Fees & Taxation

Strategic is an Independent Fee Based Advisory

 

Important Note: While many of Strategic’s clients will not be required to complete an IRD Tax return it is important to do so to secure a tax credit against other income from Strategic’s professional fees. Get a IRD 3 Here

We have no obligation to any party other than our clients.

Strategic’s Independent advisory status requires that no placement commissions are retained over and above our set fees levels (100% rebated or credited to clients account) and any ongoing commissions are credited to the clients account and offsets portfolio fees.

How your Portfolio Fees are calculated

Fees monthly fees are calculated as per our Disclosure Statement as follows:

Annual Advisory fee (1/12) + Administration Fee (1/12) + Custodian Charges for any UK Listed Investment Trusts  & US Holding) (1/12) less ongoing commissions  (1/12) credited to your account + GST.

Fees and Commission Credits are calculated on the 15th of the month following the monthly payment period and are based on an average of the monthly holdings values.

Portfolio Management Fees are tax deductible (commissions are not) against other taxable income for NZ residents. Fees provide a slight tax advantage as well as objectivity.

  •     Employment IncomeNZ Superannuation
  •     Interest from Fixed Interest Investments
  •     Dividends from NZ Investments.

(PIE Funds are tax paid and tax will be between 17.5% & 28% and no further tax is payable). Especially advantageous for those on 33% tax rate.

Tax Rate Rebate per $1000
17.50% $170.50
30% $300
33% $330

 

Tax Treatment of Different Funds

Pie Funds

(e.g OneAnswer, Synergy, Strategic’s Core Flexible Solution)

Funds within which the tax is deducted at your personal PIE rate and is a final tax. It cannot be offset against other income. You PIE Rate needs to be confirmed each year.

See IRD PIE info here.  See IRD site here on how to calculate you PIE Tax Rate. Note it is often different from your personal IRD tax rate and is based on your last 2 years income.

Fixed Interest Funds (On Call Cash Account, TD’s, Bank & Corporate Bonds)

Have withholding tax deducted at your declared rate or 33% if not notified. Income can be offset.

Dividends (From  Direct NZ Shares and Investments)


Dividends carry with them an imputation credit and if the credit (Company Tax Rate) is in excess of the holders tax rate a tax credit can apply.

Foreign Investment Funds (FIF)

See here IRD’s info on how FIF’s are taxed

Holdings Under $50,000 If holdings do not exceed $50,000 per person (e.g. Joint $100,000) tax is paid on the income only. There is no capital gains tax and as the majority of gains are by way of capital gains this can be very tax effective.  Income can be offset against fees.

Over $50,000 or a Trust or Company.

A Fair Dividend Rate (FDR) applies to the percentage gain from the beginning of the financial year. This is 5%. Put another way.  Whatever the total increase in total value (capital gain + dividend) a 5% tax is applied.
If there is a loss in any year the Comparative Value (CV) can be applied. This can create a tax credit.

Strategic provides the methodology and calculations so you can elect the most efficient FIF tax response.

FIF is a complex calculation which our portfolio management software does for you. The same is used by some accountants. See here.

 

 

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