Quote Originally Posted by Snoopy View Post
Thanks for the reference, but I am not sure the author of this article, Tamsyn Parker, has a complete grasp of the subject The article is worded in a way that makes ithe issue of tax on capital gains ambiguous.

"Funds are currently taxed using the portfolio investment entity regime which means individuals are taxed on the income from their fund at a prescribed investor rate which is based on what they earn. There are three rates - 10.5 per cent, 17.5 per cent and 28 per cent. The income tax is calculated daily and tax is paid annually. The aim is to ensure people are not taxed at a rate that exceeds their personal tax rate."

That bit at least seems clear, even if no reference is given to confirm it,

"Currently there is no tax on the gains from trading in New Zealand and Australian shares. Tax on foreign shares is worked out at the fair dividend rate."

For an individual 'trading' in shares in NZ and Australia -with the aim of making a profit- is taxed. So is Ms Parker telling us that PIE funds have an advantage over the individual in this regard? That doesn't square with the levelling of the playing field argument for creating PIE. And as SBQ has pointed out, shares invested subject to the under the FIF regime pay tax in all years when in a fund. As an individual you get a tax holiday if the sum of your shares in the FIF regime makes a loss during the year. One again 'not equal'.

SNOOPY
The article explaining CGT on shares, is not very clear and does not tell much from the individual investor's point of view. Common sense logic need apply. The difference between a PIE fund and all the other managed funds is simply, the PIE funds have a tax that is maxed out at 28% ; which we spoke before, benefits the high income earners in the 30%+ tax bracket. I'm uncertain what planet the WTG was on during the CGT discussions. It seemed like they wanted to make things as complicated as possible just so Sir Michael Culleen could show his pay he received was worthy.

We have all sorts of different measuring sticks in taxation. Wouldn't it be easier just to assume all managed funds and investments into shares were tax free UNTIL the time you sell the asset? That's how other countries do it ; that article talks about taxing the capital gain on a daily basis which is no different than the current regime of managed funds being taxing on paper profits?? I mean talk about complications on a daily basis or more of NZ's phobia of wanting to get the tax FIRST before the investor can cash up in retirement.

Under the issue of FIF / FDR for investing foreign shares by the individual. It seems there's no mention of the de-minus threshold by the individual of up to $50,000 NZD. Yes. all accounts under $50K are exempt from FIF or any sort of taxation on the capital gain. To a married couple, that would be up to $100K they can have invested in without a worry about FIF. How come financial advisors in NZ aren't tweeting about this??? They must think all people who start to invest must have well over $50K to start with... (sarcasm). The crux of the issue I find here is... for the small individual investor looking to invest abroad, they can spend several years making contributions to their portfolio while remaining under the $50K value, without a concern of tax, while if they took that SAME $ to a managed fund in NZ, they would be subjected to PIR tax from the first $1 they put on day one to the several years that managed fund would of managed their account holdings. The better question is what % of these managed funds or those under Kiwi Saver have in excess of $50K in account value? Keep in mind, all these managed funds take a mgt fee.