Taxation on investments We'll post newsworthy items regarding taxation changes that will affect investments in this section as they are announced. Check in occasionally to see if there are any changes that may affect you.
 

The government has announced substantial changes to personal and company tax rates. Personal tax rates are changing from 1 October 2010 and the company tax rate is changing from the start of the 2012 income tax year (generally 1 April 2011).

To ensure that investors in PIEs are not disadvantaged by the personal tax rate changes, legislation has been introduced into Parliament to reduce PIE tax rates. In fact, with the length of time required to fully implement the personal tax rate changes and the delay in changing the corporate tax rate, the tax advantages of investing in a PIE have been enhanced for the six months beginning 1 October 2010.'

From 1 October 2010, the new PIE tax rates are:

  • 28% (previously 30%)
  • 17.5% (previously 21%)
  • 10.5% (previously 12.5%)

The 0% for companies and trusts is not changing.

Investment manager's systems will be automatically updated to record the new rates. This means no action is required for investors, if the correct rate has been elected.

 

 

 

 

 

The PIE regime provides a favourable tax structure for investment. All of the Portfolios in the Assyst Portfolio Services have been implemented as tax-efficient PIEs. 

 

 

 

 

The use of PIEs result in investors paying tax at a rate approximately their own marginal rate, without the need to file a tax return in most circumstances.

 

 

 

 

Investors in PIEs enjoy a top tax rate capped at 28% on their PIE returns. This benefits investors on higher marginal tax rates who would otherwise be taxed at 30% or 33%.

 

 

 

 

Clients in the Assyst Portfolio Service will receive a single tax statement at the end of each tax year, which will set out comprehensive taxation information in relation to their entire portfolio. Many investors will benefit from the tax advantages of PIEs. Previously, direct investing offered tax and return advantages to investors. However, the Portfolios Investment Entity (PIE) platform now offers 30% and 33% investors better after-tax investment returns, while offering all investors fewer compliance requirements and lower costs relative to direct investing.

 

Cash Deposits

Direct Bank

Investments

Equivalent PIE

investments

Assumed Gross Return

7.00%

 7.00%  

30% Taxpayer*

 

 

Tax

2.10%

1.96%

After tax-return

4.90%

5.04%

33% Taxpayer*

 

 

Tax

2.31%

1.96%

After tax-return

4.69%

    vs            5.04%

 

 

 

 

International Shares –

Diversified Portfolio

Direct

Investment

(cost over $50,000)

Equivalent PIE

investments

Assumed Gross Return

9.00%

9.00%

Taxable Income

5.00%

5.00%

30% Taxpayer*

 

 

Tax

1.50%

1.40%

After tax-return

7.50%

7.60%

33% Taxpayer*

 

 

Tax

1.65%

1.40%

After tax-return

7.35%

       vs         7.60%

 

*Assumes at 28% PIE tax rate