These investments are usually called FDR prohibited or CV enforced investments. That would save you some tax and some hassle. But I guess investors will get used to noting the value of their international shares on April 1 each year, and keeping track of dividends. Key features of New Zealand’s tax system include: 1. no inheritance tax 2. no general capital gains tax, although it can apply to some specific investments 3. no local or state taxes, apart from property rates levied by local councils and authorities 4. no payroll tax 5. no social security tax 6. no healthcare tax, apart from a very low levy for New Zealand’s Accident Compensation injury insurance scheme (ACC). 1) Is this a $50,000 exemption or a $50,000 threshold? A. It also covers managed funds held overseas and … Does this investment strategy make sense for the first year, or is it too good to be true? FIF-Exempt Overseas Income & Overseas Tax Credits Content also available for tax entities or on our global site.. For example BHP Billiton and Rio Tinto are dual listed in Australia and Britain, but are they resident in Australia? the other country or territory has deducted tax. This is an annual tax on the rise in value of your holdings, not a tax on the sale. The $50,000 threshold is based on the original cost of offshore shares. Probably the latter. # Include the dividend as usual and not enter it in the value of the shares, or # Personal investors have an exemption of $50,000 of the original cost (not current valuation) before the tax is payable. Will the IRD produce a booklet that could be used as a guide for those with overseas investments that clearly set out the rules of what can and cannot be done? In effect, then, part of the tax will sort of be on capital gains. The new rules don't apply to individuals whose non-Australasian overseas shares cost less than $50,000. # Does "overseas investment", i.e. Alternatively, the couple could have jointly owned shares totalling up to $100,000. For NZ tax purposes I have always shown these dividends in my annual tax return. Still, I don't know your circumstances, and it may make good sense for you. This is your personal tax rate. However, the exemption will apply for a limited period to trusts created on a person's death, so that trustees have sufficient time to deal with the deceased's estate under the will." The FIF tax must be paid even if none of the earnings ever come into New Zealand and even if you receive no dividends. Q. On currency changes, the situation is the same, really. Q. If, however, you have larger holdings or plan to grow your international holdings, it's probably better just to pay the tax. The good news is that investors on a Sharesight NZ Expert or Sharesight NZ Pro plan can run their own FIF tax report in just a few clicks using both the FDR and CV method. If you are not a tax resident, you pay tax on investments you have in New Zealand. What happens if a married couple each are close to this exemption level and one dies, leaving their assets to the survivor (trusts and estates have no exemption)? Tax for New Zealand tax residents. # Under the earlier version of the tax bill, taxes could be carried forward into future years. # The total return on the shares - including dividends and any gain in price - during the tax year. You should use the exchange rate on the date of purchase. If the couple has some shares owned jointly, and some owned individually, each person would have to add half the cost of the jointly owned shares to their individual total. The woman's total would be $40,000 plus $15,000 (half of $30,000), which brings her over the threshold. # The new rules generally apply to shares only, although they will also apply to interests in some overseas super schemes and life insurance products. Some searching questions, answered here by Peter Frawley of Inland Revenue: 1) The $50,000 is a threshold. employers navigate New Zealand’s tax and employment related matters; we provide advice about tax planning opportunities, management of assignment policies and the provision of New Zealand tax filing services. If this is you, Sharesies can’t handle your tax for you and you should seek tax advice. * * * This is then converted to a certain number of shares, which are added to the base shareholding. A. But the rules have since changed, and there is no longer any situation in which taxes will be carried forward. Your second sentence is broadly speaking right. We have a couple of shares which were bought some years ago for around 2000 and are now worth 55,000. A. In fact, New Zealand has the least cash circulating per person than any other OECD country. In general, there are two methods in which you pay tax on your investments. In contrast, a non-resident is taxable only on New Zealand-sourced income. It seems that on April 1 we can look at the original purchase price of things to determine if we are under the $50,000 for tax purposes. If you have a job to come to, it is a good idea to open an account before you get here. A. Her website is www.maryholm.com. Let's say a person with several US shares and a portfolio worth over the $50,000 threshold has several of these stocks placed in company dividend reinvestment programmes. Browse new legislation. For other cases, … Only you can decide if the strategy is worth the hassle, costs and possibly sleepless nights. # Not all investors will have to give a statement of assets - only those to whom the new rules apply. an insurer under a life insurance policy (and the policy is not offered or entered into in New Zealand). For example: A woman owns shares costing $40,000 and her husband owns shares costing $5000. And that means, says Frawley, "it is not appropriate to recognise capital losses". He adds that "individual facts and circumstances are taken into account". Regardless of tax, any investor in overseas shares needs to learn to ride those waves. The amount of tax your employer takes may not be all the tax you need to pay. If I may ask one more thing, if the value of one's overseas investment fluctuates wildly due purely to currency changes (which is a big risk for the $) will we be taxed on the gain but not be able to claim the losses? "Broadly, under the new method tax is paid on 5 per cent of the share portfolio's opening market value each year. So it isn't all