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  1. #21
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    Quote Originally Posted by Snoopy View Post
    Correct. The only paper trail available to support this FIF law is purchase receipts. That is why the FIF law is drafted as it is.

    However, in this time of antagonism towards cheques, that is forcing shareholders into Dividend Reinvestment Plans, those DRP purchases do count as purchases, even though no more cash from NZ is flowing overseas. So in such circumstances, it wouldn't be difficult for a $45k investment to creep over that $50k limit.

    SNOOPY
    Thank-you - so overall it would be difficult: the investor would need to decide to start with an initial portfolio that had no distributions at all - a listed fund of some type and just let it run...but funds shares can turn bad. Although sell, return it to NZD and repeat the exercise.

  2. #22
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    Quote Originally Posted by BeeBop View Post
    There is a point on the FIF that intrigues me and that is the $50k "acquired' cost. So if, someone starts with a portfolio of $45,000, purchasing a selection of overseas shares and they never add any more NZ money to that portfolio, by rights they never have to pay FIF even if their portfolio grows to $200,000?

    Note: this does not apply to me but it could relate to some newer NZ based investors.
    Are you sure about that? Under the FIF rules if using the FDR or CV methods market value at the beginning of the financial year is required. This is from the IRD guide page 15

    total amount of the interests doesn't exceed the NZ$50,000 threshold at any time in the year when you're a New Zealand resident (for a natural person), or any time in the year for the trustee of an eligible trust

    Or have a read and get back to me if I am wrong.

    https://www.ird.govt.nz/-/media/proj...ir461-2019.pdf

  3. #23
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    Quote Originally Posted by Aaron View Post
    Are you sure about that? Under the FIF rules if using the FDR or CV methods market value at the beginning of the financial year is required. This is from the IRD guide page 15

    total amount of the interests doesn't exceed the NZ$50,000 threshold at any time in the year when you're a New Zealand resident (for a natural person), or any time in the year for the trustee of an eligible trust

    Or have a read and get back to me if I am wrong.

    https://www.ird.govt.nz/-/media/proj...ir461-2019.pdf
    Actually I could be wrong I tried to read the legislation which takes me from Section CQ(5)(1)(d) to section EX 68 measurement of Cost but it confuses the hell out of me but I can't find any reference to market value.

    I guess a $49,000 investment in Tesla a few years ago might not be caught under the FIF rules.
    Last edited by Aaron; 08-01-2021 at 08:52 AM.

  4. #24
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    Quote Originally Posted by Aaron View Post
    Actually I could be wrong I tried to read the legislation which takes me from Section CQ(5)(1)(d) to section EX 68 measurement of Cost but it confuses the hell out of me but I can't find any reference to market value.

    I guess a $49,000 investment in Tesla a few years ago might not be caught under the FIF rules.
    I would imagine a fair % of NZ investors with shares under FIF are skirting IRD under the assumption that their purchases (kept under $50K) would not attract any FIF. How can it be this way? If total accumulated amount invested abroad (even under multiple accounts) exceeds $50K, then FIF applies.

  5. #25
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    My accountant clarified that those shares that are exempt from fif calculations, ie. all ASX shares and others, would NOT count towards the de minimis of $50k. Do you agree?

  6. #26
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    Not all ASX shares are exempt. There is a list of those that are somewhere on IRD site.

  7. #27
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    Quote Originally Posted by Fred114 View Post
    My accountant clarified that those shares that are exempt from fif calculations, ie. all ASX shares and others, would NOT count towards the de minimis of $50k. Do you agree?
    Your accountant is incorrect. There's a fair % of shares on the ASX that are not FIF exempted. My thread here - use the link to IRD's website where you can enter the ASX company.

    https://www.sharetrader.co.nz/showth...l=1#post889382

    IRD goes in detail about the ASX shares must have a franking account and even still - it appears to be dependent on the % payout in the franking. So if it's like 0% - very unlikely to be FIF exempted. Others can clarify here.

    To the individual, FIF does NOT apply when capital cost is under $50K in value from the start of the investment to the current year.

  8. #28
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    This your best bet to find out how an ASX listed entity is treated tax wise:

    https://brc2.ird.govt.nz/opa12/web-d...lobal%24global

    But read ALL the text carefully. FIF exempt generally contains 'taxed under the general income tax rules'
    om mani peme hum

  9. #29
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    Quote Originally Posted by Fred114 View Post
    My accountant clarified that those shares that are exempt from fif calculations, ie. all ASX shares and others, would NOT count towards the de minimis of $50k. Do you agree?
    Yes exempt 'overseas' shares do not count towards your FIF share balance. But to see if they really are exempt, you need to check here:

    https://www.ird.govt.nz/income-tax/i...ent-fund-rules

    SNOOPY
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  10. #30
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    Thanks for the helpful clarification Snoop

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