Forum Archive Index - December 2002

["Malcolm Cameron" <malharcameron@hotmail.com>]

Snoopy if you get in NZ an australian imputed dividend you don't get charged 
Australian non resident witholding tax so it works out the same just a 
different way of doing it



M H & M M Cameron
55 Czarnecki Street
Camira 4300
Brisbane
Queensland
07 3389 0515





>From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: Re: [sharechat]  Supplementary payments for non-NZ holders
>Date: Sat, 14 Dec 2002 21:46:31 +0000
>
>Hi Shares and Winner 69,
>
>
>
>Thanks for your respective explanations.
>
> >
> >
> >It is a form of (part) recompense to foreign holders of the NZ
> >company tax paid by on Telecom's (and other companies') profits and
> >included as an imputation credit for NZ tax payers.  Foreigners
> >can't use NZ imputation credits.
> >
> >
>
>I accept the explanation.  But it does seem odd that New Zealand does
>this yet no other countries do it.  Or do they?  Can anyone name
>another country that gives tax paid back to foreign investors?
>
> >
> >
> >The money is not from Telecom's
> > (or other companies') coffers, but is allowed as a full tax credit
> > for Telecom (or other) by the IRD.  It has no cost to either Telecom
> > or the other shareholders.  NZ taxpayer holders of Telecon get a
> > dividend of 7.5 cps (5.0cps + imp.tax credit of 2.5cps), while
> > foreign holders get 5.8824cps.  Ask yourself who's better off.
> >
>
>As Winner pointed out:
>
>5.8824c less 15% witholding tax leaves 5c as a dividend.
>
>So if you were Australian, then you would have to show on your tax
>return an amount of 5.8824c (gross) less witholding tax of 0.8824c
>leaving a net dividend of 5c.  Is that correct?
>
>I guess it would then depend on what your income level was in
>Australia as to whether you would have any extra income tax to pay
>over there.
>
>However, the fact remains that the New Zealand income tax department
>is giving back 0.8824c of tax to overseas investors for every
>Telecom share held by those investors.
>
>True, you could also argue that the IRD are 'giving back' (by way of
>imputation credits) 2.5c of tax to New Zealand investors for every
>Telecom share held by those New Zealand investors.  But these New
>Zealand investors will be spending the money in New Zealand paying
>GST and generally helping the local economy bubble along.
>
>The overseas investors are simply repatriating the dividend money
>back offshore.  This is a process which the IRD is incentivising by
>giving the overseas investor back 15c in the dollar of the tax that
>Telecom has already paid.  If the IRD didn't do this, wouldn't the
>same overseas investors be more inclined to ask the company (Telecom
>in this instance) to leave the retained earnings in New Zealand and
>so benefit the New Zealand economy?  It seems to me that if you were
>an overseas investor and you sole objective was to repatriate
>as much income as you could 'back home' then New Zealand would be the
>place to invest.
>
>I guess what I'm asking here is:
>"Is government policy contributing to the shortage of investment
>capital available in New Zealand?"
>
>SNOOPY
>
>
>
>---------------------------------
>Message sent by Snoopy
>e-mail  tennyson@caverock.net.nz
>on Pegasus Mail version 2.55
>----------------------------------
>"You can tell me I'm wrong twice,
>but that still only makes me wrong once."
>
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