ASB charge $125 every six months for operating a margin lending facility. This is waived if the interest charged to the client exceeds $400 for that period. I was recently charged $125 because the interest was only $388, a shortfall of $12. I wrote to ASB saying that the charge was iniquitous, particularly as the previous 6 months interest was about $1,600. They reversed the fee but warned me that this was a 'one-off' and that they might not be so generous for the next six months. So much for the many thousands of dollars ASB have earned over the past decade from me for interest and share transaction fees ($30 up to $10,000 then increasing after that depending on share value).
I'm now feeling unloved at ASB so would appreciate hearing what other brokers charge for trading and margin lending fees. Can I do better?
Margin Lending Fees
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11-04-2019, 02:49 PMRobomoMargin Lending Fees
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12-04-2019, 11:47 PMpeat
CFD's might be cheaper.
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15-04-2019, 08:24 AMAaron
The ASB's rules are clear. I can appreciate your frustration but it is hardly the banks fault. A large bureaucracy can't automate if it has to factor in every clients individual position. If you keep the rules simple it is easy to understand. Normally I wouldn't argue for the large corporation but I guess I sometimes think people could just suck it up now and again.
https://www.nzx.com/services/market-...-a-participant
Looks like for online your stuck with ASB or FNZC (which I assume used to be ANZ Securities) in NZ.
Peat's suggestion could be the way to go. I have never fully understood CFD's. Here is a definition from google.
A CFD is a leveraged 'derivative' financial product. CFDs are derivatives because their value is derived from the value of another asset (for example, a share, commodity or market index). When you trade CFDs, you take a position on the change in value of the underlying asset over time.
I have always worried that whoever is running the book may not be able to pay up in the event of a crisis. -
15-04-2019, 02:07 PMAaron
Sorry about the negativity this morning Robomo.
Talking about ASB Securities has anyone got the hang of them deducting 33% NZRWT from your Australian(& overseas) dividends. I assume this is only where you use a margin lending account and ASB holds the securities on your behalf. Didn't really appreciate it until they deducted the NZRWT from my bank account to cover the tax on a Newcrest dividend that was part of a DRP. It must be a lot of buggerising about for my piddly little dividends. -
16-04-2019, 06:47 PMRRRYes, they recently started doing that. I presume tax is deducted by ASBsec only when the dividend is not taxed by Australia (this happens when majority of income/profit from the operations of the company is outside Australia).Quote:
Originally Posted by Aaron
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24-04-2019, 10:52 AMRobomoASB are able to work out interest payable on individuals accounts so should be able to easily work out an equitable fee (Margin fee of $125 less whatever interest - at the appropriate rate of percentage of $400 - has been paid for the previous 6 months) i.e. interest paid to ASB of $200 would give a 50% rebate on Margin Lending fee.Quote:
Originally Posted by Aaron
I spoke with one of ASB's advisors about the withholding tax for overseas dividends. He said it is a Govt directive and it is deducted at the Australian end and then presumably remitted back to NZ. My Accountant says that the Accounting Society have been trying for some years to get the Govt to recognise the franking on Australian dividends. They have been unsuccessful, I guess the govt are quite happy to get extra tax, even though this is double taxation for anyone getting Australian dividends. If CGT had been imposed then this would be a triple tax! -
24-04-2019, 06:02 PMAaronFair enough they calculate daily interest on savings and mortgages but probably not motivated to with fees. $250 per annum for flexible finance doesn't seem too bad to me.Quote:
Originally Posted by Robomo
It would be ASB Securities deducting the tax and filing it with IRD on our behalf. I think Australia has been blocking mutually recognising Imputation and Franking credits between the two countries which would be a good increase in our Aussie dividends if it ever happened.
https://www.nbr.co.nz/article/govern...edits-b-173961
We aren't paying extra tax, we are just paying it early. The net (after franking credit) aussie dividend still needs to be declared as income it just that ASB Securities has already paid the tax on our behalf. If your income is less than $70,000 per annum you should get some back. Have had a couple of copies of dividend cheques in the post so it will be interesting to see what gets deposited and what notification regarding the tax deducted we will get. For some reason I can't see my Aussie dollar account online so have to wait for intermittent statements.
CGT would have been another tax but only on any capital gain. -
25-04-2019, 07:02 PMRRR
One way to escape from paying tax early is to participate in the DRP if available! That is what i have done with Iress, Invocare and Sonic healthcare shares.
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26-04-2019, 08:43 AMAaronNot necessarily ASB Securities deducted money directly from my account to cover the withholding tax on a dividend that was reinvested in a DRP with Newcrest. That is what alerted me to the change.Quote:
Originally Posted by RRR
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26-04-2019, 08:00 PMRRRInteresting. How can they do that since the income/dividend is not realised at the time - of course we will be declaring the DRP dividends at the time of IT return. What if there is no money left in the Australian $ account? I usually keep a few hundred $ in the account, but will aim to keep it close to zero from now on.Quote:
Originally Posted by Aaron
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27-04-2019, 05:37 AMRobomoIf you don't have any funds in your Australian CM account then ASB will simply transfer fees from your NZ Cash Management Account. I asked about the possibility of just paying the withholding tax in NZ, seeing that it is a NZ charge, but ASB said it had to go to Australia. So I guess I have no alternative but to pay fx fees as well! With that in mind I'm now keeping sufficient funds in my Australian CM account to cover the withholding tax deductions.Quote:
Originally Posted by RRR
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27-04-2019, 05:48 AMRobomoThanks for that Aaron. Still have to pay tax on DRP though. The only way I can minimise the impact of this 'double taxation' is to move funds back and forward NZ-AU according to the fx rate at the time. I've bought more AU shares lately with the NZ dollar being worth more than 95c and intend to sell more and remit money back to NZ when it gets down to somewhere around 85c. Who knows when that will be but it will reduce the impact of 'double taxation' as long as I don't need the funds for anything else.Quote:
Originally Posted by Aaron
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27-04-2019, 02:45 PMAaronNot sure I understand what you are suggesting but the tax deducted is only from dividends, not the sale of shares. It is not an additional tax, just tax deducted at source not quite source but at ASB level. Like PAYE from wages. As I am not entirely sure of what you are doing regarding moving money around you might want to read what KPMG has to say on foreign currency bank accounts.Quote:
Originally Posted by Robomo
https://home.kpmg/content/dam/kpmg/p...rview-2015.pdf
Don't forget to include your realised foreign currency gains in your 2019 tax return or unrealised gains if you are not "cash basis person". Sometimes it is better to ignore the rules as the IRD are unlikely to catch up but they might be getting more efficient with their new computer upgrade. Surprised a few people last year when IRD asked them to include their PIE income in their tax returns as they were using the wrong PIR rate. -
28-04-2019, 12:59 PMRRRI participated in the Invocare DRP - no tax deducted by ASB!Quote:
Originally Posted by Aaron
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29-04-2019, 07:58 AMAaronWho knows how it works. I have a margin lending facility so the shares are held by ASB Securities possibly that is the difference. I don't know how they would keep track of it all anyway. Not a big deal I suppose just means the end of year tax bill is lower.Quote:
Originally Posted by RRR
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30-04-2019, 06:37 PMRRRI spoke too early! Re - Invocare DRP - ASB sec have now taken the tax from my Australian $ account.Quote:
Originally Posted by Aaron