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  1. #16
    Trying to get outta here
    Join Date
    Nov 2013
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    6,669

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    Quote Originally Posted by SBQ View Post
    The only distinction of a portfolio trading account is to tax the gains at straight income rates. We know this is not the case but we also don't know about FIF. Under FIF the account does not have to be a speculative trading account on foreign shares. It's a straight out tax on paper gains regardless if the account has had zero or repeated trading activity.

    Every share in the portfolio needs to be looked at if they're 100% FIF exempted. Some companies go in and out of FIF eligibility in certain years ; just like NZ shares that have an imputed dividend tax credit changes year after year to the shareholders.

    If all ticks clear, then there's no sense to see a tax specialist. She needs to work out estate planning like I have with my father. I find it odd how she would choose to go into NZ PIE funds with the sale of these shares because if it's a significant sum of $, there are many better, more tax friendly, places around the world to move to. Even Australia would be a better bet for her to reside in because the PIE funds are taxed under FIF approach if they invest abroad. To invest solely in NZ equities is a huge risk when if she lived in Australia, she would be open to investments globally with no tax discrimination and only a capital gain tax (which only half of the gain is income taxable) and up to her when she chooses to elect the sale for the capital gain.
    She has no FIF holdings as stated a few posts above.

  2. #17
    Junior Member
    Join Date
    Jun 2016
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    8

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    Quote Originally Posted by couta1 View Post
    Just repeating this post, this lady is NOT a trader under NZ tax law period, only a tax expert out to make extra bucks would say otherwise.
    Thanks couta1. I have a reasonable amount of knowledge and do understand all the answers. Things like FIF and suggesting that she complicate her life more by trying to become a foreign tax resident are not answering the original question and are just joise. I agree with you wholeheartedly that she's NOT a trader under NZ tax law. I was pretty sure of that when I posted but really needed people like you and some of the other commenters to say so. Not for confirmation bias. But to see if I was heading down the right thinking path and to open up our thinking if there were issues we hadn't thought about.

    There has been a lot of thinking gone into this from the starting position of AML problems with the Westpac account to get to this point of liquidating. Her husband's estate still has Australian holdings and it has been a dreadful problem. Even getting probate from NZ in Oz can be difficult if you're elderly and have always done everything yourself all your life.

    Her NOT being a trader doesn't of course guaratee that the IRD doesn't try it on. But I will be talking to her on the weekend and hopefully she will agree to liquidate her Australian holdings.
    Someone above questioned why she would go into a PIE and made the assumption it was for tax savings. The number one reason to go into a PIE for her is so that she doesn't have to return the income on her IR3, which is administratively too difficult for her any more.* I often find it interesting how some people can't put themselves in others' shoes.

    *She refuses to use experts for everything. Be it tax experts, or an accountant for her returns or a lawyer to get the probate in Australia and so on. It's partially a money thing. It's a mis-guided belief that experts make mistakes and don't know what they're talking about.

  3. #18
    Junior Member
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    Jun 2016
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    Thanks SBQ. I know you're trying to help. But she's trying to simplify her life drastically. She has no FIF holdings for that reason and it has been checked carefully. Her holding numbers are small so that's relatively easy in terms of compliance. She is very very very aware of the FIF regime and hates it with a passion. Becoming tax resident of another country is not simplifying her life. She isn't going to be in NZ equities. The money as I mentioned above will go into a diversified Pie fund (or if she's really determined to do so, an Australian Pie fund. There was never any mention of it being invested in NZ equities or funds. She has no need to save tax or get a better tax rate than a Pie. She earns way more in dividends than she spends. Buying the Pie is to simplify her life. No entry or exit fees through the likes of InvestNow and most importantly no need to enter it in the IR3. Bingo. She doesn't care if the capital gains aren't what they could be. She won't be spending the capital. She already earns from dividends a very comfortable margin over what she needs to live.

  4. #19
    Member
    Join Date
    Nov 2018
    Location
    Christchurch
    Posts
    176

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    There has been a lot of thinking gone into this from the starting position of AML problems with the Westpac account to get to this point of liquidating. Her husband's estate still has Australian holdings and it has been a dreadful problem. Even getting probate from NZ in Oz can be difficult if you're elderly and have always done everything yourself all your life.
    I've come under the same problem with AML, CRS, & FMA to the point my wife and I are serious at moving back to Canada. Despite living in NZ for almost 25 years, the only thing that really keeps us here is family relatives living here. I can't be silly about life and when I look at our children, what options do they have if they only kept their sights on NZ? Estate planning is a biggie and that is why i've structured my dad's estate to be joint held if not already gifted. While lawyers etc. do not recommend this, the game plan is when he dies, he will have nothing and since joint accounts are not part of probate, the will that he has would most likely be worth less than the paper it's written on. For the mean time, we're sticking it out in NZ for as long as he's alive.

    NZ PIE funds cover everything and play by the same rules as an individual investing the assets abroad (ie FIF). The advantage is max 28% PIR which mainly benefits those on the top end of the tax bracket. Since NZ investments are limited in return, it's very hard to judge if buying say an S&P500 index ETF when if in a PIE fund eligibility, that the 5% FDR rate would net you more at the end? The following link tells a case where investing in a PIE fund is worse off as even on years with negative, they're still subjected to FIF but on the individual, they can change to CR method of FIF: https://investnow.co.nz/expect-pay-t...ment-pie-fund/

    IMO, I find collecting dividends tax inefficient. This argument has been mentioned in other threads but my key reason is what erode the book value of the company by dishing out dividends when the profits can be kept and reinvested in the company ? (ie Warren Buffet way). When the book value goes up, so does the share value. Instead of collecting a dividend, the shareholder just only sell a portion of their holding if they want to take an income.

    IR3 income or not, with CRS, investing into any fund, PIE, etc. bank accounts, etc. require IRD tax # and the funds report that data to IRD. No matter where you put your $ (for most part with some 110 nations around the world that subscribe to CRS), your resident tax authority will know. I a lot of cases, it does not make sense to even change bank accounts or brokers because the next one is still bound by the same CRS rules.

    If you're living in NZ, your financial freedom has been limited much the same way as owning guns. The FMA basically makes it nearly impossible for a NZ resident to open an offshore / brokerage account abroad and thus, forces NZ investors to look only at local managed funds if they want to get foreign exposure.
    Last edited by SBQ; 24-10-2019 at 01:28 PM.

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