bad. "If the shares make a loss then no tax is payable," adds Frawley. Q. "The new rules have been designed to minimise investors' compliance costs," he says. "This is so taxpayers can refer to the fixed actual cost when determining whether the threshold applies to them, rather than having to track changing market values over time," says Peter Frawley of Inland Revenue. If that is the case, you will be subject to tax only on overseas income or gains remitted to the UK. Basically, as long as you buy no more non-Australasian shares, you stay outside the new rules forever. The FIF-Exempt Overseas Income & Overseas Tax Credits page is part of the FIF Report available within Sharesight.It provides a taxable income summary for Australian shares that are excluded from the FIF tax regime. February 10, 2007 Q. I refer to the recent reply regarding the new overseas tax legislation from Inland Revenue, which stated that the Aussie exemption doesn't include companies that are not resident in Australia, even if they are listed on the Australian stock exchange. For older data, you may have to ask your bank. In such cases income is calculated under the comparative value method for as long as the person owns the investments. at no cost to us. My answer - not Peter Frawley's - is that if your international share holding originally cost, say, $50,000 to $70,000, and you have no plans to buy any more international shares, it would probably be a good idea to sell down to below $50,000. But it might be pretty hard to argue that you had any other purpose. My holdings will probably then be well over $50,000 (I've had them a long time). Each quarter a dividend investment statement is mailed stating the gross dollar dividend value, federal tax taken and then the net amount. But how are dividends on shares purchased during the year treated? The FIF regime was introduced to prevent NZ taxpayers using offshore entities to avoid or defer their NZ tax obligations. It won't matter whether the value of your overseas shares changes because of changes in the share price in the home country or because of currency fluctuations. In that case, then, you will receive those dividends tax-free - putting you at an advantage, in those years, over people not affected by the new tax rules. Therefore, in your situation there may be relief to the extent the Australian company operates in New Zealand and the dividends arise from that operation. If the rules do apply to you, when calculating your 2007/08 taxes, start with the value of your offshore shares next April 1. Sorry if this is a dumb question, but I would like an answer. Frawley says there are several websites that have foreign exchange calculators with historical data. But, says Peter Frawley of the department, "If a person receives a dividend from a company listed on the Australian stock exchange that carries Australian franking credits (this would be stated on the shareholder dividend statement that the person receives from the company) then this should provide sufficient certainty that the company is resident in Australia." That's a pity that you're planning to reduce your portfolio. New Zealand tax law treats the estate of a deceased person as a trust. A. From what I've read it may be advantageous and legitimate to sell these on or before March 30 and buy them back in April. Nevertheless, strictly speaking the new tax is not a capital gains tax. less than 10% of the units in a foreign unit trust. For a start, if you hold your international shares directly - as opposed to in a managed fund - and they cost less than $50,000 when purchased, you are exempt. And I don't think the new tax rules are harsh enough to warrant most people getting out of international shares. A. Inland Revenue has no plans to publish such a list. The new overseas tax legislation will affect many investors. Investments in overseas companies and managed funds costing less than NZ$50,000 and Australian shares not included in the FIF regime will usually be treated under the normal income tax rules, when on the basis the shares were not acquired with an intention of disposal, shareholders only pay tax on dividend income they receive. They don't apply to overseas property, bonds or cash. If the rules do apply to you, when calculating your 2007/08 taxes, start with the value of your offshore shares next April 1. Note, though, that the rules don't apply to investments in Australian resident listed companies, or if the total original cost of your non-Australian offshore shares is $50,000 or less. if you have $51,000 at purchase price, is $1,000 in the new system and subject to the tax and $50,000 exempt and taxable on income only, or is all $51,000 now included? # Will investors now have to give a statement of assets each year to the IRD? Richard Prebble: China has silenced New Zealand, NZ regulator issues Bitcoin warning: Be prepared to lose all your money, It's mother vs. son in Britain's priciest divorce war, 'It's desperate down there': West Coast town hanging on for Govt help, Police seek skipper and yacht last seen in the Marlborough Sounds. Examples are Private Portfolio Service Master funds (PPS), and ING property Securities Fund. Just to complete the picture, NZ-based share funds that invest only in Australian listed and based shares will not be subject to the rules. The IR330C form is the IR form you need to complete to choose the rate of tax you have deducted from your payments. Multinational Enterprises - Compliance Focus 2019 (PDF 941KB) Download guide Compliance focus documents from previous years. If you are a resident, but non-domiciled, the amount of UK tax you have to pay on foreign income and gains may sometimes depend on whether or not you bring money or assets into the UK. Murray Brewer Partner, Tax D +64 9 922 1386 M +64 27 448 8880 E murray.brewer@nz.gt.com Greg Thompson Partner and National Director, Tax Go to www.taxpolicy.ird.govt.nz, and scroll down the homepage to February 23, "More on offshore investment changes". Dividends/income received from such investments are not directly taxable. Inland Revenue has recently published two papers clarifying a lot of the issues people are asking about. 2009 2008 2007 2006 2005. will be taxed under the New rules have since changed, and there no... 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