. Today we are at 4 year low (excluding covid).

If I was the fund manager I would not do a rights issue at this share price. However if they do, I will back up the truck.

[alokdhir]

"Kingfish trimmed its holdings in Infratil, Fisher & Paykel Healthcare, and Summerset during the month."

Though they still have full faith in current value play ...MFT ! :t_up:

[Mrbuyit]

Any thoughts on where the pocket money from PPH delist will end up.

[Rawz]

Any thoughts on where the pocket money from PPH delist will end up.
MHJ or TRA is my guess

[Muse]

"Kingfish trimmed its holdings in Infratil, Fisher & Paykel Healthcare, and Summerset during the month."

Though they still have full faith in current value play ...MFT ! :t_up:





Nice one.

Fantastic company...though I reckon it's run rate has come off and its Q4 going to post negative PCP's that will surprise on the downside. Just IMO...will see on the 25th.

[alokdhir]

Nice one.

Fantastic company...though I reckon it's run rate has come off and its Q4 going to post negative PCP's that will surprise on the downside. Just IMO...will see on the 25th.

Agree with short term turbulence for it ahead ...but I am looking real long term here ...so can only add or look thru few normalisation qtrs ...on other hand it may have priced in whats ahead as market fully understand what and why of whats ahead ...

PS : I am more worried about FPH post results then MFT ...but its again short term turbulence for great companies !!

[Not too Flash]

Good to see more repurchasers in the last few days

[alokdhir]

Yes ..they ready to buy big @ 1.30 too ...day before was 100K @ 1.29 ...

Its portfolio is doing very well ...only some big seller still around ...but good for us ...repurchases will help improve NAV slowly

[Grimy]

I bought a few more today with the proceeds from a maturing Wellington Airport bond.

[alokdhir]

As per my model today KFL portfolio up 2% ...wow :t_up:

[ronaldson]

I would think that the move to tax trust income at 39c in the $ rather than 33c will increase the attractiveness of PIE investments such as KFL. Quite a large number of trusts derive taxable income and a proportion of those rely upon dividend income.

While the intended new tax rate can be avoided (as could the 33c rate) by distributing to beneficiaries who are not taxed at such rate under current brackets for personal income it may cause a measurable shift in investment behavior. Given that Robertson justified his announcement by reference to the billions (yes, billions) of $ of income shifted to trusts since 2021 as a result of the previous introduction of the 39c top rate for personal income whilst the top rate for trusts was retained at 33c the momentum towards preference for investments that are actual PIE's could be much more than the market seems to presently anticipate, and a shift could occur much more quickly as well.

I am interested in others thoughts on this.

[alokdhir]

I would think that the move to tax trust income at 39c in the $ rather than 33c will increase the attractiveness of PIE investments such as KFL. Quite a large number of trusts derive taxable income and a proportion of those rely upon dividend income.

While the intended new tax rate can be avoided (as could the 33c rate) by distributing to beneficiaries who are not taxed at such rate under current brackets for personal income it may cause a measurable shift in investment behavior. Given that Robertson justified his announcement by reference to the billions (yes, billions) of $ of income shifted to trusts since 2021 as a result of the previous introduction of the 39c top rate for personal income whilst the top rate for trusts was retained at 33c the momentum towards preference for investments that are actual PIE's could be much more than the market seems to presently anticipate, and a shift could occur much more quickly as well.

I am interested in others thoughts on this.

I agree with your thoughts ...Budget have provided further reason to get into listed PIEs for trusts if they have other equity investments ...better switch to PIEs than companies ...11% tax saved is lot of savings ....not just for trusts but for individuals also ...the current discount can cover their fund costs as many here fear management costs .

KFL has come full cycle ...from big premium to big discount ....next is premium again ...not easy as steady state is almost parity or small discount

Nonetheless KFL is offering great value at current SP ....better value than most fairly valued yield players like HLG / TRA etc

[Rawz]

where do you think the pushpay money will go?

to another stock in into current portfolio?

[ronaldson]

Rawz - I don't know, but I topped up this morning at $1.30 as KFLs current portfolio is well positioned, it will be cum a quarterly dividend shortly, and a warrant issue can be anticipated certainly before end 2023.

With the existing NTA and the buy back in operation if the discount widens I see downside as very limited even if the OCR is up at the next announcement.

[winner69]

Headline says Challenging year for Kingfish

Did they do well? No a terrible year …and they call themselves active investors

Seems like a few years ago they threw the darts at a list of NZX stocks and put the money on those and hoped for the best and then the managers just kept a watching brief and worked out what to sell to keep the divies coming.

Two consecutive years of negative returns (even though they said 2022 was +0.0% lol)

Not good enough

See they calling for Director nominations ….job money for jam and present lot pretty useless so let’s push for alokdhir and rawz to get on the Board….and give them a good shake up

[winner69]

Always good buying in the depths of despair …..might give them another go

[percy]

Always good buying in the depths of despair …..might give them another go

Do n't they have a dart board at the Bowling Club you can use.?
Be worth comparing your results with KFL's.

[alokdhir]

where do you think the pushpay money will go?

to another stock in into current portfolio?

They have already invested PPH money by drawing down previous cash position into 2% RYM , 2% EBO and 1% CEN as per latest portfolio report ...cash was down to just 1.6% ...so PPH cash will shore it up most likely

PS : Additions to older positions me noted in last portfolio position as on 31st March

[winner69]

Do n't they have a dart board at the Bowling Club you can use.?
Be worth comparing your results with KFL's.


Darts landed on KMD AFT OCA GNE SPK GEN HGH and STU

pretty good I reckon

[alokdhir]

Darts landed on KMD AFT OCA GNE SPK GEN HGH and STU

pretty good I reckon

:p:t_up::D

U forgot FBU mate

[winner69]

One dart landed on MFB but it fell out so didn’t count

[percy]

Darts landed on KMD AFT OCA GNE SPK GEN HGH and STU

pretty good I reckon

I think so too.....lol.

[Muse]

Darts landed on KMD AFT OCA GNE SPK GEN HGH and STU

pretty good I reckon

When you run with the hares and hunt with the hounds you're always a WINNER....69 (oh yeaaah)
https://www.youtube.com/watch?v=6X6eXE9IHQg

[alokdhir]

All the stars are here at humble KFL counter ...must be something cooking ...or I must have upset something or someone ...:eek2:

[Muse]

move over 'black monday', KFL is packin' heat....

[alokdhir]

Please dont bring SR here ...please ...:p

[Rawz]

KFL 5 year SP change is -3%. That’s a tough one for shareholders

[alokdhir]

KFL 5 year SP change is -3%. That’s a tough one for shareholders

Thats after getting 8% per annum dividend mate ...so it's basically 37% plus in absolute terms ....7%+ PA ....acceptable or no for a yield stock or fund ...Cud have made some in 2 warrants issue in last 5 years ...I remember Mr B made tons in one of them ...maturing in March 2021 !!

PS : To give my personal experience with KFL ....I got into KFL in April 2010 at average SP of 92 Cents ....got average 10 Cents cash dividend every year for 13 years now and it's still at 1.30 ...so I shud be happy or not ...leave alone its tax benefits and other buy and forget benefits for 13 years mate ...

[Sideshow Bob]

https://www.nzx.com/announcements/411815

For immediate release:

22 May 2023
Challenging year for Kingfish

•Net loss after tax for year ended 31 March 2022 ($19.5m)
•Total shareholder return * (-18.8%)
•Adjusted NAV return (after expenses, fees and tax) ** (-3.6%)
•Dividend return *** +7.7% (11.64cps)

NZX-listed investment company Kingfish Limited (NZX: KFL) today announced an after-tax net operating loss of $19.5m for the year ended 31 March 2023.
Shareholders will be aware of the challenges experienced by listed equities and the Kingfish portfolio has not been immune to those pressures, recording a loss for the year.

Concerns from post-Covid inflation, rising interest rates, supply chain disruption, coupled with international uncertainty relating to the ongoing war between Russian and the Ukraine have combined to negatively impact the value of the Kingfish portfolio stocks during the period.

The portfolio’s Adjusted NAV return of -3.6% (-2.7% gross performance****) was broadly in line with the S&P/NZX50G benchmark which was down -1.9% for the 12-month period.

Total shareholder return* for the 12 month period was -18.8%, largely driven by the fall in the share price, which moved from an 11% premium to net asset value, to a 6% discount to net asset value over the course of the year.

The lower return delivered by the portfolio activated the management fee rebate (the fulcrum fee*****) which reduced the management fee for the year from 1.25% to 0.75%. The fulcrum fee mechanism is a particular feature of the Fisher-managed listed equity funds which reduces the management fee when actual returns fall below the S&P/NZX Bank Bill 90-day rate.

The directors recognise that the regularity of the tax-effective quarterly dividends are important for many shareholders. In accordance with Kingfish’s quarterly distribution policy (2.0% of average NAV per quarter), the company paid a total of 11.64 cents per share to shareholders during the year ended 31 March 2023. On 22 May 2023, the board declared a dividend of 2.82 cents per share, payable on 23 June 2023 with a record date of 8 June.

Chair Andy Coupe said “Investors have experienced another tough year, with markets being driven by a myriad of factors. However, the directors are encouraged that, despite the difficult environment for listed equities, the majority of the companies within the Kingfish portfolio are delivering solid earnings. This underlying business performance allows us to remain confident in the investment strategy and the medium to longer-term resilience of the portfolio.”

Portfolio Manager Matt Peek noted that “After a tough first half of the financial year, the Kingfish portfolio recovered most of the lost ground, with a gross performance return of +7.1% and Adjusted NAV return of +6.5% in the second half. Over the 2023 financial year the market environment has been challenging. Rising interest rates and concerns over economic activity have seen defensive companies favoured overgrowth companies, which have been key to Kingfish's historical track record of strong performance. Kingfish has performed creditably against this backdrop and its portfolio is well placed moving forward.”

For further information please contact:
Corporate Manager
Kingfish Limited
Tel: (09) 484 0352

[alokdhir]

I was surprised at Gurus making fun of KFL without fully understanding its goals and objectives for the holders . IMO KFL is best safe value play in current market with regular income / yield objective and at great discount to NAV

Its always had been a great buy at good discount levels ..

Its surely subdued for last 2 years due to the fact that it holds growth stocks which are suffering due to current above normal rates environment

That is expected to change as rates have almost topped ....next 6-9 months shud start seeing PER expansion of these stocks

When its best time to get into any stock ...at that time its the most unpopular stock / option ...eg no one was looking to buy FPH around $ 18 but happy to buy around $ 26 !!! ....lol

IMHO KFL is and will be my best choice at the moment rather then trying to get into other popular small cap yield stocks currently trading above their long term averages

Its my personal opinion and choice ...based on my requirements ...DYOR about its suitability

1. Provides regular income

2. Has great blue chip portfolio

3. Very tax efficient especially for higher tax rates individuals

4. Long track record of consistent absolute returns

[Rawz]

nice one alokdhir, you are going to make a killing over the next 24 months as growth powers ahead of the value/divvy stocks. Not only will you see huge nta growth but also SP will trade at a 10% premium again. too easy :cool:

[alokdhir]

nice one alokdhir, you are going to make a killing over the next 24 months as growth powers ahead of the value/divvy stocks. Not only will you see huge nta growth but also SP will trade at a 10% premium again. too easy :cool:

Not looking for premiums ...as they maybe one time story like a pandemic ...but surely better valuations and good growth ahead . Thanks again for your kind thoughts and best wishes .

[alokdhir]

Now that Mr B has disclosed " Significant " investments in KFL at current SP and also endorsed that its a great buy at 8% discount ...I expect better support to my original idea of KFL being excellent value buy at present ...hopefully now people will not expect 20% discounts to NAV as before ...lol ...but u never say never in markets ...anything can still happen ...but odds are in our favour ...:cool:

PS : As per his calculations KFL yields 13.43% at current discount for 33% tax payer on DRP ...on 39% it will be 14.75% ...mind boggling !!!

[Rawz]

Alokdhir and Beagle pumping the same stock. Dream team :blush:

[alokdhir]

Alokdhir and Beagle pumping the same stock. Dream team :blush:

Buying or investing in the same stock is more correct as we both see " Deep Value " in it at current levels ...lol

PS : Maybe we have same goals and needs ...retirement income

[JeffW]

Now that Mr B has disclosed " Significant " investments in KFL at current SP and also endorsed that its a great buy at 8% discount ...I expect better support to my original idea of KFL being excellent value buy at present ...hopefully now people will not expect 20% discounts to NAV as before ...lol ...but u never say never in markets ...anything can still happen ...but odds are in our favour ...:cool:

PS : As per his calculations KFL yields 13.43% at current discount for 33% tax payer on DRP ...on 39% it will be 14.75% ...mind boggling !!!

The yields for KFL are a complete and utter red herring, and don't stand up to the slightest scrutiny at all. Where do you think the yields come from - there's only two sources:

1. The dividends actually received on the KFL portfolio - all well and good but certainly not sufficient for 13.43% or anywhere close
2. The balance comes from the sale of parts of the portfolio, and therefore turning them from capital to income (admittedly PIE income) in the hands of the investor

That's not to say KFL might not be a good investment, especially for 39% tax-payers, but the supposed dividend yield certainly does not make it so

[alokdhir]

The yields for KPL are a complete and utter red herring, and don't stand up to the slightest scrutiny at all. Where do you think the yields come from - there's only two sources:

1. The dividends actually received on the KPL portfolio - all well and good but certainly not sufficient for 13.43% or anywhere close
2. The balance comes from the sale of parts of the portfolio, and therefore turning them from capital to income (admittedly PIE income) in the hands of the investor

That's not to say KPL might not be a good investment, especially for 39% tax-payers, but the supposed dividend yield certainly does not make it so

This questions has been discussed and fully understood by long term investors ...they come from capital growth of blue chip growth stocks more then their dividends so if u think IFT / MFT/ FPH / SUM / AIA will never grow in value then maybe one day KFL will become 0 !!!

