Author Topic: New Zealand Investing  (Read 100944 times)

NZBubble

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Re: New Zealand Investing
« Reply #50 on: August 04, 2015, 05:30:17 PM »
Ok, thanks for that info.

How are you planning to manage the whole tax issue with offshore shares/funds. I know tax is capped at 5% but it's taxed on capital gains not payouts, is my understanding?

zb3

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Re: New Zealand Investing
« Reply #51 on: August 04, 2015, 06:41:02 PM »
Tax is on an accrual basis so it's capped at 5 percent regardless of whether you realise your gains or not.  Dividends aren't taxed per se although te 5% was intended to approximate nz div yeild rather than a capital gains tax.  However in reality it operates like a cap gains tax since dividends are close to fully imputed in nz.  Your will have to pay foreign tax on dividends from overseas shares of 15 percent (normally depends on whether we have a double tax agreement with that country) but you can claim a foreign tax credit for that.  So provided you do that tax will be capped at 5 percent, or if your investment returns less than 5 percent you'll be taxed on that amount but get no relief for losses.

It's not ideal given shares in nz are basically tax free (unless you're a trader), but it only equates to 1.65 percent of your return (.05 x.33 if you're on the top marginal rate).

zb3

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Re: New Zealand Investing
« Reply #52 on: August 04, 2015, 06:44:21 PM »
Also the FIF regime only kicks in for investment above 50k ( in which case entire amount subject to fif regime - first 50k not exempt).  It's calculated on the cost when you purchase te shares not their value at the end of the tax year.  Ie if you bought 50k worth at the bottom of the recession you'd still be exempt from the fif regime despite the fact your shares would be worth around 200k

kiwichick

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Re: New Zealand Investing
« Reply #53 on: August 04, 2015, 08:28:38 PM »
Interesting opinion piece from Brent Sheather in the NZ Herald today, comparing hedged and unhedged funds:

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11488731
« Last Edit: August 04, 2015, 08:33:59 PM by kiwichick »

zb3

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Re: New Zealand Investing
« Reply #54 on: August 04, 2015, 11:15:58 PM »
Very interesting article

GrowAMo

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Re: New Zealand Investing
« Reply #55 on: August 09, 2015, 12:12:31 AM »
I've learned to really hate fees and I can't see how SmartShares can justify 0.3% for buying somebody else's fund. That said I'm wondering whether I should be more concerned about 5% FIF vs. zero capital gains & imputation credits on NZ shares. Does anybody know where I can find capital, dividend & imputation history for the NZ50 over a decent period (say 10 years) so I can work it out?

For NZ shares I'm tempted to move towards having 50% in NZ10 shares directly 50% in MDZ - giving me 0.43% fees on average. Has anybody found good ways to reduce fees on their NZ holdings?

NZBubble

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Re: New Zealand Investing
« Reply #56 on: August 09, 2015, 12:34:51 AM »
Would FIF apply to the Smartshares international funds?

I can't answer your question about stats sorry; there's nothing on the NZX site?

I am a completely random investor and I have tended to have a look at the monthly offers from Rabo that often come with a 'no entry fee' offer. I judge more about their return than their fees. I think half of my managed funds are about 1.25% fees, but some of them have increased in value by as much as 20% in 8 months so I don't much care. Probably the worst possible strategy but....<shrugs>.

It's my version of a lotto ticket 😁

My question back is, I see reference to splitting your portfolio 70/20/10, I would have thought for us perhaps the split should be different as the global markets seem to make more than NZ shares, and are perhaps less risky with a bigger spread?

Thoughts?

GrowAMo

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Re: New Zealand Investing
« Reply #57 on: August 09, 2015, 02:46:41 AM »
"Would FIF apply to the Smartshares international funds?"

SmartShares would have to pay any taxes due, before passing on returns to investors. I'm assuming FIF would apply equally well to companies and trusts, so I think the answer is yes - although you'd only see it as a reduced return.

"I am a completely random investor and I have tended to have a look at the monthly offers from Rabo that often come with a 'no entry fee' offer. I judge more about their return than their fees. I think half of my managed funds are about 1.25% fees, but some of them have increased in value by as much as 20% in 8 months so I don't much care. Probably the worst possible strategy but....<shrugs>.

