Originally Posted by
Snoopy
Thanks for the reference, but I am not sure the author of this article, Tamsyn Parker, has a complete grasp of the subject The article is worded in a way that makes ithe issue of tax on capital gains ambiguous.
"Funds are currently taxed using the portfolio investment entity regime which means individuals are taxed on the income from their fund at a prescribed investor rate which is based on what they earn. There are three rates - 10.5 per cent, 17.5 per cent and 28 per cent. The income tax is calculated daily and tax is paid annually. The aim is to ensure people are not taxed at a rate that exceeds their personal tax rate."
That bit at least seems clear, even if no reference is given to confirm it,
"Currently there is no tax on the gains from trading in New Zealand and Australian shares. Tax on foreign shares is worked out at the fair dividend rate."
For an individual 'trading' in shares in NZ and Australia -with the aim of making a profit- is taxed. So is Ms Parker telling us that PIE funds have an advantage over the individual in this regard? That doesn't square with the levelling of the playing field argument for creating PIE. And as SBQ has pointed out, shares invested subject to the under the FIF regime pay tax in all years when in a fund. As an individual you get a tax holiday if the sum of your shares in the FIF regime makes a loss during the year. One again 'not equal'.
SNOOPY