I gave my personal example before ...which it seems u didnt read ...again I repeat ...I invested in KFL in April 2010 @ 92 cents ...got 10 cents dividend the same way ...better to call it distribution ...and even in big downtrend its almost 50% above my purchase price ...in absolute terms I got 130 Cents distributions plus 40Cents warrants benefit plus 39 Cents capital gains = 209 Cents ...spread over 13 years on 92 Cents investment ...2010-2023 is long enough to know their model of distribution works alright for income

[JeffW]

This questions has been discussed and fully understood by long term investors ...they come from capital growth of blue chip growth stocks more then their dividends so if u think IFT / MFT/ FPH / SUM / AIA will never grow in value then maybe one day KFL will become 0 !!!

I gave my personal example before ...which it seems u didnt read ...again I repeat ...I invested in KFL in April 2010 @ 92 cents ...got 10 cents dividend the same way ...better to call it distribution ...and even in big downtrend its almost 50% above my purchase price ...in absolute terms I got 130 Cents distributions plus 40Cents warrants benefit plus 39 Cents capital gains = 209 Cents ...spread over 13 years on 92 Cents investment ...2010-2023 is long enough to know their model of distribution works alright for income

Good for you. I'm not arguing the merits or otherwise of KFL as investment - I am just stating the fact that the supposedly superior Dividend Yield element is completely misleading and irrelevant to the investment decision for the likes of KFL

[alokdhir]

Good for you. I'm not arguing the merits or otherwise of KFL as investment - I am just stating the fact that the supposedly superior Dividend Yield element is completely misleading and irrelevant to the investment decision for the likes of KFL

It's not dividend but its distribution which comes from real dividends PLUS capital growth of blue chip stocks ....they DISTRIBUTE 2% of NAV every quarter ...so it provides quarterly income for retirees like me ...also its tax efficient . But one need understand its coming majorly from capital appreciation part of the blue chip portfolio ...which I reckon all here do

[SPC]

Well JW, I'll state a fact or three for you. I have held a large position in KFL built over 17 years. My holding cost today has more than been paid for in distributions, on top of that I have profits from selling down at market peaks, and my fully paid capital position could be sold anytime on market for the value on the day for a total profit.
You need some better facts I think.

[JeffW]

Well JW, I'll state a fact or three for you. I have held a large position in KFL built over 17 years. My holding cost today has more than been paid for in distributions, on top of that I have profits from selling down at market peaks, and my fully paid capital position could be sold anytime on market for the value on the day for a total profit.
You need some better facts I think.

I think you're missing the point - I certainly am not trying to suggest KFL is a poor investment - I've stressed this several times. The point I am trying to make is that to the extent that the dividend/distribution is made up of payments out of capital growth on the investments, it is simply turning capital receipts into income receipts (albeit PIE income), and thus a conversation about yield percentage is non-sensical - and certainly turning what would be capital receipts into income receipts is not tax efficient in the slightest. Nothing more, nothing less. I appreciate that it may suit you to have a quarterly receipt, and I'm certainly not arguing against it.

[SPC]

I feel we're slipping towards the 'aerodynamically speaking- bumble bees can't fly' argument.
Turning capital (gains) into income is actually extremely tax efficient as it happens. If it weren't the left side of politics wouldn't be bleating so much as they are..?

[moose]

The yields for KFL are a complete and utter red herring, and don't stand up to the slightest scrutiny at all. Where do you think the yields come from - there's only two sources:

1. The dividends actually received on the KFL portfolio - all well and good but certainly not sufficient for 13.43% or anywhere close
2. The balance comes from the sale of parts of the portfolio, and therefore turning them from capital to income (admittedly PIE income) in the hands of the investor

That's not to say KFL might not be a good investment, especially for 39% tax-payers, but the supposed dividend yield certainly does not make it so

Can someone with a bit more knowledge clarify something for me.......

1. We all agree that the 8% of NTA annual divvies come from a mixture of dividends received on the underlying investment + sales of some shares in the portfolio (or recycling of money saved by issuing shares under the DRP instead of cash divvies +/- new investor money e.g. via warrants) - I haven't looked at the data for "total shares in circulation over time" which would be interesting.
2. If you owned the underlying shares in the same proportion you would get dividends (incl imputation credits) and (hopefully) some tax-free capital gain.
3. KFL dividends include 2 components a "fully imputed" amount and an "excluded income" amount - the latter comes with the instruction to not include it for tax purposes (yes, I know that most people don't include any PIE income on a tax return)
4. My understanding of the KFL dividend structure was that this "excluded income" represents the capital gain.

So getting to the point........If the above is true and the "fully imputed" part of the dividend is only around 20-30% of the total then the calculation of effective rates of return for individuals with a 33/39% personal tax rate is a bit more complicated as you only make a "tax saving" on the part that is subject to tax not the excluded income - overall the tax savings would only be about the same as the additional management fees for holding KFL instead of the underlying shares.

None of this changes the arguments about buying below underlying nta or having a "no hassle" income stream but I would appreciate any comments about claims that KFL yields close to 15% gross for 39% tax payers by paying a PIE net 8% of nta.

[alokdhir]

Can someone with a bit more knowledge clarify something for me.......

1. We all agree that the 8% of NTA annual divvies come from a mixture of dividends received on the underlying investment + sales of some shares in the portfolio (or recycling of money saved by issuing shares under the DRP instead of cash divvies +/- new investor money e.g. via warrants) - I haven't looked at the data for "total shares in circulation over time" which would be interesting.
2. If you owned the underlying shares in the same proportion you would get dividends (incl imputation credits) and (hopefully) some tax-free capital gain.
3. KFL dividends include 2 components a "fully imputed" amount and an "excluded income" amount - the latter comes with the instruction to not include it for tax purposes (yes, I know that most people don't include any PIE income on a tax return)
4. My understanding of the KFL dividend structure was that this "excluded income" represents the capital gain.

So getting to the point........If the above is true and the "fully imputed" part of the dividend is only around 20-30% of the total then the calculation of effective rates of return for individuals with a 33/39% personal tax rate is a bit more complicated as you only make a "tax saving" on the part that is subject to tax not the excluded income - overall the tax savings would only be about the same as the additional management fees for holding KFL instead of the underlying shares.

None of this changes the arguments about buying below underlying nta or having a "no hassle" income stream but I would appreciate any comments about claims that KFL yields close to 15% gross for 39% tax payers by paying a PIE net 8% of nta.

For the purpose of an investor on 39% rate it wud seem like appox Gross 15% yield ...actual tax saved is much less but nett money in your bank will seem like coming from any NZ listed company Gross dividend yield of appox 15% for 39% marginal rate investor ...IMO thats what matters to investors ...not what amount of actual tax got saved...matters is what nett comes to bank as direct credit which can be called tax paid

To make it clearer if U have TRA shares bought at $ 3.50 and u on 39% marginal rate then it wud seem like they paying gross dividend PA of 52.5cents ...

[JeffW]

Can someone with a bit more knowledge clarify something for me.......

1. We all agree that the 8% of NTA annual divvies come from a mixture of dividends received on the underlying investment + sales of some shares in the portfolio (or recycling of money saved by issuing shares under the DRP instead of cash divvies +/- new investor money e.g. via warrants) - I haven't looked at the data for "total shares in circulation over time" which would be interesting.
2. If you owned the underlying shares in the same proportion you would get dividends (incl imputation credits) and (hopefully) some tax-free capital gain.
3. KFL dividends include 2 components a "fully imputed" amount and an "excluded income" amount - the latter comes with the instruction to not include it for tax purposes (yes, I know that most people don't include any PIE income on a tax return)
4. My understanding of the KFL dividend structure was that this "excluded income" represents the capital gain.

So getting to the point........If the above is true and the "fully imputed" part of the dividend is only around 20-30% of the total then the calculation of effective rates of return for individuals with a 33/39% personal tax rate is a bit more complicated as you only make a "tax saving" on the part that is subject to tax not the excluded income - overall the tax savings would only be about the same as the additional management fees for holding KFL instead of the underlying shares.

None of this changes the arguments about buying below underlying nta or having a "no hassle" income stream but I would appreciate any comments about claims that KFL yields close to 15% gross for 39% tax payers by paying a PIE net 8% of nta.

I broadly agree with your points 1-4 above. I'm not sure if any of the underlying dividends received by KFL are not fully imputed, but if so, this may affect the split between KFL's excluded income and imputed income.

Similarly, I'm not sure if their fees are charged against the imputed income or excluded income in the dividend calculation, or some mixture of the two.

Both of these things may affect the 20-30% you mention relative to holding underlying shares directly, although I suspect not materially.

Subject to the above qualifications, your conclusion is absolutely correct - the after-tax income yield if you owned the underlying shares directly is the cash dividends plus any Imputation Credits, minus your own marginal tax rate. Conversely, your true after-tax income yield owning via KFL is the total cash dividend received minus the excluded dividend portion, plus potentially an imputation adjustment if you include the dividends in your tax return AND have a marginal tax rate of less than 28%

[alokdhir]

I broadly agree with your points 1-4 above. I'm not sure if any of the underlying dividends received by KFL are not fully imputed, but if so, this may affect the split between KFL's excluded income and imputed income.

Similarly, I'm not sure if their fees are charged against the imputed income or excluded income in the dividend calculation, or some mixture of the two.

Both of these things may affect the 20-30% you mention, although I suspect not materially.

Subject to the above qualifications, your conclusion is absolutely correct - the after-tax yield if you owned the underlying shares directly is the cash dividends plus any Imputation Credits, minus your own marginal tax rate. Conversely, your true yield owning via KFL is the total cash dividend received minus the excluded dividend portion, plus potentially an imputation adjustment if you include the dividends in your tax return AND have a marginal tax rate of less than 28%

To help u further ...excluded income was around 9.5 Cents and included income with 28% imputation tax credits attached was around 3 cents last year ...that shud help u do how it will seem like to u ...U wud have got appox 11.5 cents in bank nett tax paid for year with 0.82 cents as imputation credits attached too

[JeffW]

To help u further ...excluded income was around 9.5 Cents and included income with 28% imputation tax credits attached was around 3 cents last year ...that shud help u do how it will seem like to u ...U wud have got appox 11.5 cents in bank nett tax paid for year with 0.82 cents as imputation credits attached too

Thanks, I'm a little unclear how the 11.5cents works - 9.5 & 3 are 12.5cents in the bank net not 11.5cents - or is the 3 cents inclusive of the .82 cents, so 2.18 cents cash? Maybe the cash received is 9.5 & 2.18 = $11.68?

More likely I surmise, and I might well be wrong, is that the 82 cents is correct, and the gross is therefore 2.93 (i.e. .82/.28) and the net is 2.11 & 9.5 so 11.61 in total - I have used these latter figures below so if I'm wrong so are the calculations below, but the theory remains the same.

Also, unhelpfully for comparative calculations, we don't know how much you would have received if you had owned the underlying shares direct - i.e. we do not know how much KFL has received from underlying dividends but used to pay the running costs.

However, the 9.5 is sourced from tax free gains, then it's not appropriate to gross these up for 33% or 39% tax-payers - An owner of the underlying shares would receive this amount (likely not in cash, but in value), and maybe a little more if some of the running costs are deducted. Therefore, it's only appropriate to gross up the 2.11cents net. It is equivalent to 3.14 cents for a 33% tax-payer (2.11/(1-.33)) or 3.46 cents for a 39% tax-payer (2.11/(1-.39)). By all means, factor the 9.5 cents in but not grossed up, but if so, also take into account the change in KFL share-price/asset backing over the same period or I believe it's just misleading as it's essentially a return of capital. To do otherwise is comparing a cash yield including repayment of capital (if held via KFL) with a smaller cash return but no withdrawal of capital (for a direct holder)

Again, I stress, I'm not bagging KFL - they bring something to the table even if the costs are more than the 0.53 cent difference between 3.46 and 2.93.

[SPC]

They've brought plenty to my table over the years. And I've bought plenty more for dessert.
JW - why don't you save yourself all the angst of trying to figure out what's inside the KFL black box and just buy $100 bucks worth and sit back and watch it work..? (And there's likely a warrant issue in the wings soon too!)
How KFL generate the excluded (capital) portion of the return is up to them. There are no doubt trading mechanisms whereby a holding may overshoot providing a sale opportunity and profit, along with underpriced opportunities allowing for restocking. They're using an active manager to run the black box and the above is normal and expected strategy for a fund manager. They know what they're doing. Selling and buying to make capital gains is not a crime is it? (unless your political thinking suggests otherwise) and I go further and suggest that this whole investment regime was actually a creation of the late Dr Michael Cullen who probably never owned a share in his life.
Taxation discussions are unnecessary. Listed PIEs are automatically excluded from individual taxation positions.
Go on be brave...give it a go 😉

[JeffW]

They've brought plenty to my table over the years. And I've bought plenty more for dessert.
JW - why don't you save yourself all the angst of trying to figure out what's inside the KFL black box and just buy $100 bucks worth and sit back and watch it work..? (And there's likely a warrant issue in the wings soon too!)
How KFL generate the excluded (capital) portion of the return is up to them. There are no doubt trading mechanisms whereby a holding may overshoot providing a sale opportunity and profit, along with underpriced opportunities allowing for restocking. They're using an active manager to run the black box and the above is normal and expected strategy for a fund manager. They know what they're doing. Selling and buying to make capital gains is not a crime is it? (unless your political thinking suggests otherwise) and I go further and suggest that this whole investment regime was actually a creation of the late Dr Michael Cullen who probably never owned a share in his life.
Taxation discussions are unnecessary. Listed PIEs are automatically excluded from individual taxation positions.
Go on be brave...give it a go 

I get all that, truly I do. Whilst I've never been a KFL shareholder I have been both a BRM and MLN shareholder. My issue is that, probably through ignorance, fantastical yields are quoted which simply do not stack up. If you had a term deposit and each quarter when the interest was paid you also withdraw some of the original deposit, then there's no way in the world you'd count the principal sum withdrawn as part of the return. Sure, the underlying KFL/BRM/MLN "term deposit" varies in value and mostly upwards over time, but the principle is the same, and to pretend otherwise is just wrong when comparing cash returns from KPL to dividends from direct investment

[Rawz]

The answer is you are all right

Cheers

[alokdhir]

What we call it ? Shud it matter ? KFL is giving on 23rd June 2.82 Cents in my bank ...quarterly dividend ...with just 0.095 cents imputation credits also ...I may or may not use is my discretion ...why will I use it if I am on 39% rate ...so forget that part

How they got 2.82 Cents ...its 2% of average NAV of the last quarter

Last dividend was 2.79 Cents in the bank ...after that dividend NAV was 1.3979

Current NAV is again about 1.41 ...U will know exact tmrw

U will keep getting 2% of NAV every quarter in your bank tax paid with nothing to do ...for no additional capital appreciation ...NAV just needs to rise 2% every quarter for this to go on perpetually

Whether we call is yield or what ever ...does it matter ...if u want to replicate yourself using KFL portfolio ...u can try ...its not easy ...plus u get into grey area with IRD of doing stock trading too ...as Funds can do buy and sell without being called but individuals get into trouble with that

I think U are not liking it being called dividend or yield ...it doesn't matter what u call it ...it gives at current SP 9% tax free DRP returns ....with scope for it rising if NAV goes up ...it was 1.945 in Jan 2021 ...SP was 2.10 ...its a fund which holds great stocks which can move up in future

So unless u think its portfolio cant appreciate even 8% PA then only it will start returning your original capital as distributions while NAV starts declining after each payment

Its been listed since 2004 and has been paying quarterly payment since 2007 I reckon ...it par was $ 1 and its current NAV is around 1.41 ...so its portfolio can support 2% NAV based quarterly payments ....which for u are tax paid returns ...

