How will investments in the Funds impact on my tax position?
All of our funds are registered as Portfolio Investment Entities (PIE's). Under PIE legislation, investors benefit from:
- No tax on gains in New Zealand shares and certain Australian shares
- Investors are taxed at their own Prescribed Investor Rate (PIR), with a maximum of 28%.
PIE's that invest in New Zealand companies and Australian resident companies that are listed on the ASX All Ordinaries Index (generally the largest 500 companies) are not taxed on any gains in the value of their shares however the shares are taxed on any dividends received.
Fisher Funds invests in growing companies which often have a low dividend yield and the majority of returns come from the increase in the value of the shares. This is a significant advantage for investors.
Investments in companies outside New Zealand (unless they are listed on the Australian ASX All Ordinaries Index) are taxed under the modified Foreign Investment Fund regime (FIF regime) and are taxed as if they have earned 5% total income. The income is calculated by multiplying the daily market value of the total portfolio of assets subject to the FIF regime by 5% and dividing by 365 days. Dividends from companies subject to the FIF regime are not taxed.
Under the PIE regime, instead of all Fund income and expenses passed through to investors being taxed at the Funds tax rate of 28%, they are taxed at the investors PIR. This is a significant saving for investors on a 10.5% or 17.5% PIR.
The PIE regime provides tax advantages for investors over those who invest directly in shares. The reason is twofold:
- PIE's have statutory protections against taxation on gains. Generally speaking direct investors are not taxed on capital gains either if they can show that they are not investing to make capital gains. However, there are complex and uncertain rules about whether an investor is deemed to be holding shares for gain or for some other income.
- Direct investors who receive dividends are taxed at their marginal tax rates. For investors on a 33% tax rate, that means they will be taxed at the full 33% tax rate on dividends received, where in a PIE they will only be taxed at 28%.
What do I need to do to ensure that my investment is taxed correctly?
You simply need to notify us in writing or by email of your, or the investment entity you are acting on behalf of's IRD number and PIR. We then do the rest on your behalf. If you do not provide us with your IRD number or PIR rate then your investment will be taxed at the default rate of 28%.
How do I calculate my PIR rate?
Your PIR depends upon your situation. Identify the correct rate for your circumstances here.
What should I do if my PIR rate changes?
You can update your PIR via online access or by email or in writing. The change in PIR cannot be updated and will apply from the time we are advised of the change.
Will you send me an End of Year Tax Statement?
Yes. A tax statement will be sent each April to all investors summarizing the tax on investment income position for the prior tax year (to 31 March). If you owe tax to IRD, we will sell down some of your units and pay this to IRD on your behalf. If you are due a tax refund, we will claim this from IRD and buy units in the fund on your behalf. If you withdraw from a fund, tax will be paid or refunded at that time. There is no need to include this information in your personal tax return as the Fund will have taken care of it for you.
If you would like to read more about PIE tax, the IRD website has a good overview that you can access.