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    Default ASX ETF - like S&P500 = NO FIF ?

    Just a quick question and i'm sure someone will know. Is there an index ETF on the ASX exchange that tracks the S&P500? I'm looking for a direct ticker stock to buy and not through some managed fund. The reason being I find there's a lack of transparency with NZ managed funds that do advertise buying US equities & ETFs but do not mention about FIF or the full tax implication.

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    Yes there is.
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    Quote Originally Posted by Snow Leopard View Post
    Yes there is.
    Which ticker symbols? Thanks.

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    I presume you have managed to search the ASX website for the options available by now.
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    Quote Originally Posted by Snow Leopard View Post
    I presume you have managed to search the ASX website for the options available by now.
    I've been looking and came across IVV. I also made a quick phone call to Jarden and the adviser says none of those ETFs that have a majority foreign (outside NZ/ASX) exposure holding equities will be exempted from FIF. IVV also has a franking rate of 0% which will be like most ETFs that hold foreign content and therefore will never be exempted from FIF as ASX franking is a requirement.

    Anotherwords, the adviser said to me, "You can't contract yourself to pick foreign holdings through a conduit (the ETF) when ultimately, the foreign holding is of non NZ/Aus based investments and therefore IRD will have in every right, to impose FIF". After all, the whole point of FIF is to tax overseas share investments that have a focus on capital gain growth (as NZ has no format CGT and such gains would be tax free without FIF).

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    Quote Originally Posted by SBQ View Post
    I've been looking and came across IVV. I also made a quick phone call to Jarden and the adviser says none of those ETFs that have a majority foreign (outside NZ/ASX) exposure holding equities will be exempted from FIF. IVV also has a franking rate of 0% which will be like most ETFs that hold foreign content and therefore will never be exempted from FIF as ASX franking is a requirement.

    Anotherwords, the adviser said to me, "You can't contract yourself to pick foreign holdings through a conduit (the ETF) when ultimately, the foreign holding is of non NZ/Aus based investments and therefore IRD will have in every right, to impose FIF". After all, the whole point of FIF is to tax overseas share investments that have a focus on capital gain growth (as NZ has no format CGT and such gains would be tax free without FIF).
    SBQ. If you are looking for Aussie instruments that are exempt to the FIF regime then arguably the best place for you to check is with the IRD direct. There is a specific webpage you can refer to in the first instance (provided below). The FIF regime has quite a few idiosyncrasies which makes determining whether an instrument comes under the provisions or not much more difficult. Sadly it's not as straightforward as simply checking that the entity is in the ASX200!

    https://www.ird.govt.nz/income-tax/i...ent-fund-rules
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    Quote Originally Posted by SBQ View Post
    I've been looking and came across IVV. I also made a quick phone call to Jarden and the adviser says none of those ETFs that have a majority foreign (outside NZ/ASX) exposure holding equities will be exempted from FIF. IVV also has a franking rate of 0% which will be like most ETFs that hold foreign content and therefore will never be exempted from FIF as ASX franking is a requirement.

    Anotherwords, the adviser said to me, "You can't contract yourself to pick foreign holdings through a conduit (the ETF) when ultimately, the foreign holding is of non NZ/Aus based investments and therefore IRD will have in every right, to impose FIF". After all, the whole point of FIF is to tax overseas share investments that have a focus on capital gain growth (as NZ has no format CGT and such gains would be tax free without FIF).
    SBQ. If you are looking for Aussie instruments that are exempt to the FIF regime then arguably the best place for you to check is with the IRD direct. There is a specific webpage you can refer to in the first instance (provided below). The FIF regime has quite a few idiosyncrasies which makes determining whether an instrument comes under the provisions or not much more difficult. Sadly it's not as straightforward as simply checking that the entity is in the ASX200!

    https://www.ird.govt.nz/income-tax/i...ent-fund-rules
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    Quote Originally Posted by FTG View Post
    SBQ. If you are looking for Aussie instruments that are exempt to the FIF regime then arguably the best place for you to check is with the IRD direct. There is a specific webpage you can refer to in the first instance (provided below). The FIF regime has quite a few idiosyncrasies which makes determining whether an instrument comes under the provisions or not much more difficult. Sadly it's not as straightforward as simply checking that the entity is in the ASX200!

    https://www.ird.govt.nz/income-tax/i...ent-fund-rules
    Thanks for the link to IRD - it just confirms what the financial adviser said to me today. IVV is clearly not FIF exempt. The end of the story is this, the well regarded index ETF S&P500, which comprises of say 99% foreign (or maybe 1% NZ / Aus companies in it?) is a far cry to expect it to be FIF exempted. To be really FIF exempt, you basically have to own NZX listing and some ASX listings.