[Muse]

Thoughtful discussion here from which I’ve learned a lot. Thanks

[Cruseo]

What we call it ? Shud it matter ? KFL is giving on 23rd June 2.82 Cents in my bank ...quarterly dividend ...with just 0.095 cents imputation credits also ...I may or may not use is my discretion ...why will I use it if I am on 39% rate ...so forget that part

How they got 2.82 Cents ...its 2% of average NAV of the last quarter

Last dividend was 2.79 Cents in the bank ...after that dividend NAV was 1.3979

Current NAV is again about 1.41 ...U will know exact tmrw

U will keep getting 2% of NAV every quarter in your bank tax paid with nothing to do ...for no additional capital appreciation ...NAV just needs to rise 2% every quarter for this to go on perpetually

Whether we call is yield or what ever ...does it matter ...if u want to replicate yourself using KFL portfolio ...u can try ...its not easy ...plus u get into grey area with IRD of doing stock trading too ...as Funds can do buy and sell without being called but individuals get into trouble with that

I think U are not liking it being called dividend or yield ...it doesn't matter what u call it ...it gives at current SP 9% tax free DRP returns ....with scope for it rising if NAV goes up ...it was 1.945 in Jan 2021 ...SP was 2.10 ...its a fund which holds great stocks which can move up in future

So unless u think its portfolio cant appreciate even 8% PA then only it will start returning your original capital as distributions while NAV starts declining after each payment

Its been listed since 2004 and has been paying quarterly payment since 2007 I reckon ...it par was $ 1 and its current NAV is around 1.41 ...so its portfolio can support 2% NAV based quarterly payments ....which for u are tax paid returns ...

1st time caller. Long time listener.

Thanks Alokdhir for the insights. Seems like youÂ’ve been beating the KFL drum for quite a while and IÂ’ve started to step in time.

IÂ’ve been slow to warm to KFL over concerns the high yield may have on NAV and while the recent SP decline has been off putting, the absolute return remains attractive. Good underlying assets at below value with a good yield, tax efficient and professionally managed - whatÂ’s not to like. I bought today.

[Cruseo]

1st time caller, long time listener.

Thanks for all the insights. I’ve been listening to Alokdhir beat the drum for KFL for a while and decided to step in time.

I like the tax efficient yield. The decline in SP has been off putting but the current discount to NAV is appealing. This is a long term hold and re-invest for me. Bought some today at $1.30. Interested to see where this goes.

[clip]

They've brought plenty to my table over the years. And I've bought plenty more for dessert.
JW - why don't you save yourself all the angst of trying to figure out what's inside the KFL black box and just buy $100 bucks worth and sit back and watch it work..? (And there's likely a warrant issue in the wings soon too!)
How KFL generate the excluded (capital) portion of the return is up to them. There are no doubt trading mechanisms whereby a holding may overshoot providing a sale opportunity and profit, along with underpriced opportunities allowing for restocking. They're using an active manager to run the black box and the above is normal and expected strategy for a fund manager. They know what they're doing. Selling and buying to make capital gains is not a crime is it? (unless your political thinking suggests otherwise) and I go further and suggest that this whole investment regime was actually a creation of the late Dr Michael Cullen who probably never owned a share in his life.
Taxation discussions are unnecessary. Listed PIEs are automatically excluded from individual taxation positions.
Go on be brave...give it a go 

Having trouble understanding all this, if I buy $100 bucks worth and sit back and watch it work, what will happen? E.g. mention of receiving warrants, dividends, I'm not following. Let's say there's 2 warrants and 2 dividends per year (or tell me what a typical year is), what happens to your initial $100?

[alokdhir]

I agree 100% with Mr B that for people not needing regular income ...DRP option maximises KFL gains fully ...3% discount works well

Also KFL investment is very timing sensitive ...buying near market bottoms with maximum discount to NAV works the best vs buying at any other point ...worst time for KFL investment was when it was at premium ...like people who bought over $ 2 ...at present their income returns are also just 6% and capital also minus 35% ..

So timing matters for KFL investment ...even for longer term ...as at higher levels of NAV ...2% quarterly returns are not easily supported by portfolio without loosing steam ...IMO

[ronaldson]

clip - You are very late to the party. KFL pays dividends quarterly, the shares are cum a 2.82c quarter dividend if you buy on market currently, and there is a DRIP available.

Re Warrants - go back to my post #827 on page 83 and read that. Warrants are entirely dependent on the Board deciding to issue - when and on what terms - but there seems to be almost a policy here to do so on a reasonably regular basis and they are then tradeable/exercisable according to their terms.

Hope that helps.

[FTG]

Also KFL investment is very timing sensitive ...buying near market bottoms with maximum discount to NAV works the best vs buying at any other point ...worst time for KFL investment was when it was at premium ...


So timing matters for KFL investment ...even for longer term ...

One would think 'timing' of entry (and exit) of any investment matters, not just with KFL?

If a prudent investor senses that they need to be extra 'time sensitive' prior to executing an investment decision it strongly indicates that there is...

A) more perceived volatility at play with that investment opportunity and therefore..
B) at the point of exit (especially if that be over a short or medium term) there is a higher concern of not returning 100% of the originally invested capital.

Furthermore, the investor will have more uncertainty re the realistically expected investment Alpha over the term.

[winner69]

You’d think the way FPH and MFT share prices are heading there might be another big buying opportunity coming up

Alokdhir ..I hope they didn’t as you suggest spend the Pushpay proceeds before they got the cash …..could have bought even more FPH and MFT shares if they had held on

[Rawz]

You’d think the way FPH and MFT share prices are heading there might be another big buying opportunity coming up

Alokdhir ..I hope they didn’t as you suggest spend the Pushpay proceeds before they got the cash …..could have bought even more FPH and MFT shares if they had held on

Also… they should cease immediately all buybacks and instead plow all cash into MFT and FPH as they two gems stocks drift lower.

KFL are also allowed to borrow money to invest. They havnt done it to date but they should consider this

[alokdhir]

Also… they should cease immediately all buybacks and instead plow all cash into MFT and FPH as they two gems stocks drift lower.

KFL are also allowed to borrow money to invest. They havnt done it to date but they should consider this

Very soon they will give mandate to W69&Co to do fund management ...then it will be holding all low PE stuff with solid dividend yields ...TRA / HLG will be 20% each ...lol ....and then the recession will hit retail trade deeply with both going half from recent highs ...and KFL will be sub par ...how is that for a scenario ? :eek2:

PS : I hope all remember that KFL was at 8% discount to NAV ...as per Mr B it gives 8% cushion for NAV to fall before your dividend starts reducing below 8% of your purchase price ...but yes all. is possible ...

[winner69]

Definitely ‘time in the market’ is their mantra rather than timing the market

Being the fund manager must be a cushy job …probably one that AI could take over

[alokdhir]

Definitely ‘time in the market’ is their mantra rather than timing the market

Being the fund manager must be a cushy job …probably one that AI could take over

They have clearly mentioned in their prospectus their way of investing ...long term goals ...for companies having super long runways ahead of them ...MFT is their longest held jewel ...how many can dream to hold MFT from 2004 ...needs vision and belief which we lack as we see very short term like which small cap is going to be included in index next etc

[Not too Flash]

Looks like the repurchase window opportunity has closed again ....

[alokdhir]

If one chooses to include KFL income in IR3 then where to add ....NZ Dividends with imputation credits of 28% or PIE income with PIR of 28% ....I reckon new IR3 pre calculates your PIR so if u include any PIE income with right tax deducted it does not reflect in your total taxable income ...as PIE tax is final tax and maximum rate is 28% ....it only does PIR rate adjustments if paid less or more ...but no effect on your total income ...while if u include KFL income as NZ dividends then its included in total taxable income for further tax calculations ...KFL imputations credits are credited as usual at 28% ...Inquired from IRD ...they say can be included at either as KFL is PIE distributions so its PIE income

[777]

You only include the the gross amount that has the imputation credit and then only do it if your gross taxable income is less than $48,000 as there is no advantage otherwise.

[alokdhir]

You only include the the gross amount that has the imputation credit and then only do it if your gross taxable income is less than $48,000 as there is no advantage otherwise.

Question was to put KFL income where ? NZ dividends or PIE income ??

[777]

There is no place that I can see to put PIE income and I guess that is because there is no need to. If you want to claim the imputation then you would include it in the dividends section. It would then become taxable income with a credit of 28c/$ so if you were on a higher marginal rate than 28c then you would be having to pay the difference.

[alokdhir]

There is no place that I can see to put PIE income and I guess that is because there is no need to. If you want to claim the imputation then you would include it in the dividends section. It would then become taxable income with a credit of 28c/$ so if you were on a higher marginal rate than 28c then you would be having to pay the difference.

I can see both PIE income section and NZ Dividends section on my online IR3 ...thats why I was wondering to put KFL income where ? In PIE section or NZ Divi section as both result in different final tax refund outcomes !!

Second question is how to use excess imputations credits ? If u are retired with all dividends income only ?

[RRR]

My understanding is that - as an individual investor you don't have to declare your PIE income.

The only situation where you would include PIE income is when your total income (including PIE income) is below 28% income tax threshold - you would then be able to claim back some of the excess tax paid.

[777]

I have just received my IR3 completed by the IRD. It is exactly as I had worked out. The only reason that the PIE income is is recorded on it is for the IRD to check you are using the correct PIR. It otherwise plays no part in your return. Listed PIEs are not included as the PIR is at the maximum of 28c. As I stated if you have a gross income of less than $48,000 (including any KFL you wish to add in) then you can claim the imputation credit against your income. If it is over the $48,000 then it will cost you the difference in you marginal rate and the 28c on KFL gross dividend declared and the only place to get the imputation credit is to include it in the dividend section.

alok we went over this a couple of years ago. Probably on this thread somewhere.

I am retired as well and know they are no use to me as I am well in excess of $48,000.

[SPC]

Yep this had already been discussed.
Rince and repeat:
You won't get a cash refund from your Imputation credits. They can only be used to reduce final tax owed to IR.
Pie imp credits are no different to any other company imp credits. No cash refund, but if you owe tax at the end of the IR3 you can apply whatever credits you have to offset the tax owed down to a zero balance, but no further.

[alokdhir]

I just don't understand why u people cant understand my simple question !!

IF one wants to include KFL on IR3 ...where it shud go not the virtues of it or who shud do it

Answer I am looking for is ...either NZ dividends or PIE income ....as it's both as per IRD also

Why u people keep going into the merits or demerits of including KFL income ...that is well understood by me ...but will give one example for u all to understand that its not simple as u think ie only under $ 48000 u shud include

One person has only income from KFL of $ 70,000 and he gets tax credits of $ 19600 with it ...as per u people he shud not report it but while he reports it he gets a refund or tax credit of $ 4607 ...reason being KFL taxed @ 28% right from dollar 1 while actual effective rate for $ 70,000 is 21.41% only ...

This is not the issue ...issue is it goes to NZ dividends or PIE income ...rest I fully understand mates

Thanks for your time and replies ...much appreciated


PS : Also I wanted to know how to use lots of carry forward imputation credits ...Ideas being buy companies paying unimputed dividends or other forms of other income like Bank interest ...ideas about high unimputed dividends will be most welcome

[777]

Twice I stated it goes in the dividends section. I couldn't be clearer than that.

[alokdhir]

Twice I stated put it goes in the dividends section. I couldn't be clearer than that.

Ok...Thanks for telling me again...lol

Any ideas about how to use excess imputation credits ?

[SPC]

Yes you declare the income as standard div's. Not pie.
You seemed determined to earn more un/undertaxed income so you can burn through some Imputation credits. But all taxable income must be declared and with the risk of that comes changes in tax legislation. I earn nearly twice as much as 'person 1' in pie income and I don't declare a cent of it. My tax rate is 10.5% and I enjoy all the benefits of looking 'poor' 😆.
Mate use your brains...

[dabsman]

Yes you declare the income as standard div's. Not pie.
You seemed determined to earn more un/undertaxed income so you can burn through some Imputation credits. But all taxable income must be declared and with the risk of that comes changes in tax legislation. I earn nearly twice as much as 'person 1' in pie income and I don't declare a cent of it. My tax rate is 10.5% and I enjoy all the benefits of looking 'poor' .
Mate use your brains...

