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My wife has inherited some CBA shares as part of a managed portfolio. Her financial adviser prepared her tax return and did not include dividends received from CBA saying they are exempt according to the IRD. "CBA is treated as non FIF as its included in the ASX 200 and its also not a stapled security" I am confused when I look at the IRD site ( I think its an"age" thing!) Is the adviser correct?
Hi Herbert -
I think this is the bit you are looking for:
https://www.ird.govt.nz/income-tax/i...exemption-tool
Which when I enter CBA:
Results for Commonwealth Bank of Australia
ASX ticker code: cba
Tax period: 1 April 2022 to 31 March 2023
Shares do qualify for exemption
The ASX Ticker Code you have entered relates to Commonwealth Bank of Australia.
Based on the information you have provided, the shares qualify for the Australian share exemption provided the shares were held at 1 April 2022 or were acquired on the market during the year.
This means income from the shares is taxed under the general income tax rules, the same as investments in New Zealand. They are not attributing interests for tax purposes and therefore fall outside the FIF rules.
Firstly, I am not qualified to give tax and financial advice.
Related information can be found in the IR461 documentation from IRD. You can find it here:
https://www.ird.govt.nz/income-tax/i...ent-funds-fifs
Also from the older 2021 version of the documentQuote:
ASX-listed Australian share exemption
This is a common exemption from the FIF rules. The exemption applies when a person holds shares in a company that:
• is listed on the official list of ASX Limited
• is an Australian resident (and not treated as resident in another country under an agreement between Australia and that other country)
• maintains a franking account, and
• is not stapled stock.
If the person is an individual, no FIF income arises from this investment but they will usually need to account for dividends in their tax return and may need to pay tax on capital gains if shares are sold which were held on revenue account.
Quote:
Common errors to avoid
1. If you're a transitional resident you're not taxed on your foreign investment income for your transitional period. This temporary tax exemption on foreign investment income expires after 48 months and there's no entitlement to Working for Families Tax Credits.
All other residents are required to return dividends as received from foreign investments that are exempt from the foreign investment fund regime, such as Australian shares shown in the exemption check tool.
Dividends received from investments that are subject to the foreign investment fund regime must not be returned when received as the income is calculated under the FIF rules.
Thanks Guys, thats exactly what I was looking for! It would seem then that adviser was incorrect and tax return will have to be amended to include the CBA dividends.
By the way, CBA dividends include some NZ imputation (10c/share for the last few), so you may be able to claim them as tax credits.
https://www.commbank.com.au/about-us...formation.html
Yes good point..thanks caenix