by Rob Hosking
At least one industry player – AMP Capital – has recommended postponing the domestic changes as well but this is unlikely to happen because those changes are considered crucial to the government’s KiwiSaver workplace savings scheme.
The offshore changes, which include abolishing the grey list countries and making investors in those countries subject to capital gains tax – has never been a popular proposal, because about 80% of all offshore investment goes into three of those grey list countries – Australia, the United Kingdom and the United States.
Dunne is on the record as being against anything which looks like a capital gains tax, and has also indicated he is unhappy with the degree of public concern about the issue.
However it is not all plain sailing on the domestic changes either. Those proposals involve a voluntary flow through tax regime which would allow investors to pay tax at their marginal rate, instead of the present flat rated of 33%.
The Association of Superannuation Funds of New Zealand (ASFONZ) has pointed out this puts trustees of such funds in an invidious position – if they choose to opt in to the flow through regime they disadvantage one group of investors but if they stay out they disadvantage another group of members.
There has also been some concern from the industry that the costs of change will be high. AMP has suggested some managed funds will face pressure to provide both opt-in and opt-out vehicles to avoid upsetting investors, and has proposed capping the flow through rate at 33%, or making flow through compulsory.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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