One of the main resons I have gone into these funds. Especially with non-deductability of interest on rental properties. Last thing I need is trying to minimise trust income now its 39% tax and being unable to disburse to personal income as all the rent is hitting that now as well :(

[justakiwi]

This confuses me. I too was under the impression that one is not required to declare PIE income, but could do so to claim imputation credits if it would be advantageous. But IRD apparently does not agree:

From their website:

If you received income from a Kiwisaver provider or other portfolio investment entity (PIE), or any of the above income types, you need to include this in your return.

So if they are correct, how do you get away with never declaring it?


Yes you declare the income as standard div's. Not pie.
You seemed determined to earn more un/undertaxed income so you can burn through some Imputation credits. But all taxable income must be declared and with the risk of that comes changes in tax legislation. I earn nearly twice as much as 'person 1' in pie income and I don't declare a cent of it. My tax rate is 10.5% and I enjoy all the benefits of looking 'poor' .
Mate use your brains...

[alokdhir]

This confuses me. I too was under the impression that one is not required to declare PIE income, but could do so to claim imputation credits if it would be advantageous. But IRD apparently does not agree:

From their website:

If you received income from a Kiwisaver provider or other portfolio investment entity (PIE), or any of the above income types, you need to include this in your return.

So if they are correct, how do you get away with never declaring it?


Kiwi saver are MRP ...ie multi rate PIEs ...they now automatically provide info to IRD for PIR correctness purposes ...if all year correct PIR used then no further action needed and this PIE income is not included in any other taxable income to even influence slab or marginal rate change

BUT KFL type are LISTED PIES ...they have separate rules ...their distributions / dividends / income is already taxed at maximum PIE rate of 28% thus they give beneficiary the choice to include , if suits for imputation credit purposes , or not ...their is no limit to how much u can get from KFL dividends ...U can still choose to not declare it ...so SPC has listed PIES income which he doesn't declare ...nothing wrong ...as he got that income already taxed at maximum FINAL PIE RATE ie 28% ...he has already paid

[justakiwi]

I understand that, but the IRD statement I quoted, implies to me, that all PIE income must be declared. There is no accompanying statement or note that says "excluding listed PIE income."


Kiwi saver are MRP ...ie multi rate PIEs ...they now automatically provide info to IRD for PIR correctness purposes ...if all year correct PIR used then no further action needed and this PIE income is not included in any other taxable income to even influence slab or marginal rate change

BUT KFL type are LISTED PIES ...they have separate rules ...their distributions / dividends / income is already taxed at maximum PIE rate of 28% thus they give beneficiary the choice to include , if suits for imputation credit purposes , or not ...their is no limit to how much u can get from KFL dividends ...U can still choose to not declare it ...so SPC has listed PIES income which he doesn't declare ...nothing wrong ...as he got that income already taxed at maximum FINAL PIE RATE ie 28% ...he has already paid

[alokdhir]

I understand that, but the IRD statement I quoted, implies to me, that all PIE income must be declared. There is no accompanying statement or note that says "excluding listed PIE income."

If u read the dividend statement which we get from KFL ...it clearly says Individual investor can choose to declare and take advantage of imputation credits attached or otherwise .
https://www.ird.govt.nz/roles/portfolio-investment-entities/types-of-portfolio-investment-entities/listed-portfolio-investment-entity

"Paying taxListed PIEs do not file periodic returns, annual reconciliations or investor certificates. They are required to continue to file income tax returns.
Listed PIEs cannot pass losses out to investors. They may pay dividends.
Investors can decide whether or not to include the dividend in their income tax assessment."

[justakiwi]

I am agreeing with you. I am just saying IRD does not make this at all clear in the limited information they provide on their website, with regards to PIE income.


If u read the dividend statement which we get from KFL ...it clearly says Individual investor can choose to declare and take advantage of imputation credits attached or otherwise .
https://www.ird.govt.nz/roles/portfolio-investment-entities/types-of-portfolio-investment-entities/listed-portfolio-investment-entity

"Paying tax

Listed PIEs do not file periodic returns, annual reconciliations or investor certificates. They are required to continue to file income tax returns.
Listed PIEs cannot pass losses out to investors. They may pay dividends.
Investors can decide whether or not to include the dividend in their income tax assessment."

[SPC]

Yes I agree with you that some of their wording is confusing. That's where a few hundred or less spent on some tax advice is useful. Theoretically you shouldn't need to but that's life. Actually I think the tax system now is about as efficient as it gets so as long as you play by the rules and get prof advice when you aren't sure.
As per Akldr, Listed Pie investments are legislated to tax taxable distributions at the top companies rate and you walk away fully compliant. Thankyou Dr Sir Michael Cullen (dec). He hated " rich pricks" (sic) but I never took it personally 😉 Just saying..

[alokdhir]

I am agreeing with you. I am just saying IRD does not make this at all clear in the limited information they provide on their website, with regards to PIE income.

The link I have below is IRD website info ...I think they are pretty clear that investors in listed PIEs can decide to include income in assessment or not ...

https://www.ird.govt.nz/roles/portfolio-investment-entities/types-of-portfolio-investment-entities/listed-portfolio-investment-entity

[Rawz]

KFL could slip down into the $1.20s again. MFT, FPH and now EBO trending down recently

[alokdhir]

KFL could slip down into the $1.20s again. MFT, FPH and now EBO trending down recently

Its just gone ex dividend of 2.82 cents ...and its in its weakest period of 5 days after ex to determine DRP price ...

[winner69]

Did kingfish have any PEB shares?

[alokdhir]

Did kingfish have any PEB shares?

Not as per their portfolio mate ....But u asked means U think so ....:p

But they surely have your favourite growth stock EBO ...:cool:

[winner69]

Jeez, the NAV taken a big hit this week …could be said to be collapsing

Highly paid manager probably just sitting back and thinking no worries ..it’ll be all OK one day ..just need to work out how I can financially engineer my way out of this mess so I can say we beat the Benchmark

[winner69]

Ah, I see most of what NAV has dropped is the dividend …..clever

[alokdhir]

Ah, I see most of what NAV has dropped is the dividend …..clever

U are sharp mate ...finally u r getting it ...growth stocks into super tax efficient yield is their main USP to retired people who wants ultimate peace of mind and not as sharp as u to play rising stocks stars , new entrants to index or read balance sheets with occasional lucky punts like PEB @ 5.45 cents :p

PS : Soon u will stop looking for MFT at $ 50 also ...lol

Also if its any consolation ...KFL fund managers got lowest fees of 0.75% only last year due to underperformance

[Sideshow Bob]

NTA announcement - https://www.nzx.com/announcements/412763

Date 7/6/2023 31/5/2023
KFL NAV $1.3687 $1.3987
Share price close $1.31 $1.35
Discount 4% 3%

The above net asset value (NAV) is unaudited and net of fees and tax.

The NAV per share is after deducting an accrual for a 2.82 cents per share dividend to be paid on 23 June 2023. The NAV per share is also calculated after deducting treasury stock of 379,378 shares (acquired under the Kingfish buyback programme).

[Snoopy]

Any ideas about how to use excess imputation credits ?


Yes. You buy Australian dividend paying shares. Australian shares have a much lower rate of tax deducted being 0% (if the dividend is fully franked) or 15% if it is unfranked. Either way you will have a tax bill to pay. So you can use excess New Zealand tax credits to do it.

Of course you cannot claim the Australian franking credits as an NZ taxpayer, so in that sense you are 'double taxed' on Australian dividends. But neither do you have to pay the capital gains tax on any capital profits, provided you are an investor, not a trader. By contrast the Aussies investors do have to pay CGT. So it is really a swings and roundabouts situation as far as paying tax on Australian shares goes.

SNOOPY

[Snoopy]

I have just received my IR3 completed by the IRD. It is exactly as I had worked out. The only reason that the PIE income is recorded on it is for the IRD to check you are using the correct PIR. It otherwise plays no part in your return. Listed PIEs are not included as the PIR is at the maximum of 28c. As I stated if you have a gross income of less than $48,000 (including any KFL you wish to add in) then you can claim the imputation credit against your income.


The above sounds right to me, although I think there is some ambiguity in the wording used. If the tax deducted from your PIE income is too high, then you can claim the over-payment of tax back. But that calculation is done by using the calculation page in the tax guide under the reference material for Question 36 in the IR3G tax guide for FY2023. The PIE tax reassessment is a ring fenced self contained calculation.

"Copy the amount in Box 5 (calculation sheet in your guide) to Box 36C of your return (part of the IR3 form itself), if you are entitled to a refund of PIE tax enter a minus sign at the end of the cents box."

You then go onto the worksheet attached to Question 37 from the IR3G guide, where you use your overall income level to calculate your tax liability. But, and here is the important bit, the PIE income you earn plays no part in your assessable tax rate - NONE!

Now if you are due for a PIE tax refund, you do this in the Question 37 work sheet in box 11. Note again that the refund number you write in here bears no connection to any of your non-PIE income, nor any taxes deducted from any other income source. Your PIE income, and the tax deducted from that, is completely ring fenced and self contained. You do not generally claim a PIE tax refund by declaring that PIE income in the dividend section of your tax return. There is no need to do such a thing.



If it is over the $48,000 then it will cost you the difference in you marginal rate and the 28c on KFL gross dividend declared and the only place to get the imputation credit is to include it in the dividend section.

I am retired as well and know they are no use to me as I am well in excess of $48,000.


Yes but if your income is over $48k why would you try to 'get' your imputation credit by shifting income from your 'PIE box' to your 'dividend income' box? All that would do would be to increase your tax bill for those PIE earnings from 28% up to your marginal tax rate for no reason. That would be the opposite of tax avoidance, which would be such a rare thing I am not sure it even has a name - tax stupidity perhaps?

SNOOPY

[SPC]

Snoopy I strongly suspect your PIE tax adjustment scenario applies to Multi rate PIEs as used by managed funds (ie. Fisher funds NZ growth fund - the non listed sibling to Kingfish) where you specify your prescribed investor rate PIR to the fund operator, and the calculation you refer too is if you've elected the wrong rate to the fund operator and are seeking to be refunded the overpaid tax.
Kingfish is a fixed rate PIE, there is no option to select a tax rate, it's fixed at 28% and refunds are not provided for in the legislation.
But you do get imputation credits which requires you to include the gross dividend in the IR3, which as previously discussed raises your base taxable position.
Multi rate PIEs do not issue imputation credits they simply deduct 'pie tax' at your chosen PIR, which you determine from other income data not known to the investment fund ie. KiwiSaver as an example.

[777]

snoopy I was merely answering alokdhir. I had nothing to change due to my income exceeding $48,000.

[Snoopy]

Snoopy I was merely answering alokdhir. I had nothing to change due to my income exceeding $48,000.


Yes I was aware of that. It is just that the way you worded your post, some might think that you meant that for certain people, it would be desirable to 'get the imputation credits' by declaring your PIE income as dividend income. Yet if your income was high enough ( >$48k was the example you gave), I am having trouble imagining any situation where this would be so.

SNOOPY

[Snoopy]

Snoopy I strongly suspect your PIE tax adjustment scenario applies to Multi rate PIEs as used by managed funds (ie. Fisher funds NZ growth fund - the non listed sibling to Kingfish) where you specify your prescribed investor rate PIR to the fund operator, and the calculation you refer too is if you've elected the wrong rate to the fund operator and are seeking to be refunded the overpaid tax.

Multi rate PIEs do not issue imputation credits they simply deduct 'pie tax' at your chosen PIR, which you determine from other income data not known to the investment fund ie. KiwiSaver as an example.

Kingfish is a fixed rate PIE, there is no option to select a tax rate, it's fixed at 28% and refunds are not provided for in the legislation.
But you do get imputation credits which requires you to include the gross dividend in the IR3, which as previously discussed raises your base taxable position.


I don't hold Kingfish, but are you sure about that (the bold bit)? I thought the whole purpose of PIEs was so that the average Joanna investor could simply buy into an investment that was professionally managed, and also be given a little tax advantage as an incentive to committing to such an investment. If Jo has to start filling out IR3 tax returns, that would seem to me to defeat the purpose of simplicity. Sure you could declare your Kingfish imputation credits as part of dividend income. But why would you want to do that? Wouldn't doing so just bump up the tax rate you have to pay on your Kingfish investment?

SNOOPY

[SPC]

Snoopy, yes to use the Imputation credits against other taxable income you will need to declare the dividend that provided those credits. Under fixed rate pie legislation you can choose not to go down that route, but you may wish to, if like alokdir your gross income is under 48k and you want to use the credits taxed at 28%, provided of course that adding the kingfish gross div does not lift your gross income above 48k. As you say the exercise would be self defeating above 48k.
The tax refund process you described is not applicable to kingfish income. It applies to managed pies that have user selected tax rates which is referred to as your PIR..
IR provides a mechanism to have excess tax returned. But not for fixed rate PIEs like kingfish.

[justakiwi]

Gee, reading through these posts, I feel much better. Seems I am not the only one who has always been a little confused about this. I have (up until now) always included my KFL and BRM dividends to claim the imputation credits as my income is well under $48,000 - but clearly that was pointless, given that I always end up with a tax refund - never tax to pay.

I do think IRD could do a better job of explaining this though.

[SPC]

JaK, so you are saying you had no other taxable income which could be reduced by applying your KFL/BRM imputation credits?
If that is the case then yes there's no point in adding your KFL/BRM income on the return. I never have.
But with rising bank deposit rates spitting out higher cash returns I may consider doing so next year, but up to the 48k ceiling.
Beyond that there is no point.

[alokdhir]

Easiest way is to do IR3 online ...as long as u put your incomes in right slots ...ie PIE income in PIE section , Dividend in NZ dividends etc ....most of the income is already pre populated ....only KFL is not as its a listed PIE who are not required to report distributions to IRD ...rest need do ....so its already there .

