Where to invest?

**peat** · 12-01-2018, 01:21 PM

my understanding is that conversely if you are subject to FIF but you earned less than the 5% imputed return then if you actually declare what you did get then you pay tax on that and not the 5%. So as long as you're prepared to do the return accurately the 5% doesnt necessarily have to be paid.

(Discl - not tax advice)

**Beagle** · 12-01-2018, 01:27 PM

http://www.ird.govt.nz/resources/7/6...dd2d/ir461.pdf
Before anyone asks, NO, I am not going to answer any questions about this. If you have any questions after reading this you should consult your accountant.

**777** · 12-01-2018, 03:17 PM

Originally Posted by peat

my understanding is that conversely if you are subject to FIF but you earned less than the 5% imputed return then if you actually declare what you did get then you pay tax on that and not the 5%. So as long as you're prepared to do the return accurately the 5% doesnt necessarily have to be paid.

(Discl - not tax advice)

Known as the CV method of calculation.

If you use the IRD calculator it will come up with the lower amount to pay of the FDR or the CV. It is a bloody hard calculator to use so I just do the calculation manually.

**777** · 12-01-2018, 03:18 PM

Originally Posted by morphs

I used to try and avoid FIF because I didn't understand it. It seemed complex and scary. But once I understood it, it's actually pretty straightforward. In some cases it is a big advantage. For example, if you own Aussie unit trusts, they must distribute all their capital gains every year on June 30th. If they have a good year that could be a significant distribution. If you are outside FIF (under 50K) you will have to pay tax on the full distribution as income but if you account for it under FIF (FDR), you only pay tax on 5% of the opening value no matter what the distributions are.

At least I am not the only one that sees it this way. I would hate for it to be removed.

**morphs** · 12-01-2018, 03:50 PM

Originally Posted by 777

Known as the CV method of calculation.

If you use the IRD calculator it will come up with the lower amount to pay of the FDR or the CV. It is a bloody hard calculator to use so I just do the calculation manually.

Yes, that is right. Under FIF, the maximum gain that is taxable is 5%. Anything less than that, you use the CV method.

**Jonboyz** · 13-01-2018, 01:49 PM

Originally Posted by kiwico

It's always a good idea to try to not die anyway but refer to Voltage's comments below from the Should I actively avoid FIF investments thread.

A casual look at estate taxes on inheritances shows that it is only on amounts more than $5.49 million that are taxed. Source:
https://www.forbes.com/sites/ashleae.../#76bb82453b70

Unless there is a seperate tax for overseas investors who die.?

**morphs** · 15-01-2018, 02:08 PM

Originally Posted by Jonboyz

A casual look at estate taxes on inheritances shows that it is only on amounts more than $5.49 million that are taxed. Source:
https://www.forbes.com/sites/ashleae.../#76bb82453b70

Unless there is a seperate tax for overseas investors who die.?

There most certainly is: http://perkinsaccounting.com/u-s-est...-us-decedents/ If you were lucky enough to die with, say, $1M in US assets, they would tax $940,000 of it at 40%. So, a tax payable of US$376,000. Nice.

**kiwico** · 15-01-2018, 03:31 PM

Interesting to see that the Vanguard US Total Market Shares Index ETF on the ASX (VTS) and the Vanguard All-World ex-US Shares Index ETF (ASX code VEU) both list US estate tax as potentially being applicable even though the prospectus for each states "For the avoidance of doubt, Vanguard US Total Market Shares Index ETF securities are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws."