Originally Posted by
Snoopy
SBQ, the FIF tax is levied (or not) based on your purchase price being more than $50k. So if you buy $50k worth of shares hold them for 30 years and sell for $500k you will pay no FIF tax. You will have to pay NZ income tax on the dividends you receive along on the way though.
There is no such thing as 'maximum 5% FIF tax'. You are taxed on 5% of your cumulative FIF holding opening balance at your marginal tax rate. That generally works out to be about 1.5% of the opening balance, offset by dividends that are untaxed separately in NZ. Whether Smartshares deduct FIF tax at the start of the financial year I am not sure. But if they do, then all they are doing is paying tax on your behalf. The problem with Smartshares paying FIF tax for you is that is that they may not know the extent of your full FIF portfolio. So they won't know what your FIF tax liability is, because FIF tax is calculated on a 'whole of FIF portfolio' basis.
When you hold foreign shares with an NZ third party provider, you will get to nominate how you wish them to treat you for tax. That won't make any difference to your tax bill in the end. But it might make some difference to the withholding tax deducted along the way.
SNOOPY