It's my version of a lotto ticket"

Sounds much more likely to make you a million than a lotto ticket :)

We've had a good bull run in recent years and some great returns, but if I look at the S&P500 over the last 10 years (taking in the GFC) it's more like 7.5%. Something like 6% seems like a reasonable long term expectation, take tax off at 28% you've got 4.32, fees of 1.25 you're down to 3.07%, then subtract inflation... That's why I don't like fees, they seem small - but so are my after tax returns over the long haul.

"My question back is, I see reference to splitting your portfolio 70/20/10, I would have thought for us perhaps the split should be different as the global markets seem to make more than NZ shares, and are perhaps less risky with a bigger spread?"

I was only talking about my NZ share holdings. You're right - I wouldn't want to hold everything in NZ shares for risk reasons. For the same reason TWF (VT) would seem lower risk than USF (VOO). Returns wise I was pleasantly surprised when I looked back to find that although the S&P500 got about 7.5% over the last 10 years, the NZ50 achieved more like 10.6% if my figures are right. Go NZ!

Personally I hold more than the 15 to 20% in NZ shares that I've seen in most funds. I figure my future is tied to the country in which I live and I like the idea of backing other Kiwis.

I just checked the imputation credits on my shares last year, and it's running at 20% of gross dividends. So for what I already own I'm paying almost no tax there.

NZBubble

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Re: New Zealand Investing
« Reply #58 on: August 09, 2015, 02:26:25 PM »
@GrowaMo That's such a lot of info there for me to think about, thanks.

I see your point about fees. I wish I didn't. I'm going to cling to the idea that the funds I've picked are all going to earn more than the average fund.

Because I'd rather pay 1.25% on a 20% increase in value than 0.4 on 7%. I wonder if I could make millions selling this idea lol? Wait, I think I may have heard it somewhere else first.

I have halted my plan to send off my application for Smartshares. I think I should have a look at the returns on each fund but there's nothing on the Smartshares website.
Should I just look on the Vanguard site for the relevant fund?

zb3

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Re: New Zealand Investing
« Reply #59 on: August 10, 2015, 02:32:43 AM »
Smartshares funds are PIEs (portfolio investment entities) and are subject to the FIF regime but the tax is taken care of by the fund.

GrowAMo

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Re: New Zealand Investing
« Reply #60 on: August 10, 2015, 04:24:50 AM »
I have halted my plan to send off my application for Smartshares. I think I should have a look at the returns on each fund but there's nothing on the Smartshares website.
Should I just look on the Vanguard site for the relevant fund?

Yep, there won't be any history on the Vanguard backed SmartShares ETFs as they're brand new. I found them here:
https://www.google.com/finance?q=VT
https://www.google.com/finance?q=VOO

I can complain about the fees, but SmartShares are still the cheapest I know of in NZ - unless you want to go direct as @zb3 did (respect!), and they'll make drip feeding easy. Don't let me put you off!

And hey - I figured out how to make the quoting work!

kiwichick

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Re: New Zealand Investing
« Reply #61 on: October 01, 2015, 06:45:41 PM »
Do many people here invest directly in US stocks? If so, who do you use? Interactive Brokers look best for active traders, not infrequent buy-and-hold investors due to the US$10 monthly account fee.

Is it too much to ask for cheap brokerage, no account fees, and a way to transfer funds without high Wire charges?? In a perfect world, brokers would take deposits via Visa debit, but I haven't seen any who do - maybe something to do with anti-money laundering laws.

Does anyone use TD Ameritrade or E*Trade?

NZSurfer

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Re: New Zealand Investing
« Reply #62 on: October 01, 2015, 07:19:21 PM »
I do so through Optionsxpress as I used to trade options, but just hold a few shares now.

There a lot of comparison sites that show the different brokerage options (google top 10 share brokers or similar), which is good to compare all the different fees and commissions. There are some really cheap ones out there.

The money transfer has always been a pain, and one of the reasons why I haven't put any funds into my account in years.

kiwichick

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Re: New Zealand Investing
« Reply #63 on: October 01, 2015, 08:07:22 PM »
I do so through Optionsxpress as I used to trade options, but just hold a few shares now.

There a lot of comparison sites that show the different brokerage options (google top 10 share brokers or similar), which is good to compare all the different fees and commissions. There are some really cheap ones out there.

The money transfer has always been a pain, and one of the reasons why I haven't put any funds into my account in years.

