TEM.NZX - Templeton Emerging Markets Investment Trust Plc Ord Shares

[777]

Just a small comment on snoopy's post. He states "excludes most Australian investments". Correct when deals with shares but the FIF does include all fund investments. Some funds though must be done under the CV method not the FDR method. They are found on the IRD website. Otherwise a good post.

[Traderx]

Hi all

Basic question which I can't seem to find an answer to on IRD website hope you can help.

If you are under the $50k FIF threshold can you still elect to be taxed by FDR?

Scenario: a lot of aussie unit trust funds etc pay out large distributions of cap gains etc (platinum funds for example), which i think would be taxable in NZ as a dividend/distribution, so could you elect to be under FDR even if you are under the $50k threshold so that you limit your "return" to 5%?

[777]

I am sure you can but once choosing that method then you would have to continue with it. No "cherry picking" so to speak. It is exemption to the FIF rules so by my interpretation it is up to you whether you wish to take up the exemption or not.

[Snoopy]

Hi all

Basic question which I can't seem to find an answer to on IRD website hope you can help.

If you are under the $50k FIF threshold can you still elect to be taxed by FDR?

Scenario: a lot of aussie unit trust funds etc pay out large distributions of cap gains etc (platinum funds for example), which i think would be taxable in NZ as a dividend/distribution, so could you elect to be under FDR even if you are under the $50k threshold so that you limit your "return" to 5%?

I would say unlikely Traderx, which is probably why you can't find it on the IRD website. The $50,000 FIF limit was to allow small (sic) investors to duck under the paperwork requirments of the FIF regime. Peter Dunne thought it would be unfair to demand the more complicated paperwork from such investors. IOW the cost of the paperwork wouldn't justify the extra tax brought in. I put it like that because Dunne was under the impression that FIF taxpayers would generally pay more tax as a result of the FIF scheme. Over the long term I think he is right, although for any particular year that is not necessarily so. For a growth investment over the long term I think you will be worse off under FIF. I don't think it is too smart to try and join the FIF brigade if you don't have to!

SNOOPY

[Snoopy]

Just a small comment on snoopy's post. He states "excludes most Australian investments". Correct when deals with shares but the FIF does include all fund investments. Some funds though must be done under the CV method not the FDR method. They are found on the IRD website.

One loophole that Dunne wanted to plug was investors buying funds in Australia that held worldwide shares, and hence escaping the FIF net. That is why Australian unit trusts are generally captured under the FIF regime. Westfield is one such example, as they own property in the USA and Europe as well as Australasia. But what about the new Westfield float that only holds properties in Australasia?

SNOOPY

[Lizard]

I don't think you can technically elect to join FIF regime if under the $50k, but unless you are obviously well out of reach, I doubt IRD would bother to audit your entry price. In fact, I suspect they would prefer not to audit any returns on FIF calcs and would only be incentivised to do so if they saw large $'s involved.

Re the company tax question, I have an inkling that companies will all be paying company tax rate on a comparative value basis for all shareholdings, so are not affected by FIF regime - long time since I checked this though, so don't trust my memory. Would think most companies would use an accountant?

[Lizard]

Okay, just to correct previous, I have been advised by a more expert ST member that companies generally WOULD use the FDR method. They cannot use comparative value, although they may have other choices. Legislation here if you want to make sense of it.

[BlackPeter]

Time to accumulate?

http://www.marketwatch.com/story/7-r...cks-2014-01-28

looks like a long time anybody posted on this thread ... and the TEM share price trend currently does not provide a pretty sight. On the other hand - do we all assume that China, India, Brazil, Indonesia, Turkey, South Africa and Russia just quietly close down their economies? Well, maybe Russia will, given Putins attempts to play Hitler, but what about the rest of the countries? And even Russia should survive given that its gas fields are even larger than its level of corruption

Maybe the current share price is an opportunity to buy some more?

discl: holding;

[BlackPeter]

Light at the end of the tunnel?

TEM SP started to bounce (though still quite low) - and first somewhat positive news about emerging markets performance appearing on the internet ... just a warmer day in winter or is this the first sign of spring?

http://www.bloomberg.com/news/2014-0...-forecast.html

discl: holding

[Lizard]

Yes, I saw that too... maybe time to add again.