I have gone through some of my stacks of, things to do, and come up with two recent dividend statements; one from NZ and the other from the land of Oz.
In the case of the NZ dividend you are correct. WHS shows a final dividend of .04/share. The dividend amount is listed, however as $70.59 on 1,500 shares with a withholding tax of $10.59 and a net dividend of $60.00 Imputation credit with which I am an concerned is $18.96. What has thrown me is on the remittance advice which I pay more attention to it says:
The check I receive therefore is for $60.00NZ, but I have to pay income tax to my government on $70.59.
On the Aussie dividend statement it is not broken down as much, but here goes.
CHS 2,000 shares @.08C/share Unfranked amount $0.00 Franked amount $160.00 Imputed credit $68.57. My check was for $160.00A You're better then me at unraveling what all this means. To me it means I receive a check for $160.00, but must pay tax to the U.S. on more than that.
I should also point out that things are rarely this Rosy, that is to say full imputation credits and full supplemental dividends, but it is nice when it comes along.
You're right about working capital not shrinking in at least the very short term, but I'm thinking that the total size of markets is not just measured by working capital, but by total capitalization which would be devastated if all overseas investors pulled out of ANY MARKET, Hong Kong, Japan, Korea etc, etc, etc.
Have a good evening Snoopy, our market has another 12 hours to go before our Monday opening.
Allan
--- On Mon 12/16, tennyson@caverock.net.nz tennyson@caverock.net.nz wrote:From: tennyson@caverock.net.nz [mailto: tennyson@caverock.net.nz]To: sharechat@sharechat.co.nzDate: Mon, 16 Dec 2002 13:07:30 +0000Subject: Re: [sharechat] Overseas ans. to Supp. payments non-NZ holdersHi Allan, I was unfamiliar with the NZ legal concept of withholding tax. Iwas using it simply as tax withheld by a vendor,(a portion of whatthey pay you) that is sent directly to the government and for whichyou get credit when you file your final taxes.I think it is just the different cultural way of looking at things which is confusing me. You, Allan, are thinking of the American system where all dividends are subject to tax, whether or not the company that is paying you the dividend has paid tax on it already.Thus in the American system any tax deduction that is shown on the dividend statement, tax that has been paid directly to the government, really is witholding tax. I imagine all American dividends have witholding tax taken off them.By contrast, I don't regard New Zealand imputation credits on my dividend statement as a witholding tax, because there truly is no requirement for me to pay tax on a fully imputed dividend. The act of the company paying its own tax, discharges the tax responsibility attached to those earnings. In the New Zealand way of looking at things, you cannot have witholding tax on a fully imputed dividend. As far as the shareholder that is receiving the fully imputed dividend is concerned, the idea of 'witholding tax' on that dividend doesn't make sense, because there is no legal requirement for the shareholder to pay any tax on an imputed dividend. You can't withhold tax on a tax bill, when the tax bill is zero. In CASE 1 you state: "You own shares in Telecom and get a 5 centdividend that contains a 2.5 cent imputation credit and a 0.8824supplementary dividend." What is the *gross* dividend that arrivesin the mail? Is it 5 cents or 5.8824c? The answer is 5c and the supplementary dividend would be 0.7500 andnot 0.8824.Are you sure about that Allan? Witholding tax rate is at 15% so...5c x (0.15) = 0.75c (your figure)but5.8824 x (1-0.15) = 5cIsn't the witholding tax usually taken off the gross amount? (If you get a cheque for 5c this implies a gross payment of 5.8824c) In CASE 2 you state: "You own shares in Telstra and get an 11cdividend that contains a 4.71c franking credit." What is the grossdividend that arrives in the mail. Is it 11c. Yes it is, but ourfranking credit would not be that high, but somewhat under that.Careful with the terms here Allan. When you say 'our franking credit' are you sure you don't mean 'our witholding tax'? I wasn't aware that Americans could utilise Australian franking credits. Perhaps, to clarify things, you have an Australian example of your own you can quote us? On the size of your market question. Do you even remotely thinkthat if all overseas investors sold all of their holdings, Kiwiinvestors wold buy all of the shares??? No.If it were possible, at what price wold the shares be purchased??? At the very least the capitalization of you market (size) would be slimmed downdrastically.I don't doubt that the market capitalization of the NZ market would fall if all the overseas investors pulled out. But just because the market capitalisation shrinks, does not mean that the working capital of the companies themselves shrinks. That is the point I was trying to make. If all overseas investors stopped buying NYSE shares, our marketwould collapse. DOW 2,000 anyone???Don't tempt fate on that one Allan ;-) Hopefully we are all more enlightened than when the subject was first brought up -- that is the purpose of this forum, isn't it?? For Sure.SNOOPY---------------------------------Message sent by Snoopy e-mail tennyson@caverock.net.nzon Pegasus Mail version 2.55----------------------------------"You can tell me I'm wrong twice, but that still only makes me wrong once."----------------------------------------------------------------------------To remove yourself from this list, please use the form athttp://www.sharechat.co.nz/chat/forum/Join Excite! - http://www.excite.com The most personalized portal on the Web!
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