IRD computer itself does the calculations and provide the answer before u finally submit it ...very simple and user friendly

I just wanted to reconfirm with tax gurus here about where to put KFL income ...I got the answer ...NZ Dividends

In my case it helps to include and I need to include too ...thats why I include and get carry forward imputations credits ....maybe one day they will become useful ...just thinking they shud allow to trade in imputation credits on NZX ...after all its real tax credit ie tax paid to Govt ...so shud be made transferable like any other credit ...just a thought ...I know wont happen

Thanks Snoopy for your answer about how to use them by having some Aussie shares in portfolio

[justakiwi]

OK, so I am STILL confused.

From everything I've been reading here, I was under the impression that the imputation credits are only useful if I OWE tax. If I am already getting a refund, are you saying it would be more if I claimed the credits?

It's really not a big deal for me given the size of my holdings - total credits would probably be less than $100. A moot point now anyway, as this year I was given no opportunity to amend their assessment - it was paid into my bank account the day after I received the refund notification (with no request to "please confirm").

Having said that, it would be good to get my head around this for next year - which I obviously currently, still do not ;)




JaK, so you are saying you had no other taxable income which could be reduced by applying your KFL/BRM imputation credits?
If that is the case then yes there's no point in adding your KFL/BRM income on the return. I never have.
But with rising bank deposit rates spitting out higher cash returns I may consider doing so next year, but up to the 48k ceiling.
Beyond that there is no point.

[alokdhir]

OK, so I am STILL confused.

From everything I've been reading here, I was under the impression that the imputation credits are only useful if I OWE tax. If I am already getting a refund, are you saying it would be more if I claimed the credits?

It's really not a big deal for me given the size of my holdings - total credits would probably be less than $100. A moot point now anyway, as this year I was given no opportunity to amend their assessment - it was paid into my bank account the day after I received the refund notification (with no request to "please confirm").

Having said that, it would be good to get my head around this for next year - which I obviously still do not ;)

As u have real cash deducted as PAYE ...I think u will get bigger refund if u include KFL imputations ...as IRD need extinguish imputations credits first then cash tax credits are used ...so if u have more imputation credits then your actual tax payable then all cash tax credits will be refunded ...as your overall income is below threshold ...its no harm to include them ... if u getting carry forward imputation credits that means your all cash tax credits being refunded already

PS : U can still amend your return to include these in your NZ dividend section and maybe will get more refund as they need use imputation credits first before cash tax paid credits

[Snoopy]

IR provides a mechanism to have excess tax returned. But not for fixed rate PIEs like kingfish.


OK, I want to make sure we are on the same page talking about this. I have myself received from the IRD a 'summary of income'. There is:

i/ A category for 'Interest',
ii/ A category for 'Dividends' and
iii/ A category for 'PIE Income'.

I don't own any Kingfish. But if I did, under which of the above three categories would 'Kingfish' appear?

SNOOPY

[777]

OK, I want to make sure we are on the same page talking about this. I have myself received from the IRD a 'summary of income'. There is:

i/ A category for 'Interest',
ii/ A category for 'Dividends' and
iii/ A category for 'PIE Income'.

I don't own any Kingfish. But if I did, under which of the above three categories would 'Kingfish' appear?

SNOOPY

Nowhere as listed PIE's income will not have any affect on determining whether your PIR being used for non listed PIEs is correct.

[alokdhir]

OK, I want to make sure we are on the same page talking about this. I have myself received from the IRD a 'summary of income'. There is:

i/ A category for 'Interest',
ii/ A category for 'Dividends' and
iii/ A category for 'PIE Income'.

I don't own any Kingfish. But if I did, under which of the above three categories would 'Kingfish' appear?

SNOOPY

Listed PIEs are not required to report ...unlike MRP PIES ...so it wont be there ...but if u CHOSE to include KFL ...it will be added to NZ Dividends

[Snoopy]

Listed PIEs are not required to report ...unlike MRP PIES ...so it wont be there ...but if u CHOSE to include KFL ...it will be added to NZ Dividends


OK listed PIEs are not required to report to the IRD. That is news to me so, I have learned something. But I presume listed PIEs are required to report to you personally as a unit holder.

I have some unlisted PIE term deposits. My IRD statement reports three things:

a/ Attributed PIE Income/Loss
b/ PIE tax paid
c/ PIR charged (which in my case is 28%)

If I was a KFL unitholder (which I am not), what information would be reported back to me on my KFL statement?

SNOOPY

[alokdhir]

OK listed PIEs are not required to report to the IRD. That is news to me so I have learned something. But I presume listed PIEs are required to report to you personally as a unit holder.

I have some unlisted PIE term deposits. My IRD statement reports three things:

a/ Attributed PIE Income/Loss
b/ PIE tax paid
c/ PIR charged (which in my case is 28%)

If I was a KFL unitholder (which I am not), what information would be reported back to me on my KFL statement?

SNOOPY

KFL gives quarterly distributions which come under the heading of " PIE Distribution "

It has two components ...one is called excluded income which comes from capital transactions thus not IRD worthy or to be included anywhere

Part two is fully imputed income @ max pie rate of 28% ....which is highlighted in a box with heading PIE Tax Information ...it has gross dividend paid plus imputation credits @ 28% attached

Bottom says investor can choose to include imputed dividend part if suitable

In your format it will have following

1. Excluded income ...part of total dividend declared

2. Fully Imputed Dividend @ 28%

PIE tax details in a box ....which has fully imputed Gross Dividend part of total dividend and Imputation Credits attached@28% and with tax withheld part always being 0

[Snoopy]

KFL gives quarterly distributions which come under the heading of " PIE Distribution "


Thanks, so KFL gives you four dividend statements throughout the year, as dividends are paid. There is no 'wrap up' statement at the end of the year that summarizes all the payments you have received throughout the year?



It has two components ...one is called excluded income which comes from capital transactions thus not IRD worthy or to be included anywhere


Yes the 'excluded income' is just assets Kingfish have sold to make up the difference between the dividends received from the underlying share portfolio owned by KFL, and the cash payment they promised you as a unit holder. The reason this 'income' is excluded is because it is not income by any IRD definition. 'Excluded income' means Kingfish are selling assets that you -as a unit holder- already own, and they are giving this 'sold on capital' back to yourself.



Part two is fully imputed income @ max pie rate of 28% ....which is highlighted in a box with heading PIE Tax Information ...it has gross dividend paid plus imputation credits @ 28% attached


The above does not sound right. The gross dividend paid should include the imputation credits paid. IOW the imputation credits are part of the gross dividend paid. They are not an extra. There is no 'plus' here.



Bottom says investor can choose to include imputed dividend part if suitable

In your format it will have following

1. Excluded income ...part of total dividend declared

2. Fully Imputed Dividend @ 28%

PIE tax details in a box ....which has fully imputed Gross Dividend part of total dividend and Imputation Credits attached@28% and with tax withheld part always being 0


Withholding tax being zero makes sense because the PIE regime says that once a PIE entity has paid tax to a rate of 28%, that is the end of the income tax liability, no matter what the individual tax rate of the individual unit holders might be.

There is something funny about the reporting language used though. 'A fully imputed Gross dividend' is generally understood to mean the amount paid out before any tax deductions are made. So you can't have a 'fully imputed Gross dividend' part of a 'total dividend'. They are one and the same thing!

If a dividend comes with 'imputation credits attached' that means it is a 'net dividend' not a 'gross dividend', does it not?

SNOOPY

[kiora]

Listed PIEs are not required to report ...unlike MRP PIES ...so it wont be there ...but if u CHOSE to include KFL ...it will be added to NZ Dividends

If the wrong PIR rate is used then the dividend needs to be reported in the tax return?

[justakiwi]

No, because the tax rate is 28% regardless and you cannot claim any overpaid tax due to your PIR being less than 28%. So if you used the wrong PIR is has zero effect (I think).


If the wrong PIR rate is used then the dividend needs to be reported in the tax return?

[777]

If the wrong PIR rate is used then the dividend needs to be reported in the tax return?

You don't chose a PIR for listed PIEs.

[kiora]

You don't chose a PIR for listed PIEs.

Ok but unlisted PIE investment funds you do ?

[777]

Snoopy if there is any imputation credits on any listed PIE then they show in one box and the associated Gross Dividend in another box.

The statement is called a PIE Statement as distinct from a Dividend Statement.

Example
Gross Dividend $100.00
Imputation Credit $28.00

The PIE's do not have to provide anything more to you as a holder.

If your income is less than $48,000 then you can include it and use the credit of the imputation credit in your return up to a maximum of what tax you would pay. If you still have any of the credit over you can accrue it for further years.

[777]

Deleted...

[777]

Ok but unlisted PIE investment funds you do ?

Yes a the IRD have those funds on your "myIR" to check that you are using the correct PIR. They can then adjust you tax accordingly if you have been using the wrong one.

[Snoopy]

Snoopy if there is any imputation credits on any listed PIE then they show in one box and the associated Gross Dividend in another box.

The statement is called a PIE Statement as distinct from a Dividend Statement.

Example
Gross Dividend $100.00
Imputation Credit $28.00

The PIE's do not have to provide anything more to you as a holder.


OK, I think I am getting there. One more question though. Using your example above, how much money is deposited into your bank account? Is it $100? Or is it ($100-$28)=$72? Or is it something else?

I think the twisted nomenclature of KFL calling a 'capital return' a 'dividend' is confusing me. Is the 'Total Dividend'(sic) equal to - as declared by KFL- the sum of the 'Gross Dividend' and the 'Capital Return'? I am having trouble understanding exactly what figures KFL are feeding their unit holders.

SNOOPY

[justakiwi]

Here is one of my PIE statements for KFL (June 22) - happy to share. The "excluded income" is the capital return and should not be declared on your tax return. See the "notes" (click on image to enlarge).

.14636


OK, I think I am getting there. One more question though. Using your example above, how much money is deposited into your bank account? Is it $100? Or is it ($100-$28)=$72? Or is it something else?

I think the twisted nomenclature of KFL calling a 'capital return' a 'dividend' is confusing me. Is the 'Total Dividend'(sic) equal to - as declared by KFL- the sum of the 'Gross Dividend' and the 'Capital Return'? I am having trouble understanding exactly what figures KFL are feeding their unit holders.

SNOOPY

[alokdhir]

Here is one of my PIE statements for KFL (June 22) - happy to share. The "excluded income" is the capital return and should not be declared on your tax return. See the "notes" (click on image to enlarge).

.14636

That will do the trick for Snoopy and for many others too ...its very self explanatory ....:t_up:

PS : Will help them understand the merits of listed PIE investments ...especially to retired or semi retired ...no need be expert in Tax law ...no need even file IR3s to keep it simple like SPC

[777]

$72.00

Snoopy it is not KFL on it's own. All the property PIEs do it the same way.

I know some on here refer to any capital return as the excluded amount but whether that is correct I am not sure. That is beyond my knowledge. All I know is they distributed income and capital gain as they see fit and I don't waste my time caring how it is calculated.

[Snoopy]

Here is one of my PIE statements for KFL (June 22) - happy to share. The "excluded income" is the capital return and should not be declared on your tax return. See the "notes" (click on image to enlarge).


Thanks JAK. I will ignore the 'excluded income' as that is just your own capital that Kingfish are giving back to you.

So the IRD relevant 'income figures' are:



Gross Dividend (same as Attributed PIE income)$7.47


less Imputation Credits (same as PIE tax paid)$2.09


equals Net Dividend$5.38



I note that: $2.09/$7.47 = 0.28. That ties in with the maximum PIE tax rate of 28%. If this same information was listed on your IRD 'Summary of Income' it would look like this:



PIE nameAttributed PIE Income/LossPIE tax paidPIR at year endPIR changed


Kingfish Fund $7.47$2.0928%No



The form then goes on to say: "If you are an individual investor you can choose whether to include this amount in your income tax return. Individual investors on lower than the 30% marginal tax rate may choose to do so to gain the benefits of the imputation credits attached."

I note there is no instruction on where you should claim these imputation credits. This suggests to me you could EITHER claim the imputation credits by declaring the Kingfish payments as dividends -as some here have opined- OR through the IR3G worksheets as they relate to PIE income, associated with questions 36 and 37 in the IR3G guide. It is your choice as to which way you do it (or choose not to do it at all).

Of course, if you take the latter declaration path, you would have to know that:

'Gross Dividend' = 'Attributed PIE income'
-AND-
'Imputation Credits' = 'PIE tax paid'

That is not made clear on the form.

SNOOPY

[justakiwi]

It would, but listed PIES like KFL do not submit any of this info to IRD so it does not appear there. It is up to me to declare it if I wish to.


=Snoopy;1007292]Thanks JAK. I will ignore the 'excluded income' as that is just your own capital that Kingfish are giving back to you.

So the IRD relevant 'income figures' are:



Gross Dividend (Attributed PIE income)
$7.47


less Imputation Credits (PIE tax paid)
$2.09


equals Net Dividend
$5.38



I note that: $2.09/$7.47 = 0.28. That ties in with the maximum PIE tax rate of 28%. If this same information was listed on your IRD 'Summary of Income' it woudl look like this:



PIE name
Attributed PIE Income/Loss
PIE tax paid
PIR at year end
PIR changed


Kingfish Fund
$7.47
$2.09

[Snoopy]

If the wrong PIR rate is used then the dividend needs to be reported in the tax return?




No, because the tax rate is 28% regardless and you cannot claim any overpaid tax due to your PIR being less than 28%. So if you used the wrong PIR it has zero effect (I think).

JAK, that would have been the correct answer up until the end of the tax year FY2020. But from FY2021, the IRD brought in reporting of PIE income. Using questions 36 and 37 from the IR3 form, and the associated spreadsheets in the IR3G instruction book, a mechanism became available to claim overpaid PIE tax credits that had been deducted incorrectly at too high a rate.


Gee, reading through these posts, I feel much better. Seems I am not the only one who has always been a little confused about this. I have (up until now) always included my KFL and BRM dividends to claim the imputation credits as my income is well under $48,000 - but clearly that was pointless,

No, not pointless at all. Sounds like you did the right thing.

SNOOPY

[Snoopy]

It would, but listed PIES like KFL do not submit any of this info to IRD so it does not appear there. It is up to me to declare it if I wish to.