  9. #9
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    Anyone dealt with this platform?
    https://blackbullmarkets.com/en/trading/index-cfds/

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    Quote Originally Posted by kiora View Post
    A "Credit For a Difference" has been spoken in another thread (re: the collapse of Bill Hwang's Archegos Hedge Fund) and it may be the CFD terms used in NZ/Australia may not be the same as in the US. I am uncertain how CFD for the retail market in NZ/Aus would apply to the global market when CFD are illegal to retail traders in the US; again it may be due to the difference in terminology like many things. Ie. A "Bank Cheque" issued by a bank in NZ vs "Bank Draft" issued by a bank in the US (both are the same instrument with different wording. Sometimes I come across the same wording in finance but has a different meaning abroad. The CFD does not mean taking a 'short position'.

    Also as mentioned in a different thread, the issue of CFDs has conditions that affect the outcome of these contracts. Namely 'dividends' as mentioned in that blackbullmarket link, affecting the outcome for asset price and the timeliness when these contracts expire.

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    Last edited by justakiwi; 09-06-2021 at 11:47 AM.

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    Quote Originally Posted by SBQ View Post
    To be really FIF exempt, you basically have to own NZX listing and some ASX listings.
    Not correct SBQ. Under certain circumstances an individual/entity doesn't need to come under the FIF regime at all.

    First up and as i assume you already know, there is the NZD50K threshold, which if kept under makes adherence & related compliance paperwork for the small investor a LOT simpler.
    Secondly, for those with overseas holdings exceeding the value of NZD50K there are other strategies & approaches one can deploy (don't worry - all very legal!) which means that one can elect NOT to be under the FIF regime. Of course the devil is in the detail, and there will be pro's & con's to being under FIF or not, as opposed to the alternative pathways. Plus, there are a variety of considerations particular to each individual's specific circumstances that needs to be considered. All quite technical and not suitable to being disseminated here on ST in generic form.

    The short story is DYOR, ideally with your Tax Accountant/Advisor.
    Last edited by FTG; 09-06-2021 at 10:33 AM.
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    Quote Originally Posted by FTG View Post
    Not correct SBQ. Under certain circumstances an individual/entity doesn't need to come under the FIF regime at all.

    First up and as i assume you already know, there is the NZD50K threshold, which if kept under makes adherence & related compliance paperwork for the small investor a LOT simpler.
    Secondly, for those with overseas holdings exceeding the value of NZD50K there are other strategies & approaches one can deploy (don't worry - all very legal!) which means that one can elect NOT to be under the FIF regime. Of course the devil is in the detail, and there will be pro's & con's to being under FIF or not, as opposed to the alternative pathways. Plus, there are a variety of considerations particular to each individual's specific circumstances that needs to be considered. All quite technical and not suitable to being disseminated here on ST in generic form.

    The short story is DYOR, ideally with your Tax Accountant/Advisor.
    You base my question on the basis that FIF is exempted under $50K NZD? This is a joke - even justakiwi knows the funds i'm dealing with (and for many of those that have invested in shares for a very long time nearing retirement), have well in excess of $50K NZD.

    The issue of FIF has been batted many times in other threads. The wording by IRD's FIF manual seems to be interpreted differently by individuals here. ie. buying multiples of shares under $50K to assume that it exempts from FIF. I prefer to take the common sense approach and i'm sure all the financial advisers in NZ will agree. $50K is a threshold of ALL TOTAL assets that the individual has abroad. It would be senseless to think otherwise - and this is just only 1 example. One does not simply elect out of FIF just like one doesn't elect out of paying other taxes.

    I am doing my research and fact checking. As the financial advisers tell me, the goal for FIF is to address taxation on large capital gains on foreign shares, namely US equities that have a tax system that favours capital gains on growth stocks instead of paying dividends (ie like Berkshire Hathaway). If FIF had some leeway for ASX listings being exempted from FIF, then perhaps I thought there would be some way to invest in a similar ETF holding such as the S&P500 (by Australian listings). However, it seems there's a fair % of ASX listings that do not qualify for FIF exemption.

