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  1. #11
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    Quote Originally Posted by SBQ View Post
    Following link Buffet reiterates the importance of keeping management fees down (and indirectly from the NZ perspective, keeping taxes down). Unfortunately for the NZ residents, we are stuck with FIF which imposes a 5% FDR on the entire fund portfolio value - effectively acting the same as a 5% management fee as you lose compound returns):
    SBQ you are right about the tax payable by NZ holders of 'overseas' shares, because of the NZ FIF regime, being equivalent to an ongoing annual management fee. You are wrong about the rate though. NZ Taxpayers are taxed based on 5% of the capital value of their FIF portfolio at the beginning of each financial year. That 5% of opening capital value is taxed at your marginal tax rate. If your marginal tax rate is 30%, then the tax rate you pay on your opening portfolio balance is:

    0.3 x 5% = 1.5%

    This is less that one third of the figure that you were bandying about.

    SNOOPY
    Last edited by Snoopy; 12-01-2020 at 10:32 PM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  2. #12
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    Quote Originally Posted by Snoopy View Post
    SBQ you are right about the tax payable by NZ holders of 'overseas' shares, because of the NZ FIF regime, being equivalent to an ongoing annual management fee. You are wrong about the rate though. NZ Taxpayers are taxed based on 5% of the capital value of their FIF portfolio at the beginning of each financial year. That 5% of opening capital value is taxed at your marginal tax rate. If your marginal tax rate is 30%, then the tax rate you pay on your opening portfolio balance is:

    0.3 x 5% = 1.5%

    This is less that one third of the figure that you were bandying about.

    SNOOPY
    Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.

    Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

    The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).

  3. #13
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    Quote Originally Posted by SBQ View Post
    Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.

    Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

    The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).
    Canada sounds like a wonderful place, why don't you move there and quit whinging about NZ ?
    om mani peme hum

  4. #14
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    Quote Originally Posted by Snow Leopard View Post
    Canada sounds like a wonderful place, why don't you move there and quit whinging about NZ ?
    Snowwy, that is a total B S comment, grow up !!!

  5. #15
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    Quote Originally Posted by whatsup View Post
    Snowwy, that is a total B S comment, grow up !!!
    Canada not a wonderful place then?

    You could be right, a friend of mine in big trouble with his family because he & his wife want to spend time there.
    om mani peme hum

  6. #16
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    Can we please get back on track. Anyone else have anything helpful to contribute on my “beginners struggle?”

  7. #17
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    Sorry ma'am, won't do it again.

    Apart from moving to Canada where things are so much easier then at the end of the day you are going to have to invest time into learning and analysing companies from the perspective of your investment or trading style, putting some real money* where you conclusions say good value is and then see how it works out for you.


    Some you will win and some you will lose, both ways you will learn by actually doing it and having money in the market.

    You see how it goes and adapt with experience.


    *If I remember correctly you can buy small $$ of shares with low brokerage
    om mani peme hum

  8. #18
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    Quote Originally Posted by SBQ View Post
    However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).
    SBQ, to be clear, there is NO capital gains tax on PIE funds, whereas there definitely is a tax on investment property gains if you sell within 5 years. You also (of course) pay income tax on the rental income from property, just like you pay income tax on dividends from shares or funds.

  9. #19
    Guru justakiwi's Avatar
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    I suppose I did sound a bit like a (school) ma’am

    Yes, I’m investing $40 a week via Sharesies currently, which is small bikkies for most people, but I’m feeling pretty good about what I’ve achieved so far in terms of building my little portfolio. At just under 19% returns for 2019 (calendar year) my money is working a heck of a lot better for me than it was sitting in the bank. I am an investor - not a trader, so happy to be patient and see how it all unfolds. Doing heaps of reading, listening to podcasts, learning from others in various forums and so on. I guess for me, the analysis and interpretation of annual reports/financial reports, is where I struggle. Some companies are better than others at putting those things together in a way that novices can understand. It’s a learning curve. I thought there might have been some online courses available, but so far, I haven’t been able to find any.


    Quote Originally Posted by Snow Leopard View Post
    Sorry ma'am, won't do it again.

    Apart from moving to Canada where things are so much easier then at the end of the day you are going to have to invest time into learning and analysing companies from the perspective of your investment or trading style, putting some real money* where you conclusions say good value is and then see how it works out for you.


    Some you will win and some you will lose, both ways you will learn by actually doing it and having money in the market.

    You see how it goes and adapt with experience.


    *If I remember correctly you can buy small $$ of shares with low brokerage

  10. #20
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    Quote Originally Posted by justakiwi View Post
    I suppose I did sound a bit like a (school) ma’am

    I guess for me, the analysis and interpretation of annual reports/financial reports, is where I struggle. Some companies are better than others at putting those things together in a way that novices can understand.
    Do a major in accounting and you will be all au fait with it. I completed a finance degree many moons ago but it was once I had finished an accounting major that I really got to understand financial statements and more importantly the notes to the statements.

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