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New Investment Taxation Regime Welcomed

13 April 2006

Tower Investments Welcomes New Investment Taxation Regime For Managed Funds.

Tony Hildyard, Chief Executive Officer of TOWER Investments, has welcomed the government’s proposals for reform of investment taxation as it affects managed funds.

“The proposed new investment taxation regime promises to create a more level playing field for New Zealand-based managed funds versus direct and offshore investments,” he said.

“This can only be to the benefit of ordinary, lower-to-middle income regular savers for whom managed funds represent the most effective and attainable way of introducing meaningful diversification and professional management into their investment portfolios.”

“Previously such people could complain with some justification that investment taxation rules discriminated against their investments in managed funds, whereas wealthier investors with “lump sums” to invest could amass diversified portfolios of more tax-effective direct investments and offshore assets.”

“The changes will also advantage those investors taking up the Government’s new KiwiSaver retirement savings plan, many of whom will not have acquired a retirement savings portfolio previously. The new taxation rules will ensure that more is left of their fund returns to compound up towards their retirement nest egg.”

“The long-term compounding effects of the tax changes will have very noticeable impact for KiwiSaver contributors needing to amass personal capital to finance a retirement lifestyle at their level of choosing.”

“Not everybody will be happy with the new rules and some fine-tuning may be required, but it is certainly fairer and more “democratic” that more New Zealand savers will enjoy an easing of the tax burden on their managed investments.”

“The New Zealand-based managed funds industry will benefit from the tax changes in becoming more competitive with direct investment and offshore-domiciled fund managers.”

“Level playing fields introduced respectively for onshore and offshore investment taxation can help build up the managed funds industry in New Zealand and this should produce ancillary benefits for the New Zealand economy. The availability of investment capital will increase with more funds directed towards productive sectors rather than speculative residential property investments.”

“These changes create more incentive for New Zealand-domiciled fund managers to become more innovative and offer a wider range of products to open up investment opportunities that formerly only high income earners found it easy or worthwhile to access,” Mr Hildyard said.


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