Their website doesn't appear to be too detailed. I'm guessing the "no platform fees" means no monthly account fee, is that right? Their wire-out charge is high at US$30. Can't see a mention of fees to accept funds or FX info. Do you wire money directly from an NZ bank account, or do you use a middle-man like NZForex? - sorry for the 101 questions! :-)

NZSurfer

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Re: New Zealand Investing
« Reply #64 on: October 02, 2015, 12:44:30 AM »
Yeah some sites are a bit hard to find out the fee information. I don't pay any month fee there, just trade commissions which are a bit on the high side also at $9.95 I believe.

I don't believe they charge anything to accept funds. Previously I've used a bank, but they give terrible rates, so would use a Forex broker. I've used a company called Collinsonfx for quite a few years for business currency transactions and have found them great to deal with. Good rates and just a $10 fee.

kiwichick

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Re: New Zealand Investing
« Reply #65 on: October 07, 2015, 12:20:59 PM »
Just a quick update if anyone else is interested in direct investing in US shares. After a bit of research, TD Ameritrade kept topping lists of online brokers, but I understood from various forum posts that they weren't accepting NZ clients. So I emailed them to to see if that's still the case and it turns out they are now accepting new clients from New Zealand. They'll also accept wire transfers through third parties (such as NZForex which looks much, much cheaper to use than the banks), but only after the initial deposit comes from a bank account in your name. Here's the full text:

Quote
Thank you for contacting us and I can help. We can take new clients from New Zealand. The initial funding must come from a bank account in your name. We can after that, accept bank wires from third parties. However, the acceptance of the wire is going to go through a process where the wire comes in, we contact you to ask - who is the 3rd party to you, why did they send funds to us, instead of you and what are you plans for the wired funds. At that time our Wire Department decides if they can accept the 3rd party wire. In my experience once a pattern is established (same 3rd party sending the funds), our Wire Department becomes much easier to work with. As you might expect, we have many governmental regulations that we have to be mindful of with international funds transfers.

OptionsXpress also looks very good as suggested by NZSurfer, though if you only trade a few times per year then they charge US$14.95 a trade. That's for the Australian branch - the US branch is cheaper at US$8.95 though I haven't contacted them yet to see if they take NZ customers or if you need to go through Aussie.

marcustachian

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Re: New Zealand Investing
« Reply #66 on: November 14, 2015, 12:42:04 PM »
Hi there,
Could someone please clarify the pros and cons of buying Smartshare ETFs on the NZX versus Vanguard ETFs on the ASX?
I have an ASB sharetrading account, currently with only an NZD account.

I see that the management fees for the ASX Vanguard ETFs are comparatively very low, but are there any extra fees involved in cashing dividend cheques or reinvesting dividends on the ASX if those ETFs are all in AUD?

Some advice would be much appreciated.
Cheers

the lorax

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Re: New Zealand Investing
« Reply #67 on: November 14, 2015, 04:27:02 PM »
hi
I am also with ASB and am trialling both options currently. Cashing the dividend cheques is very easy - they should set you up with a foreign currency AUD account so you can buy on ASX and the dividend cheques go into that. No fee, or at least nothing big, but the exchange rate won't be that good. Note also that VGS, VAS and probably some others allow dividend reinvestment. Cons are the tax - Smartshares ETFs are set up as PIEs, Vanguard ones obviously aren't and over $50K you get into the Foreign Investment Fund tax fun.
smartshares are good from a customer services point of view, however as noted on the kiwi mustachian facebook site recently, liquidity is pretty low in the smartshares funds, particularly the new ones so you might have trouble selling. Superlife and now part of the NZX with Smartshares, they have higher fees but easier to sell and they do all the tax side of things. cheers.

lee333

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Re: New Zealand Investing
« Reply #68 on: December 21, 2015, 11:05:21 PM »
Hi guys, New to the forum and relatively new to investing.

Kiwichick, I was just wondering, have you begun investing through TD Ameritrade yet and are they accepting NZForex wire transfers?
I contacted TD Ameritrade to confirm what you had been told. I was told that opening an account is no problem, however bank wires from NZForex might be a problem: "If the service is similar to Western Union or some other money transfer service, we do not accept those transfers".

Cheers, Lee

zb3

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Re: New Zealand Investing
« Reply #69 on: January 03, 2016, 11:56:53 PM »
hi
I am also with ASB and am trialling both options currently. Cashing the dividend cheques is very easy - they should set you up with a foreign currency AUD account so you can buy on ASX and the dividend cheques go into that. No fee, or at least nothing big, but the exchange rate won't be that good. Note also that VGS, VAS and probably some others allow dividend reinvestment. Cons are the tax - Smartshares ETFs are set up as PIEs, Vanguard ones obviously aren't and over $50K you get into the Foreign Investment Fund tax fun.
smartshares are good from a customer services point of view, however as noted on the kiwi mustachian facebook site recently, liquidity is pretty low in the smartshares funds, particularly the new ones so you might have trouble selling. Superlife and now part of the NZX with Smartshares, they have higher fees but easier to sell and they do all the tax side of things. cheers.