Yes, exactly right.

SNOOPY

[SPC]

Snoopy 'pie tax' is a term relevant to unlisted investment funds and KiwiSaver operating under the pie legislation. Your 'pie tax refund' calculation relates only to these.
KFL, BRM, MLN and the listed property funds operating as pies do not pay 'pie tax' and that form or tax deduction (or correction if wrong PIR) is not relevant. They pay 'distributions' consisting sometimes of capital ( not subject to any tax whatsoever) and profits which are taxed at 28%- with the tax represented as imputation tax 'credits'. If your total taxable annual income is less than 48k and you have any other income taxed at higher than 17.5 percent then you can declare your listed pie taxable income and the Imputation credits can offset the excess tax liable to be paid. But only down to zero.
As stated before you don't get cash refunded from unused imputation credits. But you can store them for possible future use.

[alokdhir]

"I note there is no instruction on where you should claim these imputation credits. This suggests to me you could EITHER claim the imputation credits by declaring the Kingfish payments as dividends -as some here have opined- OR through the IR3G worksheets as they relate to PIE income, associated with questions 36 and 37 in the IR3G guide. It is your choice as to which way you do it (or choose not to do it at all)."

I started this topic with this question only Snoopy ...many here like 777 and SPC opined that KFL income IF included MUST come under NZ dividends only as it has tax credits of imputation credits type which cannot be refunded ...like U said I also thought it can be put under PIE income section with KFL tax credits as PIE Tax credits ...as not all people have PIR of 28% thus they can get cash refund out of KFL income also if put under PIE income when your PIR is less then 28% ...like u rightly said from FY21 excess PIE tax paid can be refunded ...Still it will not affect your total taxable income as rightly pointed by u that PIE income is ringfenced.

[Snoopy]

Snoopy 'pie tax' is a term relevant to unlisted investment funds and KiwiSaver operating under the pie legislation. Your 'pie tax refund' calculation relates only to these.
KFL, BRM, MLN and the listed property funds operating as pies do not pay 'pie tax' and that form or tax deduction (or correction if wrong PIR) is not relevant. They pay 'distributions' consisting sometimes of capital ( not subject to any tax whatsoever) and profits which are taxed at 28%- with the tax represented as imputation tax 'credits'.


SPC, PIE is short for 'portfolio investment entity' and they pay 'PIE tax'. I would class myself as a 'Citizen of New Zealand' and I pay 'Citizen tax'. However, under those two respective 'label lids' both PIEs and Citizens pay 'income tax'. There is no such thing as 'citizen tax'. Nor is there such a thing as 'PIE tax'. There are only citizens and PIEs that pay 'income tax'. The principal difference between 'a citizen' and 'a PIE' for income tax purposes is that PIEs have an advantage whereby their maximum income tax rate is capped at 28%, compared to a maximum cap of 39% for citizens.

I think we can agree that capital repayments are irrelevant to a discussion on tax, because a capital repayment is only giving back to you an asset that you already own. The IRD has no interest in such transactions, which amount to you paying your own money to yourself.

KFL, BRM and MLN all do pay PIE tax because they are PIEs. Look at the form sent out by KFL as posted by JAK (post 946). The header outlining the payment received by KFL unit holders says 'PIE tax information'. So if KFL themselves are claiming to pay PIE tax on the distribution payment form they send out to investors, I would say there is a fairly good chance they are telling the truth. However, as I explained before 'PIE tax' is not a thing in itself. It is merely a phrase coined to cover the idea of PIEs paying tax. PIEs pay 'income tax', just like the rest of us.

You say KFL pays tax on profits at a rate of 28%, "with the tax represented as 'imputation credits' ". The tax paid isn't 'represented as imputation credits'. The tax paid is the imputation credits. There are not special classes of taxes that only PIEs pay.

SNOOPY

[justakiwi]

So have I got this right:

1.My tax rate is 17.5%

2.My PIE income is taxed at 28%

3.Imputation credits are not the complicated accounting "thing" that I have never understood - they are simply the tax KLF paid on my behalf for my share of the profits which were returned to me as part of my dividend?

4.If I declare this I will get the difference back between the 28% and the 17%?

[Snoopy]

Snoopy 'pie tax' is a term relevant to unlisted investment funds and KiwiSaver operating under the pie legislation. Your 'pie tax refund' calculation relates only to these.
KFL, BRM, MLN and the listed property funds operating as pies do not pay 'pie tax'


I hope I have convinced you that KFL, BRM and MLN do indeed pay PIE tax. However, I do not speak from personal experience claiming PIE tax back because my income precludes such a claim having any value to me. However, you do seem very fixated on the idea that listed PIEs are treated for tax in a different way to unlisted PIEs. What I am interested in is why do you think this way? Why would a government create a PIE scheme where a worker earning less than $48k could nominate a lower PIE tax rate on, in this example, the 'Fisher NZ Growth Fund' but not be able to do the same equivalent(*) on the 'Kingfish Listed Fund'. Both funds have ostensibly the same holdings and are managed by the same asset managers. So why would the government legislate that workers are allowed to obtain a refund on PIE tax overpaid in the 'Fisher NZ Growth Fund', but not on the 'Kingfish Listed Fund'? Why would the government create fundamentally different classes of PIE funds with different rules as a way to simplify the investment regime for savers?

(*) by equivalent I mean tax is still paid at 28% up front in the listed Kingfish, but there is a mechanism to claim back in cash any over-payment in PIE tax paid because our investor is on a lower tax rate

SNOOPY

[Snoopy]

So have I got this right:

1.My tax rate is 17.5%

2.My PIE income is taxed at 28%

3.Imputation credits are not the complicated accounting "thing" that I have never understood - they are simply the tax KLF paid on my behalf for my share of the profits which were returned to me as part of my dividend?

4.If I declare this I will get the difference back between the 28% and the 17%?

I am saying you will get the difference between 28% and 17% back, but I don't speak from experience. SPC is saying you won't get it back in cash, you will instead get an imputation credit you can use to carry forward into future income years, which is what he/she has done in the past. But that experience is based on declaring the KFL income in the dividend section of your IR3. I am saying if you take a different course of action by claiming your imputation credits back using the IR3G spreadsheets relating to questions 36 and 37 relating to the IR3 return, then I think you should get your overpaid PIE tax back as cash. That would be the logical outcome, although I confess the IRD tax system does not always follow logic. If it were me I would try it this way and see if the IRD accept it.

If they do not then you could:

1/ Buy an ASX listed dividend paying share that would use up your carried forward tax credit in future years.
2/ Transfer your KFL units to Fisher Funds and ask them to issue you with units of equivalent value in the unlisted 'Fisher NZ Growth Fund' that is largely the same underlying investment. With the 'Fisher NZ Growth Fund', you certainly could ask to have your PIR rate reduced to a level below 28%. That is something I feel that SPC and I could both agree on.

SNOOPY

[SPC]

JaK you will NEVER get a refund of the difference in tax paid on your behalf by KFL at 28% ( the standard company rate) versus your individual top marginal rate of 17.5%.
It's the last time I will say this. Excess imputed tax is never refunded as cash.
Those tax credits can only be used when you find you have tax to pay IR at EOY, and only to the extent of the amount of tax payable and of course credits of sufficient quantity. And of course you then need to declare the KFL income which has the tax credits applied.
And no you cannot write to Kingfish and ask them to send your investment over to Fisher funds as suggested by Snoopy for a 'swap'.
They are different legal/company investments.
They aren't even identical share holdings.
You would sell the Kingfish shares on market and then apply to buy units in the Fisher funds NZ growth fund. If you could stand the identification bs and other paperwork you'll need to go through ( why just buying anything you like on NZX is so much easier). I think you will find the managed funds does not distribute income, it just accumulates it in your account until one day you 'apply' to cash in units.
BTW I have never had a reason to include my KFL income in my IR3. I have never had a tax bill to pay. So the Imputation credits are of no use to me. Same for you I'm hearing?
If in doubt don't ask on here, go and see a tax accountant. I have.
Over and out.😉

[Snoopy]

And no you cannot write to Kingfish and ask them to send your investment over to Fisher funds as suggested by Snoopy for a 'swap'. They are different legal/company investments.


I mentioned this because way back in the days of much higher trading fees than now, I remember a case of a widow, I think it was, not being share savvy, wanting to convert her late husbands share portfolio into something professionally managed. I can't remember the fund manager concerned. But the net result was the fund manager took the shares and in return issued the widow with an equivalent value of managed fund units. I don't know if Fishers would do this. But there would be no harm in asking. Just ring them up and find out.

I think SPC got the wrong end of the stick with what I was suggesting. He/She is right when he/she says they are different companies and investments. So the Kingfish units would have to be sold and the Fisher Growth fund units bought. SPC is dead right there. The only question is whether you would pay for the transaction costs JAK, or whether Fishers would. Fishers are dealing with shares all the time and would likely trade with lower broker rates than you would. It has been known for fund managers to do such a subsidised swap before. Whether Fishers would do so in your -hypothetical- situation I do not know. But no harm in asking.



They aren't even identical share holdings.


I never said they were identical. I said they were largely the same underlying investments, which is true. I have investiagted this before. Here is my comparison between the top declared holdings of the 'Fisher NZ growth fund' and 'Kingfish' from a year ago so you can see for yourself.

https://www.sharetrader.co.nz/showthread.php?10315-NZ-Fund-Managers&p=956476&viewfull=1#post956476

Not identical but pretty similar. The largest difference being that the Fisher NZ Growth fund has a significant holding in Xero which Kingfish does not have.



I think you will find the managed funds does not distribute income, it just accumulates it in your account until one day you 'apply' to cash in units.


Yes this is correct. The Fisher NZ Growth fund automatically reinvests dividends received inside the fund. It does not pay a regular income like Kingfish. Nor does the Fisher NZ Growth fund issue warrants like Kingfish does.

SNOOPY

[Snoopy]

JaK you will NEVER get a refund of the difference in tax paid on your behalf by KFL at 28% ( the standard company rate) versus your individual top marginal rate of 17.5%.
It's the last time I will say this. Excess imputed tax is never refunded as cash.

If in doubt don't ask on here, go and see a tax accountant. I have.
Over and out.��


If excess imputation is 'never refunded as cash', why did the IRD change the IR3 form in FY2020 to collect PIE income information to allow just such refunds to happen?

Yes you could go to a tax accountant and find out if you can get a cash refund on overpaid PIE tax by going through the process in questions 36 and 37 in the IR3 form. This will cost you $xxx. Or you could submit the tax form as I have suggested, using the calculation sheets supplied in the IR3G guide relating to Q36 and Q37 and it will cost you $0. If I am wrong (and it is a binary choice, you either get your refund or you won't) the tax department will correct your IR3 form for $0. So it is really a case of how much money you want to spend to know the answer.

SNOOPY

[kiora]

I agree with you Snoopy.
There are no tax refunds for imputation credits BUT they can be used to reduce future tax
https://www.taxpolicy.ird.govt.nz/-/media/project/ir/tp/publications/2008/2008-dd-imputation-credits/2008-dd-imputation-credits-pdf.pdf?modified=20200910094529

[alokdhir]

If excess imputation is 'never refunded as cash', why did the IRD change the IR3 form in FY2020 to collect PIE income information to allow just such refunds to happen?

Yes you could go to a tax accountant and find out if you can get a cash refund on overpaid PIE tax by going through the process in question s 36 and 37 in the IR3 form. This will cost you $xxx. Or you could submit the tax form as I have suggested, using the calculation sheets supplied in the IR3G guide relating to Q36 and Q37 and it will cost you $0. If I am wrong (and it is a binary choice, you either get your refund or you won't) the tax department will correct your IR3 form for $0. So it is really a case of how much money you want to spend to know the answer.

SNOOPY

Agree with u ...it's worth a try as KFL is a PIE and it gives PIE income so why cant we classify it under PIE income and not NZ Dividends . That way if your PIR is less then 28% U will get cash refund back

Also agree with u that term imputation credits is same as tax credits and its equivalent to paying cash tax ...all shud mean the same eventually unless some silly rule somewhere says otherwise

[Bjauck]

What is Dividend income and imputation within the PIE taxing regime - just some of the complexities of taxing
the investment income of NZ residents. I guess it means more money for our accountants as hapless investment income earners try to comply.

Yet some claim a CGT would be too complex. LOL.

[winner69]

Going to make an apple pie today

Didn’t know there were so many different recipes …is there a correct way to make an apple pie?

[Bjauck]

Going to make an apple pie today

Didn’t know there were so many different recipes …is there a correct way to make an apple pie? Only if there is a NZ Recipe Act enforced by Cordon Bleu, with which you need to comply!

[alokdhir]

Going to make an apple pie today

Didn’t know there were so many different recipes …is there a correct way to make an apple pie?

I have full confidence in your abilities mate ...what ever way u make it ...it will be yummy :t_up:

[777]

The tax system "is what it is" not "what you want it to be".

[JeffW]

I hope I have convinced you that KFL, BRM and MLN do indeed pay PIE tax.

Unfortunately not correct - they are companies that pay Income Tax, that gives rise to Imputation Credits attached to PIE distributions - always at 28%. PIE Tax is paid by investment funds and Kiwisaver funds, and is paid with reference to the investor's personal rate (PIR). It's also why, should you choose to put them in your Income Tax Return, that they should go into the Dividend Box and not the PIE Box. You're right though, that the IRD instructions are not clear


JaK you will NEVER get a refund of the difference in tax paid on your behalf by KFL at 28% ( the standard company rate) versus your individual top marginal rate of 17.5%.
It's the last time I will say this. Excess imputed tax is never refunded as cash.

The effect though can be that the amount of the excess Imputation Credits can be refunded in cash, if you have other income with tax deducted at source - eg: NZ Super, Wages or Interest. The reason for this is that the Impuation Credits are deducted from the tax liability prior to the deduction of PAYE & RWT. Excess Imputation Credits only carry forward to offset future tax liabilities if there are no/insufficient other source deducted tax to refund


So have I got this right:

1.My tax rate is 17.5%

2.My PIE income is taxed at 28%

3.Imputation credits are not the complicated accounting "thing" that I have never understood - they are simply the tax KLF paid on my behalf for my share of the profits which were returned to me as part of my dividend?