    Using the FIF lookup link that FTG provided for the current taxation year, can someone explain to me why a NZ company XERO ticker XRO trading on the ASX is not FIF exempted? While an Australian operated company BHP shows up as being FIF exempted?

    So far i've not seen any benefit of investments going under FIF so perhaps you can elaborate this from a retirement planning point of view who this would be advantageous? My friends in Canada appear to have retirement plans where their share investments grow tax free (deferred taxation at retirement) and in many cases, have tax free registered accounts for education and TSFA which is 100% tax free for the intended purpose (ie saving for education, or disabilities). Yes I know we live in NZ, but I don't think it's fair that the productive working society, those who transition into the work force and work until retirement, that their investments are penalising them as the pay tax on those investment gains. This is a huge disincentive when the rich in NZ are able to buy multiple houses without paying any tax on the capital gain. They can hold the houses in a trust, and all the capital gains are tax free. The worker pays into a Kiwi Saver plan, in either a PIE fund or some other fund (FIF or not), and is still subjected to taxes every year.

    Not trying to be hard on you but let's be real here. What are the advantages please?

  14. #14
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    I had Platinum Funds for about 15 years. Every year ,in line with Australian requirements of paying out what they made, I received large distributions all taxable at 33c/$. Once FIF came into the picture my amount of tax reduced considerably due to the fact that 5% of the opening balance was less than what I was getting as a distribution along with the odd year of a decrease in value in the funds allowing use of the CV method.

    We have been over this before, and you didn't agree, but the $50,000 minimus is a cost price calculation, not a value calculation.

    XRO's omission from list is, I think, simply due to the fact it does not pay a dividend.

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    Quote Originally Posted by SBQ View Post
    You base my question on the basis that FIF is exempted under $50K NZD? This is a joke - even justakiwi knows the funds i'm dealing with (and for many of those that have invested in shares for a very long time nearing retirement), have well in excess of $50K NZD.

    The issue of FIF has been batted many times in other threads. The wording by IRD's FIF manual seems to be interpreted differently by individuals here. ie. buying multiples of shares under $50K to assume that it exempts from FIF. I prefer to take the common sense approach and i'm sure all the financial advisers in NZ will agree. $50K is a threshold of ALL TOTAL assets that the individual has abroad. It would be senseless to think otherwise - and this is just only 1 example. One does not simply elect out of FIF just like one doesn't elect out of paying other taxes.

    I am doing my research and fact checking. As the financial advisers tell me, the goal for FIF is to address taxation on large capital gains on foreign shares, namely US equities that have a tax system that favours capital gains on growth stocks instead of paying dividends (ie like Berkshire Hathaway). If FIF had some leeway for ASX listings being exempted from FIF, then perhaps I thought there would be some way to invest in a similar ETF holding such as the S&P500 (by Australian listings). However, it seems there's a fair % of ASX listings that do not qualify for FIF exemption.

    Using the FIF lookup link that FTG provided for the current taxation year, can someone explain to me why a NZ company XERO ticker XRO trading on the ASX is not FIF exempted? While an Australian operated company BHP shows up as being FIF exempted?

    So far i've not seen any benefit of investments going under FIF so perhaps you can elaborate this from a retirement planning point of view who this would be advantageous? My friends in Canada appear to have retirement plans where their share investments grow tax free (deferred taxation at retirement) and in many cases, have tax free registered accounts for education and TSFA which is 100% tax free for the intended purpose (ie saving for education, or disabilities). Yes I know we live in NZ, but I don't think it's fair that the productive working society, those who transition into the work force and work until retirement, that their investments are penalising them as the pay tax on those investment gains. This is a huge disincentive when the rich in NZ are able to buy multiple houses without paying any tax on the capital gain. They can hold the houses in a trust, and all the capital gains are tax free. The worker pays into a Kiwi Saver plan, in either a PIE fund or some other fund (FIF or not), and is still subjected to taxes every year.

    Not trying to be hard on you but let's be real here. What are the advantages please?
    SBQ, "tut tut". Yet again you appear to be making a few glib assumptions & hence some rather broad sweeping statements here. Sorry, I'm going to call you out on a couple of them, but there are too many for me to invest my time in addressing each & every one.