This advice isn't fully correct.  PIE funds are subject to the FIF regime as well - its just that the PIE fund takes care of the tax.  Aside from the fees, a huge disadvantage of using smartshares ETFs to invest in a vanguard fund is that PIE funds cannot use the comparative value method under the FIF regime.  I will give an example to illustrate the impact of this:

If I invested 100k in a vanguard ETF directly and it was worth only say 95k at the end of the year, I would pay no tax as I could use the comparative value method (basically under this method I pay tax on the gain, or if I make nothing or make a loss I pay no tax (note that companies cannot use this method so its better to invest via a family trust for foreign shares)).

If invested that 100k through a PIE fund, and the the shares were worth 95k at the end of the year, the PIE fund would still have to pay tax on 5% of the portfolio value.

This is a huge disadvantage of smartshares funds (also the fees).  However, if you are not overly sophisticated and are not able to do your taxes yourself, you may save money by using a PIE fund depending on the amount invested as you would not need to pay an accountant to do your tax return.
« Last Edit: January 04, 2016, 12:02:13 AM by zb3 »

zb3

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Re: New Zealand Investing
« Reply #70 on: January 03, 2016, 11:59:24 PM »
Hi there,
Could someone please clarify the pros and cons of buying Smartshare ETFs on the NZX versus Vanguard ETFs on the ASX?
I have an ASB sharetrading account, currently with only an NZD account.

I see that the management fees for the ASX Vanguard ETFs are comparatively very low, but are there any extra fees involved in cashing dividend cheques or reinvesting dividends on the ASX if those ETFs are all in AUD?

Some advice would be much appreciated.
Cheers

If you want to reinvest your dividends with ASB you will have to pay the brokerage fee, if you want to get the money you have to pay their forex fees.  The best thing you can do is have them pay AUD into your foreign currency account.

kiwichick

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Re: New Zealand Investing
« Reply #71 on: January 04, 2016, 07:04:13 PM »
Hi guys, New to the forum and relatively new to investing.

Kiwichick, I was just wondering, have you begun investing through TD Ameritrade yet and are they accepting NZForex wire transfers?
I contacted TD Ameritrade to confirm what you had been told. I was told that opening an account is no problem, however bank wires from NZForex might be a problem: "If the service is similar to Western Union or some other money transfer service, we do not accept those transfers".

Cheers, Lee

Hi Lee,
Sorry for the late reply - I've only just seen your question. No I haven't opened an account yet. If I do, it won't be until July next year when I'm expecting a lump sum to be paid out. I'm still on the fence about investing directly in US shares vs putting more into Smartshares. The email I received from TD Ameritrade said that the initial deposit had to come from a bank account in my name and then they could assess any further deposits through 3rd parties. But it all sounded a bit risky - I wouldn't want to send a lump sum over to them and have it returned (and probably still have fees charged).

sb14

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Re: New Zealand Investing
« Reply #72 on: April 10, 2016, 04:02:45 AM »
I've recently come across the realm of FI bloggers and have been hooked on the content and the method for saving and investing for potential early retirement.  After looking into the practicalities of doing this from NZ, its obvious its really expensive with fees and FIF tax which has put a huge dampener on my early enthusiasm.

I have an optionsxpress account and have been in touch with smart shares about investing through them but am still tossing up the best way to approach this.

Just wondering if any kiwis have been following the MMM, JM Collins, Mad Fientist etc blueprint for a few years now and are on the way to financial independence, even in light of the harsh fees and FIF tax we encounter which US based investors dont have to worry about. 

Every post I've come across about doing this from NZ has been really negative (rightfully so) due to options we have of doing global index fund investing from here.

kiwichick

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Re: New Zealand Investing
« Reply #73 on: April 10, 2016, 06:51:15 PM »
I think it really depends on how much money you have to invest. I'm still keen to send some capital over to a US stock broking account, but right now I don't feel I have enough saved to do so (though I could be swayed into it if the dollar goes back up over US$0.80, though I don't see that happening). You also need to be prepared to leave that money invested for years, otherwise you'll lose out to exchange fees etc (although if you could get an ATM card attached to the account, you could potentially use those funds as travel money :-) ).

