KPG - Kiwi Property Group Limited

[Southern Lad]

I think we will have a dividend coming soon, but I'd like KPG to limit dividends to the size that can be fully imputed. Beyond this level you are starting to destroy shareholder value as 28% of the dividend paid goes to the taxman.

As KPG is a listed PIE, any part of a dividend paid that can’t be imputed is exempt income in shareholders hands, so absolutely no downside in paying dividends that can’t be fully imputed. With the reintroduction of tax depreciation on buildings, the level of imputation credits available should fall, but the benefit can be directly passed onto shareholders where you have a listed PIE.

The other advantage with a listed PIE is that shareholders can choose whether they include fully imputed dividends in their tax returns - where their total taxable income is below $48,000 there is a benefit in doing so because the 28% imputation credits exceeds the final tax rate on the income and they can benefit from the excess credit.

[Southern Lad]

Double up - deleted

[Waltzing]

PIE investments are the way to go as entities can be pass through and be distributed into beneficiaries.

we could see a down side to 1.10 or lower for a while if markets panic on the 10 year but they will recover once the adjustment passes as it always does.

Dividend across the economy im sure we all know will slowly return over the next 5 years and share prices should continue to rise in a bull market.

[Habits]

"bull market"
NZ experience out of lockdown of rising property values is now being felt in Australia and elsewhere. I've been surprised by 6 month lag of aust resi property to low interest rates but fast happening now. Wealth effect spreading.

[fungus pudding]

As KPG is a listed PIE, any part of a dividend paid that can’t be imputed is exempt income in shareholders hands, so absolutely no downside in paying dividends that can’t be fully imputed. With the reintroduction of tax depreciation on buildings, the level of imputation credits available should fall, but the benefit can be directly passed onto shareholders where you have a listed PIE.

The other advantage with a listed PIE is that shareholders can choose whether they include fully imputed dividends in their tax returns - where their total taxable income is below $48,000 there is a benefit in doing so because the 28% imputation credits exceeds the final tax rate on the income and they can benefit from the excess credit.

And an even bigger advantage where taxable income exceeds $180,000 (after 1st April) when top rate will move to 39%. A huge difference from PIE tax of 28%
ARG, GMT, KPG, PCT, PFI and SPG are all LPTs - PIES. No doubt there are others.

[Scrunch]

As KPG is a listed PIE, any part of a dividend paid that can’t be imputed is exempt income in shareholders hands, so absolutely no downside in paying dividends that can’t be fully imputed. With the reintroduction of tax depreciation on buildings, the level of imputation credits available should fall, but the benefit can be directly passed onto shareholders where you have a listed PIE.

The other advantage with a listed PIE is that shareholders can choose whether they include fully imputed dividends in their tax returns - where their total taxable income is below $48,000 there is a benefit in doing so because the 28% imputation credits exceeds the final tax rate on the income and they can benefit from the excess credit.

I bought during the Covid dip so I haven't had any non-full imputed dividend from them yet (Dec was fully imputed). My understanding of PIE's was that the correct tax is deducted so that you don't need to pay any further tax. That's what's happened on PIE interest income I've received so I'm assuming its the same for dividend income. What is received is free of any further tax. If you are a 28% PIE and there is full 28% imputation credits, no further tax would need to be paid. The full value would be received (10,000 shares and a 3.5c dividend would be a $350 payment).

If a 3.5c dividend was paid with no imputation credits, a shareholder with a 28% PIE would only receive $252, it would be excluded income so the shareholder can exclude the income from their tax return and avoid a further 5% (or soon 11%) tax on the income as its moved to 33% or 39%. It is not however untaxed, the taxation just happens before being received. The lack of imputation credits in this example has caused $98 to go to the taxman. The $252 received as a PIE is however better than a normal company dividend with no imputation credits which would be $234.5 (or $213.50 if hit by the new 39% tax rate).

The Nov 2019 dividend of 3.5c had 2.03c with full imputation credits and 1.47c was "excluded income". My guess is therefore that 0.41c of tax (28% if 1.47c) was deducted from the excluded income before being received. The cash received was 3.09c/share and it was tax paid income ($309 for the shareholder with 10,000 shares). If it was actually 3.5c - bonus!!

[LaserEyeKiwi]

Repost of Sep 2020 posts. I am not going to bet the farm or anything like it and the above is why. I'm still a bit grumpy about the above so I will stick with just a very modest allocation to this one.

Pretty sure I read the 10 year Govt stock yield hit 1.5% today.

I think the stated reason for the dividend pause after the large negative asset revaluation was to reduce the chances of breaching their stated gearing ratio for debt to assets. A higher ratio may have impacted negatively on credit rating and associated future interest rates on debt.

At the time I suppose it was a reasonable risk of further large lockdowns and the threat of significantly less profits of retailers going under and vacating shops etc so it was a very cautious move on their part.

Once/if they sell the Palmerston North mall (which is currently on the market) they will be a bit more flush with cash, but who knows whether this means higher dividend or quicker development of the Drury project and/or the build-to-rent apartment complexes (which will be a nice area of diversification.)

[777]

I bought during the Covid dip so I haven't had a dividend from them yet, but my understanding of PIE's was that the correct tax is deducted so that you don't need to pay any further tax. That's what's happened on PIE interest income I've received so I'm assuming its the same for dividend income. What is received is free of any further tax. If you are a 28% PIE and there is full 28% imputation credits, no further tax would need to be paid. The full value would be received (10,000 shares and a 3.5c dividend would be a $350 payment).

If a 3.5c dividend was paid with no imputation credits, a shareholder with a 28% PIE would only receive $252, it would be excluded income so the shareholder can exclude the income from their tax return and avoid a further 5% (or soon 11%) tax on the income as its moved to 33% or 39%. It is not however untaxed, the taxation just happens before being received. The lack of imputation credits in this example has caused $98 to go to the taxman. The $252 received as a PIE is however better than a normal company dividend with no imputation credits which would be $234.5 (or $213.50 if hit by the new 39% tax rate).

The Nov 2019 dividend of 3.5c had 2.03c with full imputation credits and 1.47c was "excluded income". My guess is therefore that 0.41c of tax (28% if 1.47c) was deducted from the excluded income before being received. The cash received was 3.09c/share and it was tax paid income ($309 for the shareholder with 10,000 shares). If it was actually 3.5c - bonus!!

You do not need to include PIE income, no matter where it comes from, on your tax return. You can however declare any part that is imputed and and/or had RWT deducted if your marginal rate is below 28c so you can get a refund on the extra tax paid. This is written on the PIE payment statement.


As explained by Southern Lad in post 331.

[turbo]

KPG paid an interim dividend on Dec 18, 2020

[777]

Scrunch did you not receive the KPG div in early December?