    Let's remember SBQ that you started this thread with a simple question... ASX ETF - like S&P500 = NO FIF. I simply responded to your question, providing a web link to assist you & other STers in determining whether an ASX listed entity is exempt under the FIF regime or not. I also suggested that depending on an individual's/entity's particular circumstances, coming under the FIF regime MAY actually not be required or the best pathway.

    To clarify & correct you
    - At no point did I claim to know your (or any other ST members for that matter) financial position ("claimed" and/or actual)
    - At no point did I claim that the advantages of coming under FIF outweighed (or not) not doing so; or vise-versa.

    For what it is worth, my opinion is that the NZ FIF regime is an absolute dog. Significantly over-engineered, creating heavy compliance costs and many unintended consequences. When followed, the regime materially impacts real Net returns, which in turn goes on to change the behaviours of NZ investors.
    But as you say, there are plenty of other FIF threads on ST where any further detailed discussion is more suited.

    SBQ, apologies if you find this a bit harsh, but I assume that you genuinely wish to acquire more knowledge and improve your understanding with points discussed on ST, rather than it primarily being a soap box for yourself? If so, I would respectfully suggest expending your energy on posturing is not going to get you very far, let alone earning the enduring respect of fellow ST participants. I suggest you should take twice the time to properly read others' posts, and output half the amount you seem to currently keenly dispense.

    You say that you are nearing retirement, so I can only assume that you have some reasonable life (and investing) experience. Experience that some others can surely learn from.
    Maybe focus on the quality of your posts rather than the quantity. :-)
    Last edited by FTG; 09-06-2021 at 03:34 PM.
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    Quote Originally Posted by SBQ View Post
    You base my question on the basis that FIF is exempted under $50K NZD? This is a joke - even justakiwi knows the funds i'm dealing with (and for many of those that have invested in shares for a very long time nearing retirement), have well in excess of $50K NZD.

    The issue of FIF has been batted many times in other threads. The wording by IRD's FIF manual seems to be interpreted differently by individuals here. ie. buying multiples of shares under $50K to assume that it exempts from FIF. I prefer to take the common sense approach and i'm sure all the financial advisers in NZ will agree. $50K is a threshold of ALL TOTAL assets that the individual has abroad. It would be senseless to think otherwise - and this is just only 1 example. One does not simply elect out of FIF just like one doesn't elect out of paying other taxes.

    I am doing my research and fact checking. As the financial advisers tell me, the goal for FIF is to address taxation on large capital gains on foreign shares, namely US equities that have a tax system that favours capital gains on growth stocks instead of paying dividends (ie like Berkshire Hathaway). If FIF had some leeway for ASX listings being exempted from FIF, then perhaps I thought there would be some way to invest in a similar ETF holding such as the S&P500 (by Australian listings). However, it seems there's a fair % of ASX listings that do not qualify for FIF exemption.

    Using the FIF lookup link that FTG provided for the current taxation year, can someone explain to me why a NZ company XERO ticker XRO trading on the ASX is not FIF exempted? While an Australian operated company BHP shows up as being FIF exempted?

    So far i've not seen any benefit of investments going under FIF so perhaps you can elaborate this from a retirement planning point of view who this would be advantageous? My friends in Canada appear to have retirement plans where their share investments grow tax free (deferred taxation at retirement) and in many cases, have tax free registered accounts for education and TSFA which is 100% tax free for the intended purpose (ie saving for education, or disabilities). Yes I know we live in NZ, but I don't think it's fair that the productive working society, those who transition into the work force and work until retirement, that their investments are penalising them as the pay tax on those investment gains. This is a huge disincentive when the rich in NZ are able to buy multiple houses without paying any tax on the capital gain. They can hold the houses in a trust, and all the capital gains are tax free. The worker pays into a Kiwi Saver plan, in either a PIE fund or some other fund (FIF or not), and is still subjected to taxes every year.

    Not trying to be hard on you but let's be real here. What are the advantages please?
    I am an idiot.

    By mistake I gave good rep to this post when I meant to give it FTG. I think these 3 letter acronym names confuse me.