Edited to add - the smartshares global etfs also have FIF tax applied; it's just hidden in the overall return. So the difference between investing in smartshares vs directly though a US account may not be as extreme as you think.
« Last Edit: April 10, 2016, 06:53:37 PM by kiwichick »

aspiringnomad

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Re: New Zealand Investing
« Reply #74 on: April 02, 2017, 10:52:01 AM »
Hi all, my wife and I are likely to settle in NZ (her home country) after we FIRE and slow travel for a bit. I'm from the US so all of my investments will be considered foreign for the purposes of FIF. I was initially concerned that the tax would throw a wrench in my FIRE plans, but after doing a bit more research and thinking about it, it's probably not too much different than what I would pay in taxes in the US post-FIRE, especially factoring in NZ's universal health care. If any kiwis out there are interested in rekindling this discussion, I have a couple of questions about the topics in this thread:

1) Any updates on investing in NZ? Is Smartshares still the cheapest of the easy options? I obviously have a US-based brokerage and bank account, so I'm guessing I'll just stick with that after moving (assuming I can), but it's good to know that NZ-based options have been slowly improving.

2) My understanding of FIF is the following: say my portfolio is worth $1.1m and the market is up 10% that year (assume no withdrawals for simplicity). I would pay taxes on $50k (5% of the starting value of $1m), which works out to about $8k based on NZ's current marginal tax rates assuming I earn no income outside of this portfolio. I would pay less or nothing if the market returns are less or negative. Did I miss anything about the FIF tax? If not, that seems like a reasonable and manageable tax burden to me. I'll have to factor it into my expenses so as not to mess up the SWR, but otherwise it shouldn't affect my FIRE plans unless I'm missing something.

3) How should I make the most of the 4-year new resident tax exemption? I'm guessing we can use that time to consider a house purchase, which would bring a large chunk of our portfolio on-shore. But I don't have the same affinity for owning real estate that many kiwis appear to have. I noticed that renting in the Auckland area is much, much cheaper than homeownership (almost half the weekly expense in some instances) and wouldn't want to buy into that type of situation. Since our settling in NZ is probably 4 years off and we'll have that 4-year tax exemption, maybe the market will normalize a bit in the meantime. If not, we'll probably remain renters. Any other considerations during the exemption?

4) More generally, anything else to consider from an investment standpoint? I'm really excited about our long-term plans to live in NZ, but want to make sure I've thought through the boring logistics of the transition to make it as smooth as possible.

Thanks!

BuildingFrugalHabits

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Re: New Zealand Investing
« Reply #75 on: April 08, 2017, 09:06:13 AM »
Hey does anyone know if the FIF applies to US retirement accounts such as 401k or Roth IRA?  It wasn't super obvious to me from a Google search.  Curious to hear from people who have FIRED to NZ from the USA and how they structured/optimized their finances and taxes. 

aspiringnomad

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Re: New Zealand Investing
« Reply #76 on: April 08, 2017, 09:39:48 AM »
Hey does anyone know if the FIF applies to US retirement accounts such as 401k or Roth IRA?  It wasn't super obvious to me from a Google search.  Curious to hear from people who have FIRED to NZ from the USA and how they structured/optimized their finances and taxes.

Good question and one that I'll need a definitive answer to as well. It appears that as of April 2014, foreign superannuation schemes are no longer taxed under FIF. To my mind, that should mean 401k is excluded from FIF, but not sure if it also includes Roth IRA. Seems like something really important to sort out before I start my Roth conversion ladder.

boatsydney

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Re: New Zealand Investing
« Reply #77 on: October 14, 2019, 12:13:53 AM »
We're an American family considering living in New Zealand, with the potential of permanently settling there, but also keeping our options open and may return to the US after a few years of working and living there. I still have 7-10 working years left.

The whole FIF treatment has me quite unsettled and has me re-considering the move.

Consider this example. Suppose that you had $100k and left it untouched for 10 years at 7.5%. The balance becomes $206,103. However, if you have to pay 33% tax on 5% of the balance every year, it only grows to $172,096 (assuming you pay for the taxes out of the fund). That's a huge difference! I feel bad for kiwi investors. This would result in about 20% less income if you start taking distributions after 10 years. And 30% less income if you leave it for 15 years.