4.If I declare this I will get the difference back between the 28% and the 17%?

Yes, all true, provided you have sufficient PAYE or RWT to get refunded in your Point 4, otherwise any excess credits will carry forward to the next year

[winner69]

First thing to solve …do I peel the apples

[JeffW]

First thing to solve …do I peel the apples

Normally either 28% or 17.5% of them only - depending on the PIE rate. The remainder can remain unpeeled

[winner69]

Normally either 28% or 17.5% of them only - depending on the PIE rate. The remainder can remain unpeeled

Thanks Jeff

But what proportions if some are ‘excluded’ apples

[JeffW]

Thanks Jeff

But what proportions if some are ‘excluded’ apples

I think if they're excluded then they don't go in the pie at all?

Actually, you've got me wondering - in the Nursery Rhyme I seem to recollect about "Four and Twenty Blackbirds baked in a PIE" maybe the four are excluded?

[justakiwi]

Thank you! Although, there are now so many conflicting opinions on this subject, that I literally have no idea who is right ;)

I am just going to forget about it until next year now. Interesting discussion though.



Yes, all true, provided you have sufficient PAYE or RWT to get refunded in your Point 4, otherwise any excess credits will carry forward to the next year

[Bjauck]

…
Yes, all true, provided you have sufficient PAYE or RWT to get refunded in your Point 4, otherwise any excess credits will carry forward to the next year
So PIE tax can never be refunded as an an end-of-year off-set for 28% imputation credits? PIE tax is a final tax except when the wrong rate has been applied.

[JeffW]

So PIE tax can never be refunded as an an end-of-year off-set for 28% imputation credits? PIE tax is a final tax except when the wrong rate has been applied.

The above was in respect of listed PIEs - KFL & most of the listed Property vehicles. In respect of these, the so-called PIE tax is in fact an Imputation Credit. Imputation Credits themselves can never be refunded in cash, but if there is an excess of them, then they come of the tax liability prior to PAYE and RWT, so that the effect is that the refund is a cash amount of the excess credits

[Snoopy]

I hope I have convinced you that KFL, BRM and MLN do indeed pay PIE tax.




Unfortunately not correct - they are companies that pay Income Tax, that gives rise to Imputation Credits attached to PIE distributions - always at 28%. PIE Tax is paid by investment funds and Kiwisaver funds, and is paid with reference to the investor's personal rate (PIR). It's also why, should you choose to put them in your Income Tax Return, that they should go into the Dividend Box and not the PIE Box. You're right though, that the IRD instructions are not clear


JeffW, you have a good record of being right on taxation issues before. But even if I accept you are correct, you are saying that the PIE distributions from KFL can be offset against other tax. So whether you use the term 'PIE tax' (like me) or 'income tax' (like you), the result is the same. This tax paid can be offset against other tax liabilities. It is what I call a 'dancing on the head of a pin' argument.

Kingfish may be a listed investment company. But that company has a sole purpose of managing investors funds. The only effective difference I can see is that profits from funds in Kingfish in unit holders hands are all taxed at 28%, rather than on a sliding scale where 28% is the maximum (as in the Fisher NZ Growth Fund). There is no effective difference in the tax treatment of returns in unit holders hands in either case. So we are dancing on the head of a pin again.



The effect though can be that the amount of the excess Imputation Credits can be refunded in cash, if you have other income with tax deducted at source - eg: NZ Super, Wages or Interest. The reason for this is that the Imputation Credits are deducted from the tax liability prior to the deduction of PAYE & RWT. Excess Imputation Credits only carry forward to offset future tax liabilities if there are no/insufficient other source deducted tax to refund


I found this example on the IRD site

https://www.ird.govt.nz/roles/portfolio-investment-entities/end-of-year-pie-calculation

------------------

McKenzie gave the rate of 28% to her PIE for the tax year ending 31 March 2021.
McKenzie’s PIE has returned income of $1,345 and tax deductions of $376.60 for the year.
The correct PIR determined by Inland Revenue for the 2021 tax year is 17.5%.
Inland Revenue calculates that the correct tax at the rate of 17.5% is $235.38. This results in a PIE credit of $141.22.
The income from McKenzie’s employer has had income tax under deducted of $70.23.
The credit of $141.22 from the over deducted PIE income is offset against the income tax debit, resulting in a remaining refund of $70.99.

------------------

I notice the example did not specifically say if McKenzie actually got her $70.99 refund in cash. But the way the anecdote is written, implies to me that she did.

I am normally a provisional tax payer, although sometimes this is upset by FIF tax obligation swings. What the example above is showing is that although you cannot get a cash refund from overpaid PIE tax, that overpaid PIE tax can be immediately offset against any cash amount owing.

So in my situation where I have provisional tax to pay, but also a tax refund due from the previous year, I can use my overpaid PIE tax to offset my provisional tax bill, while still getting a cash refund from my previous income tax over-payments. Alternatively I could look at this same transaction in a different way. If I take away the individual tax labels and think of all tax refunded and yet to pay as sloshing around in a big tax money bucket, I could consider that the money I got back was from the PIE tax overpaid as a 'cash refund', and the money I have to shell out was from my refund forwarded on from the previous year. As far as I am concerned, a 'tax dollar' is a 'tax dollar' and whatever sub-category label you put on it doesn't matter.

SNOOPY

[JeffW]

JeffW, you have a good record of being right on taxation issues before. But even if I accept you are correct, you are saying that the PIE distributions from KFL can be offset against other tax. So whether you use the term 'PIE tax' (like me) or 'income tax' (like you), the result is the same. This tax paid can be offset against other tax liabilities. It is what I call a 'dancing on the head of a pin' argument.

Kingfish may be a listed investment company. But that company has a sole purpose of managing investors funds. The only effective difference I can see is that profits from funds in Kingfish in unit holders hands are all taxed at 28%, rather than on a sliding scale where 28% is the maximum (as in the Fisher NZ Growth Fund). There is no effective difference in the tax treatment of returns in unit holders hands in either case. So we are dancing on the head of a pin again.



I found this example on the IRD site

https://www.ird.govt.nz/roles/portfolio-investment-entities/end-of-year-pie-calculation

------------------

McKenzie gave the rate of 28% to her PIE for the tax year ending 31 March 2021.
McKenzie’s PIE has returned income of $1,345 and tax deductions of $376.60 for the year.
The correct PIR determined by Inland Revenue for the 2021 tax year is 17.5%.
Inland Revenue calculates that the correct tax at the rate of 17.5% is $235.38. This results in a PIE credit of $141.22.
The income from McKenzie’s employer has had income tax under deducted of $70.23.
The credit of $141.22 from the over deducted PIE income is offset against the income tax debit, resulting in a remaining refund of $70.99.

------------------

I notice the example did not specifically say if McKenzie actually got her $70.99 refund in cash. But the way the anecdote is written, implies to me that she did.

I am normally a provisional tax payer, although sometimes this is upset by FIF tax obligation swings. What the example above is showing is that although you cannot get a cash refund from overpaid PIE tax, that overpaid PIE tax can be immediately offset against any cash amount owing.

So in my situation where I have provisional tax to pay, but also a tax refund due from the previous year, I can use my overpaid PIE tax to offset my provisional tax bill, while still getting a cash refund from my previous income tax over-payments. Alternatively I could look at this same transaction in a different way. If I take away the individual tax labels and think of all tax refunded and yet to pay as sloshing around in a big tax money bucket, I could consider that the money I got back was from the PIE tax overpaid as a 'cash refund', and the money I have to shell out was from my refund forwarded on from the previous year. As far as I am concerned, a 'tax dollar' is a 'tax dollar' and whatever sub-category label you put on it doesn't matter.

SNOOPY

All sounds good Snoopy, a tax dollar is essentially a tax dollar. Apologies if it sounds like dancing on the head of a pin which in most instances it is for NZ Resident taxpayers. It isn't howver if you don't have sufficeint PAYE/RWT income to "soak up" the Imputation Credits from Listed PIES (note, note multi-rate PIEs). The distinction in the type of PIE can be important - See https://www.ird.govt.nz/roles/portfolio-investment-entities/types-of-portfolio-investment-entities

KFL is a listed PIE, so the 17.5% election does not apply at source, but through your tax return, and as mentioned by several people above, is only of use if your income is less than $48,000pa

Apologies too for perhaps being a bit overly technical - I'm an accountant who amongst my client base has a multi-rate PIE for a client, and I'm well aware that it is not straight forward

[Snoopy]

I found this example on the IRD site

https://www.ird.govt.nz/roles/portfolio-investment-entities/end-of-year-pie-calculation

------------------

McKenzie gave the rate of 28% to her PIE for the tax year ending 31 March 2021.
McKenzie’s PIE has returned income of $1,345 and tax deductions of $376.60 for the year.
The correct PIR determined by Inland Revenue for the 2021 tax year is 17.5%.
Inland Revenue calculates that the correct tax at the rate of 17.5% is $235.38. This results in a PIE credit of $141.22.
The income from McKenzie’s employer has had income tax under deducted of $70.23.
The credit of $141.22 from the over deducted PIE income is offset against the income tax debit, resulting in a remaining refund of $70.99.

------------------

I notice the example did not specifically say if McKenzie actually got her $70.99 refund in cash. But the way the anecdote is written, implies to me that she did.




Apologies too for perhaps being a bit overly technical - I'm an accountant who amongst my client base has a multi-rate PIE for a client, and I'm well aware that it is not straight forward.


No problem as in this case details matter.

I wondered if you are willing to comment on that case example I quoted from the IRD website. Do you think McKenzie got her refund of $70.99 in cash? It is an unusual case, because her employer's underpayment of tax on her behalf then turned into an over-payment on overall income, because her PIE tax was deducted at too high a rate. If the IRD are not required to give McKenzie a cash refund, then the employer has taken too much tax off McKenzie. Thus McKenzie can ask her employer to give her a cash refund back (despite the employer deducting nominally less tax than required)?

SNOOPY

[Baa_Baa]

All sounds good Snoopy, a tax dollar is essentially a tax dollar. Apologies if it sounds like dancing on the head of a pin which in most instances it is for NZ Resident taxpayers. It isn't howver if you don't have sufficeint PAYE/RWT income to "soak up" the Imputation Credits from Listed PIES (note, note multi-rate PIEs). The distinction in the type of PIE can be important - See https://www.ird.govt.nz/roles/portfolio-investment-entities/types-of-portfolio-investment-entities

KFL is a listed PIE, so the 17.5% election does not apply at source, but through your tax return, and as mentioned by several people above, is only of use if your income is less than $48,000pa

Apologies too for perhaps being a bit overly technical - I'm an accountant who amongst my client base has a multi-rate PIE for a client, and I'm well aware that it is not straight forward

No need to apologise, it's better for the observers of this thread to have a professional opinion than one that tries to put it in plain English but fails, or blunders around the legal and tax technical definitions.

This has been a very difficult thread to comprehend, it's put me off buying PIE listed entities, just too complicated and a source of income for my accountant to resolve.

[Snoopy]

This has been a very difficult thread to comprehend, it's put me off buying PIE listed entities, just too complicated and a source of income for my accountant to resolve.

That is an unfortunate reaction when the whole point of introducing the PIE regime, IIRC, was to simplify investing for the average Jo and Joe, and take away the need to file tax returns for most people.

The answer appears to be that, even in retirement, make sure your annual income stays above $48k. All these PIE tax issues seem to disappear if you do that.

SNOOPY

[justakiwi]

But clearly it has not done that for listed PIES. They could solve the problem (in my humble opinion) by requiring listed PIES, such as KFL etc, to provide dividend information as all other (non-pie)companies do. That way IRD would automatically have all the information needed, before they did my assessment. They could then process my imputation credits without any input from me.

That would seem to make more sense than the current rigmarole.



That is an unfortunate reaction when the whole point of introducing the PIE regime, IIRC, was to simplify investing for the average Jo and Joe, and take away the need to file tax returns for most people.

The answer appears to be that, even in retirement, make sure your annual income stays above $48k. All these PIE tax issues seem to disappear if you do that.

SNOOPY

[777]

snoopy that McKenzie example is nothing to do with listed PIEs. It is to point out that the PIR was too high in her case and they corrected it resulting in a refund.

Have another look at JAK copy of her distribution. Forget that it is a PIE and just look at the Gross payment and the imputation credit and it then becomes no different than any other dividend with imputation credits. Excess imputation credits after return is done cannot be paid out, just carried forward. Nothing new there. You are getting bogged down with the fact that it is a listed PIE.

[Snoopy]

But clearly it has not done that for listed PIES. They could solve the problem (in my humble opinion) by requiring listed PIES, such as KFL etc, to provide dividend information as all other (non-pie)companies do. That way IRD would automatically have all the information needed, before they did my assessment. They could then process my imputation credits without any input from me.

That would seem to make more sense than the current rigmarole.


Yes I agree. I do not understand why listed PIEs are not required to report their dividend payouts to the IRD for individual investors like unlisted PIEs. I mean, they have the information because they do report it directly to investors. So why not report directly to the IRD like all other PIEs and indeed all other companies have to? All they are doing with the current policy is disadvantaging more vulnerable investors on the lower end of the pay scale. Baffling!

SNOOPY

[SPC]

This is exactly as what I said way way back.
Listed pie taxation treatment is the same as non pie listed companies in so far as imputed dividends work. And that hasn't changed for years.
The imputation credit regime was put in place around 1989 if I'm correct to prevent shareholders being taxed twice on the dividend.
However Taxation of multi rate investment PIEs is complicated. Just look at the volumes of info published around it.
The real reason I prefer listed company PIEs is that variences in market pricing over time allow opportunity to buy the shares at below underlying value, receive the dividend calculated at actual value ( in the case of KFL), and sell the shares if I wish above actual value when the market over prices them. I don't get that opportunity with the non listed investment PIEs which always cash in or cash out the units exactly at NTA ( actual underlying value).
But I don't need to include the dividends from listed pies in my IR3. That's a chunk of admin I can ignore. That's the sum total of the matter to me.

