Forum Archive Index - December 2002

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

Hi Allan,


> 
>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:
> 
>ordinary shares  1,500  4.0000c   $60.00  Withholding tax $10.59
>Supplementary div 1,500  0.7085    $10.59
> 
>                 Total  NZD       $70.59   Net payment $60.00
> 
>The check I receive therefore is for $60.00NZ, but I have to pay
>income tax to my government on $70.59.
>
>

I don't count myself as the number 1 authority on US tax laws Allan, 
but I think you are correct.   However, I'm fairly sure that the US 
and NZ has a bilateral arrangement as regards withholding tax.  This 
means you will be able to claim the withholding tax of $10.59 as 
already paid on your behalf when you fill out your US tax return.  So 
the amount of tax you have to pay on this dividend will be based on 
$70.59 at your marginal tax rate, less the $10.59, which the US 
government will give you credit for.

>
> 
>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 unravelling 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.
>
>

Again I don't claim to be an expert on AUS-US tax relations.  But if 
they work the same as AUS-NZ tax arrangements you should only pay tax 
on the $160.00.  After all, $160.00 was all you got wasn't it?   I 
fear that you have lost the imputed credit of $68.57 completely.  You 
and every other investor not resident for tax in Australia.  I and 
every New Zealander who holds shares in Australian companies that pay 
fully franked dividends are in exactly the same position :-(.

Anyway, the whole point of the original question was to find out if 
Australia and New Zealand *do* do things differently, as regards tax 
treatment of foreign investors.  It seems they do.  Now, I'm not too 
concerned about the small private investor like Allan Potts.  

But the big investors (like Verizon in Telecom, and Edison Mission in 
Contact) have two choices on which way to treat their share of the 
profits:

1/ Leave the retained earnings in Telecom/Contact and let them 
develop their own business.
2/ Take most of the retained earnings offshore in the form of a high 
dividend.

Ordinarily it would be a business decision as to what a majority 
shareholder would do.  I am all for that and this is not the 
kind of thing I would like to see the government involved in. 
 
However, if I understand the NZ overseas tax regime correctly, then 
the government is prepared to give a substantial amount of the tax 
that Telecom/Contact paid to them back to the majority shareholder as 
some sort of incentive to take the money offshore.   What sort of 
policy is that?   It sounds to me like a tax incentive to overseas 
shareholders to strip as much cash as they can out of New Zealand 
companies they hold shares in.

Isn't this the same government that claims we need foreign investment 
to develop our country?   LOL!  Well why did they skew the table via 
the tax system to favour cash stripping from New Zealand companies?  
Pathetic!  Is there any other government anywhere in the world that 
subsidizes overseas companies to take cash out of their home country 
companies?

SNOOPY

PS  Allan, why are you sending you e-mails with a blank Cc: field?  
If there is nothing in there, can you get rid of it?   I'm asking 
because a blank CcCc: field I use as a marker for spam.  I have a mail 
filter set up to automatically dump such messages and I'd rather not 
have to rummage around in the trash can to retrieve yours!


---------------------------------
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