It's too bad NZ wouldn't let me choose to forgo the tax now and pay capital gains later...

boatsydney

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Re: New Zealand Investing
« Reply #78 on: November 11, 2019, 02:23:05 PM »
...
2) My understanding of FIF is the following: say my portfolio is worth $1.1m and the market is up 10% that year (assume no withdrawals for simplicity). I would pay taxes on $50k (5% of the starting value of $1m), which works out to about $8k based on NZ's current marginal tax rates assuming I earn no income outside of this portfolio. I would pay less or nothing if the market returns are less or negative. Did I miss anything about the FIF tax? If not, that seems like a reasonable and manageable tax burden to me. I'll have to factor it into my expenses so as not to mess up the SWR, but otherwise it shouldn't affect my FIRE plans unless I'm missing something.
...

That's my understanding too. But, you have to be careful of the double taxation! When you sell shares, you will be taxed again by uncle sam at the capital gains rate.

aspiringnomad

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Re: New Zealand Investing
« Reply #79 on: November 13, 2019, 08:26:16 PM »
...
2) My understanding of FIF is the following: say my portfolio is worth $1.1m and the market is up 10% that year (assume no withdrawals for simplicity). I would pay taxes on $50k (5% of the starting value of $1m), which works out to about $8k based on NZ's current marginal tax rates assuming I earn no income outside of this portfolio. I would pay less or nothing if the market returns are less or negative. Did I miss anything about the FIF tax? If not, that seems like a reasonable and manageable tax burden to me. I'll have to factor it into my expenses so as not to mess up the SWR, but otherwise it shouldn't affect my FIRE plans unless I'm missing something.
...

That's my understanding too. But, you have to be careful of the double taxation! When you sell shares, you will be taxed again by uncle sam at the capital gains rate.

Thanks for the reply! Would that be addressed by the tax treaty? So no double taxation as long as I file my taxes with the US and apply whatever NZ taxes I've paid as a foreign tax credit against the capital gains I owe Uncle Sam. If it's less than the 8k I pay to NZ, then it would be nothing, no?

boatsydney

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Re: New Zealand Investing
« Reply #80 on: November 15, 2019, 02:51:32 PM »
...
2) My understanding of FIF is the following: say my portfolio is worth $1.1m and the market is up 10% that year (assume no withdrawals for simplicity). I would pay taxes on $50k (5% of the starting value of $1m), which works out to about $8k based on NZ's current marginal tax rates assuming I earn no income outside of this portfolio. I would pay less or nothing if the market returns are less or negative. Did I miss anything about the FIF tax? If not, that seems like a reasonable and manageable tax burden to me. I'll have to factor it into my expenses so as not to mess up the SWR, but otherwise it shouldn't affect my FIRE plans unless I'm missing something.
...

That's my understanding too. But, you have to be careful of the double taxation! When you sell shares, you will be taxed again by uncle sam at the capital gains rate.

Thanks for the reply! Would that be addressed by the tax treaty? So no double taxation as long as I file my taxes with the US and apply whatever NZ taxes I've paid as a foreign tax credit against the capital gains I owe Uncle Sam. If it's less than the 8k I pay to NZ, then it would be nothing, no?

Good question! I'm not sure...
  • If Uncle Sams considers FIF tax an "income tax", then yes you will get a foreign tax credit. If not, then you won't get one. I'd have to ask a tax expert to straighten this out.
  • It's a non-refundable tax credit, which means if you don't have any taxes in the US then you can't use it
  • It can only be carried forward for up to 10 years. So you'd have to sell your shares within that time frame in order to use that credit to offset the capital gains tax

Perhaps the following strategy would work (I'd have to check with a tax expert to be sure):
Sell your portfolio every 9 years and immediately repurchase it. This would essentially reset your cost basis every 9 years and let you apply the accrued foreign tax credits before they expire. Of course if your portfolio was worth a lot then it would put you in a higher tax bracket and you may owe Uncle Sam more than the NZ FIF taxes. In that case you could break the selling/buying up over several years. Just don't do it every year or else it won't be considered long term capital gains and Uncle Sam would tax it as normal income.

JMS

  • 5 O'Clock Shadow
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  • Posts: 22
Re: New Zealand Investing
« Reply #81 on: November 21, 2019, 05:41:05 PM »
Hi all

Glad I found an NZ thread because I'm interested to hear where others are currently investing.   I'm using Simplicity's Growth fund which has fees of about 0.31%pa which was the best I could find.  So far I've been really pleased. 

What are others doing?

Cheers