[alokdhir]

But clearly it has not done that for listed PIES. They could solve the problem (in my humble opinion) by requiring listed PIES, such as KFL etc, to provide dividend information as all other (non-pie)companies do. That way IRD would automatically have all the information needed, before they did my assessment. They could then process my imputation credits without any input from me.

That would seem to make more sense than the current rigmarole.

They do not do that as Listed PIEs dividend or so called dividend is not mandatory to include ...its a choice ...so if u want it included like in your case as it CAN help u get bigger refund ...then u need do it yourself ...AMEND the AUTO Assessment ...as auto assessment does not have your listed PIE info

I also have been saying that imputation credits gets used against tax liabilities FIRST and then any other form of cash paid tax credits ...so if u are getting any imputations credits as carried forward that means IRD is already providing u with maximum Cash Refund possible ...but one need provide their own Listed PIE info to them for IRD to recalculate like is JAK's case ...for that purpose they use to ask first before finalising auto assessment ...but for some reason this time they skipped asking just provided finalised auto assessment ...I had to amend my auto assessment and now it will be recalculated when they have time ...they put it on the back burner !!!


PS : For ease simple rule can be ...if u already getting any imputation credits as carried forward then including any listed PIE dividends will not enhance your cash refund ...at BEST it can increase the amount of carry forward imputation credits

[Snoopy]

Yes I agree. I do not understand why listed PIEs are not required to report their dividend payouts to the IRD for individual investors like unlisted PIEs. I mean, they have the information because they do report it directly to investors. So why not report directly to the IRD like all other PIEs and indeed all other companies have to? All they are doing with the current policy is disadvantaging more vulnerable investors on the lower end of the pay scale. Baffling!




They do not do that as Listed PIEs dividend or so called dividend is not mandatory to include ...its a choice ...so if u want it included like in your case as it CAN help u get bigger refund ...then u need do it yourself ...AMEND the AUTO Assessment ...as auto assessment does not have your listed PIE info


Ah thanks alokdhir. I am now 'unbaffled'.

Yes, you would not want your PIE income automatically included in your dividend income. But it would be helpful if income from KFL -and their like- were included in your 'Attributed PIE' income summary, and not the dividend income summary. That way, you would have the choice of including KFL (and other PIE attributed income) in your dividend income if you wanted to amend your IR3 that way. Not reporting KFL PIE income as attributed to holders does not take away that choice of course. But it does mean more 'scrambling around' gathering information for the less sophisticated individual investors that PIE was designed to protect.

SNOOPY

[Bjauck]

The above was in respect of listed PIEs - KFL & most of the listed Property vehicles. In respect of these, the so-called PIE tax is in fact an Imputation Credit. Imputation Credits themselves can never be refunded in cash, but if there is an excess of them, then they come of the tax liability prior to PAYE and RWT, so that the effect is that the refund is a cash amount of the excess credits
I was not clear. Imputation credits cannot come off other PIE tax already levied (that is not by way of an imputation credit) in the same way as it can come off RWT which has already been levied.

[alokdhir]

Ah thanks alokdhir. I am now 'unbaffled'.

Yes, you would not want your PIE income automatically included in your dividend income. But it would be helpful if income from KFL -and their like- were included in your 'Attributed PIE' income summary, and not the dividend income summary. That way, you would have the choice of including KFL (and other PIE attributed income) in your dividend income if you wanted to amend your IR3 that way. Not reporting KFL PIE income as attributed to holders does not take away that choice of course. But it does mean more 'scrambling around' gathering information for the less sophisticated individual investors that PIE was designed to protect.

SNOOPY

I understand what u saying ...that all your incomes during the year shud be reported and pre populated in their IRD appropriate sections so u dont need to bring out your dividend statements etc at the end of the year . But here one important point ...Listed PIE income can be completely off the books legally due to the choice given to investors ...eg SPC may have millions of KFL still his marginal rate is 10.5% and he claims he is poor in the eyes of the IRD ie they dont know his real means ...and thats fully legal under the frame work of listed PIEs ...where as thats not the case for any other income distributions including MRP PIES ...IRD will get that info of your means .I fully recognise that PIE income of any sort ie MRP PIE or Listed PIE does not alter any taxable income rates or slabs as it's fully ring fenced . With listed PIE income u can do away with filing IR3s if one has income only from listed PIEs ...thats full simplification ...but it comes at a cost that your first dollar gets taxed at 28% .

Another example ...Jeff has gross income from KFL ONLY of $ 70,000 ...he gets $ 50400 in his bank plus $ 19600 worth of imputation credits . If he files IR3 he gets a carry forward imputation credit of $ 4607 as effective tax on an income of $ 70,000 is $ 14993 only ...thus 19600 - 14993 = Carry forward $ 4607 imputation credits .
If he had same Gross income from rentals then he wud have $ 55007 in bank and no carry forward credits

This example illustrates the trade off of listed Pies advantages with some disadvantages if someone cannot use excess imputation credits

[Snoopy]

I was not clear. Imputation credits cannot come off other PIE tax already levied (that is not by way of an imputation credit) in the same way as it can come off RWT which has already been levied.

Is that a question or a statement? It seems to be based on a false premise anyway. Imputation credits never come off withholding tax.

Withholding tax for the personal investor is an extra tax taken off payments to you from a company on account of your personal tax rate being higher than the company tax paid by the company (imputation credits) on the profits passed on to you..

SNOOPY

[Snoopy]

I understand what u saying ...that all your incomes during the year shud be reported and pre populated in their IRD appropriate sections so u dont need to bring out your dividend statements etc at the end of the year . But here one important point ...Listed PIE income can be completely off the books legally due to the choice given to investors ...eg SPC may have millions of KFL still his marginal rate is 10.5% and he claims he is poor in the eyes of the IRD ie they dont know his real means ...and thats fully legal under the frame work of listed PIEs ...where as thats not the case for any other income distributions including MRP PIES ...IRD will get that info of your means. I fully recognise that PIE income of any sort ie MRP PIE or Listed PIE does not alter any taxable income rates or slabs as it's fully ring fenced .


You may be overthinking the role of the IRD here.

The IRD are there to administer tax law - and that is it. The aren't there to moralise about people's means. If people choose to receive all of their income from PIEs and so cap their maximum tax rate at 28% that is perfectly legal and is in accordance with NZ tax law. Nothing to see here. Nothing for the IRD to follow up on.

Don't think you can hide your wealth in a listed PIE like KFL. KFL is a public company so anybody, including the IRD, can apply to look through the share register. Of course such a search would be pointless because there is nothing illegal or 'tax dodgy' about owning KFL units. It would be a pointless search if the IRD did that, which is why they don't do it. But that doesn't mean the IRD is not able to search the KFL register.

Moving on to our highly negatively geared rental property owner: Such a person is in the process of losing interest deductability, so their cashflow position is turning for the worse. It may be this loss of interest deductability, turns the property cashflow deeply negative, while they still get a bill from the tax man for rent received which must be taxed as a profit. Was it 'moral' to change these tax deductability laws? Some would say no. Will the IRD still demand their pound of flesh of tax deducted from rent paid in what is a loss making business - yes. But morality doesn't come into it. All the IRD are doing is enforcing tax law as it is written.

SNOOPY

[alokdhir]

You may be overthinking the role of the IRD here.

The IRD are there to administer tax law - and that is it. The aren't there to moralise about people's means. If people choose to receive all of their income from PIEs and so cap their maximum tax rate at 28% that is perfectly legal and is in accordance with NZ tax law. Nothing to see here. Nothing for the IRD to follow up on.

Don't think you can hide your wealth in a listed PIE like KFL. KFL is a public company so anybody, including the IRD, can apply to look through the share register. Of course such a search would be pointless because there is nothing illegal or 'tax dodgy' about owning KFL units. It would be a pointless search if the IRD did that, which is why they don't do it. But that doesn't mean the IRD is not able to search the KFL register.

If u read my statement again then U will know that I fully understand ...rather I was emphasising that its perfectly legal ...some people ...maybe not me ...think thats an added advantage of listed PIEs ...

What purpose it will solve if even listed Pies are mandated to report distributions ...Let investors decide ...its their prerogative as per the law

[winner69]

I’ve contacted Shaw to do away with PIEs in the Greens tax policy

Told him if 5 gurus can’t work it out it’s just too complicated

[Snoopy]

I’ve contacted Shaw to do away with PIEs in the Greens tax policy

Told him if 5 gurus can’t work it out it’s just too complicated.


How nice of you. In return I have contacted James and he has agreed to go around to your house to assess the value of your pedigree dog - for wealth tax purposes. Whether you dog is free to roam your property on 'assessment day', or tethered, I guess is up to you ;-P

SNOOPY

[alokdhir]

I’ve contacted Shaw to do away with PIEs in the Greens tax policy

Told him if 5 gurus can’t work it out it’s just too complicated

Its the easiest to understand but it has so many permutations and combinations possible that all think they can make it work better for their circumstances ....

Its quarterly income statement is called. " PIE STATEMENT " and it has " PIE TAX INFORMATION " Box , To include or not include is investors prerogative , but if u include U shud put its income in NZ Dividends section only ( as per many ...not confirmed if by IRD also ) thus increasing your overall taxable income unlike all other PIE income

Then some can ask why call its income statement as PIE Statement and why have its tax paid section called PIE Tax Information when it has to be clubbed under NZ Dividends and IF included in assessment it will increase your taxable income opposite to PIE mandate ....

Its called Listed PIE so it can behave differently then MRP PIEs ...as per many here ...IRD is silent on it ...Snoopy's idea is the best to get IRD view on this ...by including KFL income under PIE section of IR3 and then let IRD decide if its correct or not ...that will give 100% clarity ...till then its open to interpretations of any Guru ...including W69

[SPC]

Hey Alokdir - just FYI - SPC doesn't own millions of KFL, but it would be a glorious thing. I'm getting there as buying ops allow. Could be a while tho...now when's that new warrant issue coming??

[Bjauck]

Is that a question or a statement? It seems to be based on a false premise anyway. Imputation credits never come off withholding tax.

Withholding tax for the personal investor is an extra tax taken off payments to you from a company on account of your personal tax rate being higher than the company tax paid by the company (imputation credits) on the profits passed on to you..

SNOOPY
When you receive a (non listed PIE company) Gross dividend 33% is deducted by way of a combination of Imputation Credit and RWT tax regardless of your personal marginal tax rate. With interest payments RWT is deducted at the rate you have selected.

At end of year if the credits and tax already paid exceed your calculated IT liability on returned income then any excess RWT and PAYE tax can be refunded. The same does not apply to the PIE tax already paid on for example bank pie funds or your KiwiSaver, which is non-refundable in that situation. As far as I am aware. Please correct me if I have that wrong.

[alokdhir]

When you receive a (non listed PIE company) Gross dividend 33% is deducted by way of a combination of Imputation Credit and RWT tax regardless of your personal marginal tax rate. With interest payments RWT is deducted at the rate you have selected.

At end of year if the credits and tax already paid exceed your calculated IT liability on returned income then any excess RWT and PAYE tax can be refunded. The same does not apply to the PIE tax already paid on for example bank pie funds or your KiwiSaver, which is non-refundable in that situation. As far as I am aware. Please correct me if I have that wrong.

MRP PIEs like Kiwi savers and Bank term deposits ...one need to elect PIR ...if the correct PIR is used ALL year then nothing happens ...they are separate calculations from your other taxable income calculations ...ie PIE calculations of tax paid or tax liability dont spill over to overall taxable income calculations . But if your PIR for MRP PIEs is wrong then u can either have a separate PIE tax bill or refund . Eg your MRP PIE like bank term deposit deducted tax @28% while your actual PIR for the year is 17.5% as per IRD then u will get PIE tax refund ...its seperate from other refunds like RWT etc ...it will be simple 28-17.5 = 10.5% of the MRP PIE income for that year

[Snoopy]

At end of year if the credits and tax already paid exceed your calculated IT liability on returned income then any excess RWT and PAYE tax can be refunded. The same does not apply to the PIE tax already paid on for example bank pie funds or your KiwiSaver, which is non-refundable in that situation. As far as I am aware. Please correct me if I have that wrong.

In the above paragraph you are using the words 'refund' and 'non-refundable' in the context of a cash payment. Folding notes you can take away in your hot hand - correct?
I think alokdhir has answered your question below, but is not using the same definition of the word 'refund' that you are.



MRP PIEs like Kiwi savers and Bank term deposits ...one need to elect PIR ...if the correct PIR is used ALL year then nothing happens ...they are separate calculations from your other taxable income calculations ...ie PIE calculations of tax paid or tax liability dont spill over to overall taxable income calculations . But if your PIR for MRP PIEs is wrong then u can either have a separate PIE tax bill or refund. Eg your MRP PIE like bank term deposit deducted tax @28% while your actual PIR for the year is 17.5% as per IRD then u will get PIE tax refund ...its separate from other refunds like RWT etc ...it will be simple 28-17.5 = 10.5% of the MRP PIE income for that year


alokdhir is using the word 'refund' to mean a tax credit, i.e. tax you do not have to pay in the future. It is still a 'refund' but it is not a cash refund. IOW if you want folding notes you are out of luck. I hope I have that right!

SNOOPY

[alokdhir]

In the above paragraph you are using the words 'refund' and 'non-refundable' in the context of a cash payment. Folding notes you can take away in your hot hand - correct?
I think alokdhir has answered your question below, but is not using the same definition of the word 'refund' that you are.



alokdhir is using the word 'refund' to mean a tax credit, i.e. tax you do not have to pay in the future. It is still a 'refund' but it is not a cash refund. IOW if you want folding notes you are out of luck. I hope I have that right!

SNOOPY

IMO ...U get cash refund if u have overpaid MRP tax for the year .... ie have elected or ascribed higher PIR than your actual PIR for the year