Forum Archive Index - May 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi LWD,
 
>
>
>Say TLS shares were bought on the ASX from NZ. 
>What procedures are necessary to cash them up whilst 
>in Australia?  Other than brokerage, is there anything
> to do or pay to get Aussie $.
>
>



Shares bought on the ASX will be in Australian dollars, even if 
bought from NZ.  You can't buy a share listed on the ASX that is 
*not* denominated in Australian dollars.

If you wish to sell shares that you bought in Australia, generally 
you must do so through the broker you bought them through.   This is 
because  Australian shares are normally traded on a broker sponsored 
system.  You will need to quote your HIN (Holder Identification 
Number (your pin number equivalent)) and PID (Paticipant Number 
(your shareholder number equivalent)) to your broker before you can 
sell them.

After you have sold the shares, you will be given an Australian 
cheque.  You will need an Australian bank account of some form to 
allow you to get Australian dollars in your hand.  Talk to your 
Australian broker and they may be able to help you with this, if you 
don't have an Australian bank account already.


>
> 
>If you don't mind - probably an exhausted question.
>Is there any situation when you can be double taxed on a
>ASX company dividend?
> 
>



Almost all Australian dividends are double taxed.  This is because 
our Inland Revenue department doesn't recognise Australian franking 
credits.  The only time Australian dividends aren't double taxed is 
when the Australian company either pays no dividend or has no 
franking credits to give out to shareholders.  In this case, the 
company will take off witholding tax from the dividend, and this *is* 
claimable on your tax form as tax paid on the New Zealand side of the 
Tasman.  However, this Australian witholding tax will not discharge 
your New Zealand income tax obligations.  Unless your income tax rate 
is only 15%, you will be required to pay additional tax in New 
Zealand to make the total tax paid up to your normal marginal tax 
rate.



>
>
>Forum members appear to deal a lot on foreign exchanges.
>My understanding is that this facility is marginal for the small
>short to medium term investor. An example of the extra costs to
>purchase on the ASX from NZ are: 20% extra brokerage fees ($NZ to
>$AU) and 1.4% added to buy cost (currency exchange fee) and 1.4%
>deducted from sell amount (return exchange fee back to $NZ)
> 
>Say brokerage @ $AU 29.50 in and $AU 29.50 out = say $NZ 72.00
> 
>Parcel of $1,000 = 7.2% plus 2.8% fees (in & out) - that's 10%
>gain (stock value and/or dividends) to break even.
> 
>Parcel of $10,000 = 0.7 plus 2.8% exchange fees - that's 3.5% gain
>to break even. 
>



To avoid those 'extra' brokerage fees you need to set up a broker 
account in Australia youself and buy and sell out of that.  Be aware 
that brokers may specify a significant deposit be made in an 
associated cash management fund before you can do this.  If you can't 
meet the minimum cash deposit requirements, then basically you are 
right.   The extra brokerage fees will kill off a large proportion of 
any potential trading profits.  Despite the grizzles I have heard on 
the performance of the NZSE on this forum, there is one thing I can't 
criticise them for.  It is actually very cheap to trade shares on 
teh New Zealand, if you go through a discount broker.



>
>
>I know this is basic stuff to the gurus - have I got it right by
>tending only to look at the ASX for stock which is longer term buy
>and hold?
> 
>


I could argue that statistically I can predict accurately that a 
particular investment will end up in a certain market price band at 
some point several years in the future.  Ask me where that same share 
will be headed tomorrow and I wouldn't have a clue.  I can estimate 
valuations that will be hit at some time based on an educated 
estimate of future fundamentals.   But I can't tell you where 
sentiment is headed in the short term any better than flipping a 
coin can.    I would argue that the odds will always favour the 
longer timeframe investor so you shouldn't invest in any other way.

Unless ,that is, you are someone like Phaedrus who has read all the 
trading books, is fully informed of the risks, and is prepared to 
watch the market like a hawk to protect his positions.

SNOOPY

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e-mail  tennyson@caverock.net.nz
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"You can tell me I'm wrong twice, 
but that still only makes me wrong once."

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