Bryan Bridge.

Bryan Bridge.

There are calls for the government to go further at seventeen minutes after six and amending complex tax rules so that they benefit every day key we investors as well as wealthy foreigners. The government's trying to attract here. We spoke about this a couple of weeks back. Jane chip Trainee is The Herald's Wellington Business Edit Wellington Business Editor, and she's with me tonight. Hi, Janae. Hi, right, good to have you back. So give us an idea of what we're talking about here. Remind us it's the fifth Rules of Foreign Investment Fund rules. Who do they apply to currently? What's the deal?

There are calls for the government to go further at seventeen minutes after six and amending complex tax rules so that they benefit every day key we investors as well as wealthy foreigners. The government's trying to attract here. We spoke about this a couple of weeks back. Jane chip Trainee is The Herald's Wellington Business Edit Wellington Business Editor, and she's with me tonight. Hi, Janae. Hi, right, good to have you back. So give us an idea of what we're talking about here. Remind us it's the fifth Rules of Foreign Investment Fund rules. Who do they apply to currently? What's the deal?

Right? So currently they these tax rules are basically aimed at incentivizing investment in New Zealand assets in the share market. So on. It's a good sort of principle. A quirk of the rules though, is that for is that they treat investments that New Zealanders have offshore slightly differently to the way they treat investments that you have locally. Now, that's only for investments worth more than fifty thousand dollars. So if you have more than fifty thousand dollars in shares, invested in the US or you know, other sorts of investments you fall under this tax regime, which is different to the regime that you'd fall under if you had shares invested in the New Zealand Stock Exchange, or if you had shares invested through your key We Saber fund. That's that's probably that's a pie fund, So that's a certain structure. So shares E's, which is an investment platform, has raised the point that actually this gets awfully complicated for people regular kiwis who it's quite you know, you don't have to be super wealthy to have more than fifty thousand dollars invested offshore. It gets super complicated at tax time because you have to navigate potentially two different tax systems. You have to figure out, firstly, do you have more than fifty thousand dollars invested offshore in the sorts of assets that fall under this regime, and then if yes, you have to go through a few more hoops and hurdles to satisfy the ID. So this has been a long standing problem. The thing is is that that fifty thousand dollar threshold hasn't been changed in more than twenty five years, so Back in the day when it was introduced, fifty thousand dollars was a lot of money. It's still a lot, but perhaps not quite as much as it used to be.

Right? So currently they these tax rules are basically aimed at incentivizing investment in New Zealand assets in the share market. So on. It's a good sort of principle. A quirk of the rules though, is that for is that they treat investments that New Zealanders have offshore slightly differently to the way they treat investments that you have locally. Now, that's only for investments worth more than fifty thousand dollars. So if you have more than fifty thousand dollars in shares, invested in the US or you know, other sorts of investments you fall under this tax regime, which is different to the regime that you'd fall under if you had shares invested in the New Zealand Stock Exchange, or if you had shares invested through your key We Saber fund. That's that's probably that's a pie fund, So that's a certain structure. So shares E's, which is an investment platform, has raised the point that actually this gets awfully complicated for people regular kiwis who it's quite you know, you don't have to be super wealthy to have more than fifty thousand dollars invested offshore. It gets super complicated at tax time because you have to navigate potentially two different tax systems. You have to figure out, firstly, do you have more than fifty thousand dollars invested offshore in the sorts of assets that fall under this regime, and then if yes, you have to go through a few more hoops and hurdles to satisfy the ID. So this has been a long standing problem. The thing is is that that fifty thousand dollar threshold hasn't been changed in more than twenty five years, so Back in the day when it was introduced, fifty thousand dollars was a lot of money. It's still a lot, but perhaps not quite as much as it used to be.

Interesting, So, do you think the government's actually gonna pick this up and change it because presumably it will cost them something.

Interesting, So, do you think the government's actually gonna pick this up and change it because presumably it will cost them something.

Well, yeah, that's the thing. So I took to Revenue Minister Simon Watts yesterday and he said he was open to changing that fifty thousand dollar threshold. Basically, it would just ease the administrative burden on New Zealand investors. It would mean that, you know, you don't have to go through your investments and figure out well what falls under this regime and what falls under that regime, and you know, you could set it at a higher level and still incentivize domestic investment or investment through pythons. So that's a certain type of structure. You can still invest in offshore assets, but if you do it through the certain python structure then that's fine. Now, the reason this has all come up in the news is because Simon Watts earlier this month said that he planned to make changes to these rules, but only in a way that benefited foreigners and not in a way that benefits you and I or regular New Zealanders. So I guess the fact that he is looking at these rules in the context of attracting wealthy New Zealanders to New Zealand means that it is putting the issue on the agenda and it is putting it on the table. I think it also sort of fits into the broader thing that the government's trying to do in terms of encouraging people to save and invest for their retirements. A lot of young people might get to retirement without owning a home, so you know, the investments that they have in shares are probably increasingly important for their well beings.

Well, yeah, that's the thing. So I took to Revenue Minister Simon Watts yesterday and he said he was open to changing that fifty thousand dollar threshold. Basically, it would just ease the administrative burden on New Zealand investors. It would mean that, you know, you don't have to go through your investments and figure out well what falls under this regime and what falls under that regime, and you know, you could set it at a higher level and still incentivize domestic investment or investment through pythons. So that's a certain type of structure. You can still invest in offshore assets, but if you do it through the certain python structure then that's fine. Now, the reason this has all come up in the news is because Simon Watts earlier this month said that he planned to make changes to these rules, but only in a way that benefited foreigners and not in a way that benefits you and I or regular New Zealanders. So I guess the fact that he is looking at these rules in the context of attracting wealthy New Zealanders to New Zealand means that it is putting the issue on the agenda and it is putting it on the table. I think it also sort of fits into the broader thing that the government's trying to do in terms of encouraging people to save and invest for their retirements. A lot of young people might get to retirement without owning a home, so you know, the investments that they have in shares are probably increasingly important for their well beings.

Yeah. You fascinating stuff. Hopefully they the foreigners and the exemption there will have opened the door for the rest of us. Jane tip Traaney, the Herald Wellington Business editor, with this. For more from Heather Duplessy Allen Drive, listen live to news Talks. It'd be from four pm weekdays, or follow the podcast on iHeartRadio.

Yeah. You fascinating stuff. Hopefully they the foreigners and the exemption there will have opened the door for the rest of us. Jane tip Traaney, the Herald Wellington Business editor, with this. For more from Heather Duplessy Allen Drive, listen live to news Talks. It'd be from four pm weekdays, or follow the podcast on iHeartRadio.