Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on the Government looking to change the Foreign Investment Fund regime

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Jenee Tibshraeny: NZ Herald Wellington business editor on the Government looking to change the Foreign Investment Fund regime · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks B Follow
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• 0:17
  Speaker 1: Ryan Bridge.
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  Speaker 2: There are calls for the government to go further at
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  Speaker 2: seventeen minutes after six an amending complex tax rules so
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  Speaker 2: that they benefit every day key we investors as well
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  Speaker 2: as wealthy foreigners the government's trying to attract here. We
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  Speaker 2: spoke about this a couple of weeks back. Jane chip
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  Speaker 2: Training is The Herald's Wellington Business Edit Wellington Business Editor,
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  Speaker 2: and she's with me tonight. Hi Jane, Hi Ran, Good
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  Speaker 2: to have you back. So give us an idea of
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  Speaker 2: what we're talking about here. Remind us it's the fifth
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  Speaker 2: Rules of Foreign Investment Fund rules. Who do they apply
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  Speaker 2: to currently? What's the deal?
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  Speaker 3: Right? So currently they these tax rules are basically aimed
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  Speaker 3: at incentivizing investment in New Zealand assets in the share market,
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  Speaker 3: so on. It's a good sort of principle. A quirk
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  Speaker 3: of the rules though, is that for is that they
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  Speaker 3: treat investments that New Zealanders have offshore slightly differently to
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  Speaker 3: the way they treat investments that you have locally. Now,
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  Speaker 3: that's only for investments worth more than fifty thousand dollars.
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  Speaker 3: So if you have more than fifty thousand dollars in
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  Speaker 3: shares invested in the US or you know, other sorts
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  Speaker 3: of investments, you fall under this tax regime, which is
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  Speaker 3: different to the regime that you'd fall under if you
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  Speaker 3: had shares invested in the New Zealand Stock Exchange, or
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  Speaker 3: if you had shares invested through your KEII Saber fund.
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  Speaker 3: That's that's probably that's a pie fund, so that's a
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  Speaker 3: certain structure. So shares these, which is an investment platform,
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  Speaker 3: has raised the point that actually this gets awfully complicated
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  Speaker 3: for people regular kiwis who it's quite you know, you
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  Speaker 3: don't have to be super wealthy to have more than
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  Speaker 3: fifty thousand dollars invested offshore. It gets super complicated at
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  Speaker 3: tax time because you have to navigate potentially two different
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  Speaker 3: tax systems. You have to figure out but firstly, do
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  Speaker 3: you have more than fifty thousand dollars invested offshore in
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  Speaker 3: the sorts of assets that fall under this regime, and
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  Speaker 3: then if yes, you have to go through a few
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  Speaker 3: more hoops and hurdles to satisfy the ID. So this
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  Speaker 3: has been a long standing problem. The thing is is
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  Speaker 3: that that fifty thousand dollars threshold hasn't been changed in
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  Speaker 3: more than twenty five years. So back in the day
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  Speaker 3: when it was introduced, fifty thousand dollars was a lot
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  Speaker 3: of money. It's still a lot, but perhaps not quite
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  Speaker 3: as much as it used to be.
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  Speaker 2: Interesting, So, do you think the government's actually gonna pick
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  Speaker 2: this up and change it because presumably it will cost
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  Speaker 2: them something.
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  Speaker 3: Well, yeah, that's the thing. So I took to Revenue
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  Speaker 3: Minister Simon Watts yesterday and he said he was open
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  Speaker 3: to changing that fifty thousand dollars threshold. Basically it would
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  Speaker 3: just ease the administrative burden on New Zealand investors. It
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  Speaker 3: would It would it would mean that you know, you
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  Speaker 3: don't have to go through your investments and figure out
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  Speaker 3: well what falls under this regime and what falls under
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  Speaker 3: that regime, and you know, you could see it at
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  Speaker 3: a higher level and still incentivize domestic investment or investment
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  Speaker 3: through pithons. So that's a certain type of structure. You
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  Speaker 3: can still invest in offshort assets, but if you if
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  Speaker 3: you do it through the certain python structure, then then
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  Speaker 3: that's fine. Now, the reason this has all come up
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  Speaker 3: in the news is because Simon Watts earlier this month
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  Speaker 3: said that he planned to make changes to these rules,
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  Speaker 3: but only in a way that benefited foreigners and not
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  Speaker 3: in a way that benefits you and I or regular
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  Speaker 3: New Zealanders. So I guess the fact that he is
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  Speaker 3: looking at these rules in the context of attracting wealthy
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  Speaker 3: New Zealanders to New Zealand means that that that you know,
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  Speaker 3: it is putting the issue on the agenda, and it
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  Speaker 3: is it is putting it on the table. I think
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  Speaker 3: it also sort of fits into the broader thing that
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  Speaker 3: the government's trying to do in terms of encouraging people
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  Speaker 3: to save and invest for their retirements. A lot of
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  Speaker 3: young people might get to retirement without owning a home,
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  Speaker 3: so you know the investments that they have and shares
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  Speaker 3: are probably increasingly important for their well beings.
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  Speaker 2: Yeah, you fascinating stuff. Hopefully they the foreigners and the
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  Speaker 2: exemption there will have opened the door for the rest
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  Speaker 2: of us. Jane tips Trainey, the Herald Wellington Business Editor.
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