    Actually I find the post to be in part offensive and believe it shows the posters total ignorance caused by their narrow-mindedness and total unwillingness to deviate from their prejudices.
    om mani peme hum

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    Quote Originally Posted by 777 View Post
    ....XRO's omission from list is, I think, simply due to the fact it does not pay a dividend.
    The IRD website explains that XRO does not come under FIF at all because it is a NZ company.

    You treat it the same as, for example, Mainfreight or Turners.
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    Quote Originally Posted by 777 View Post
    I had Platinum Funds for about 15 years. Every year ,in line with Australian requirements of paying out what they made, I received large distributions all taxable at 33c/$. Once FIF came into the picture my amount of tax reduced considerably due to the fact that 5% of the opening balance was less than what I was getting as a distribution along with the odd year of a decrease in value in the funds allowing use of the CV method.

    We have been over this before, and you didn't agree, but the $50,000 minimus is a cost price calculation, not a value calculation.

    XRO's omission from list is, I think, simply due to the fact it does not pay a dividend.
    From what I recall, switching on years between FIF & CV does not apply to managed funds like PIE but rather, is only allowed for private individuals. As long as the funds that hold the equities can determine a fair market value (ie. any share on the stock exchange), then the FDR must be used.

    https://www.taxtechnical.ird.govt.nz...ulation-method

    "In order to use the cost method, the FIF interest must be an ordinary share and the person must not be able to obtain a market value for the interest except by independent valuation. If a person is able to obtain a market value without an independent valuation (for example, if the FIF is listed on a stock exchange), they will usually be required to apply the fair dividend method."

    Another site makes the same reference in a response to the question: https://investnow.co.nz/expect-pay-t...ment-pie-fund/

    "For example, global share PIE funds always pay the FDR tax, even when returns are negative. In contrast an individual in a FIF fund can choose to move from the FDR methodology, and use what is called the CV (Comparative Value) methodology for calculating their tax (provided they use the same methodology for all their FIF investments in any given year)"

    Perhaps you can elaborate how your Platinum Fund is able to switch between FIF valuations?

    The $50K threshold is a bit of a misnomer and it does not apply to anyone that is in a managed fund contribution scheme such as Kiwi Saver or PIE. This threshold is to address individuals that invest directly (not through a fund). Hatch's website has a good example https://www.hatchinvest.nz/learn-articles/tax-50000-fif

    Basically what it means, when the total cost breaches $50K, FIF kicks in. The example where the person puts $10K every year for 5 years, FIF kicks in on the 5th year.

    As for XRO - that's is a for sure kick in the NZ investors face? A NZ company that once traded on the NZX, free of capital gains for NZ investors owning. Then does an expatriation move to the ASX. Voila, NZ investors on XRO get screwed on the tax benefit. So basically what you're saying is to be FIF exempted, the corporation must be paying sufficient dividends? How about the man utility companies on the NYSE that pay dividends? Why aren't those FIF exempted? This is the kind of non-sense unfair playing field I don't understand with NZ tax laws ; what kind of thinking do these politicians come up with (Michael Cullen!!!)

    Again, it would be great if someone in industry can directly clarify what i've said. It's too easy to make assumptions instead of finding the facts. If the references i've made are out of date, then I stand corrected.

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    Quote Originally Posted by Snow Leopard View Post
    The IRD website explains that XRO does not come under FIF at all because it is a NZ company.

    You treat it the same as, for example, Mainfreight or Turners.
    Yes a NZ company that does NOT trade on the NZX. If it were a dual listed company, then it would give the option for NZ investors to buy Xero on the NZX and benefit from tax free capital gains? Correct me if i'm mistaken.

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    SBQ I look at it as an individual investing off shore. You appear to be creating a fund or some such thing, way out my area.

    As far as my treatment of my investment in Platinum Funds units the following cut and paste from the IRD site explains it.

    This calculator is for New Zealand tax residents who have investments in foreign companies with a purchase price of more than NZ$50,000 or who choose to use the FDR method under the FIF rules

    Your direct income share in the FIF must be less than 10% at all times in the income year if the investment is not in a grey list country, and at any time if it is in a grey list country.

    You can calculate your taxable income in four different ways:
    Use the combined FDR and CV calculator to compare and choose the lesser liability
    Use only the FDR method to calculate your taxable income
    Use only the CV method for your guarantee return investments
    Use the cost method if you don’t know the market value of your investment, but have an independent valuation

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