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NZPIF rejects the Financial Services Council’s claim

Media Statement for immediate release

7 February 2013

NZPIF rejects the Financial Services Council’s claim

The Financial Services Council, a group representing Insurers and Fund Managers, is recommending government spend even more of tax payer funds to increase their members incomes. Their recommendations are:

1.   Increase the minimum KiwiSaver contribution rate to 7 per cent, thereby compulsorily increasing the amount of funds they earn fees from.

2.   Change Conservative Default Funds to "lifestages" funds with more "growth" assets, which they earn higher fees from.

3.   Drop PIE fund tax rates from 10.5% to 4.3%, 17.5% to 8% and 28% to 15%.

The Council’s reason for halving their tax rates (already below personal tax rates) is to put KiwiSaver funds on a level playing field with rental property investments.

The NZ Property Investors’ Federation would like to point out that:
• Traders in property are taxed on their capital profits, while Fund Managers are not.
• Higher income earners are taxed 33% on their rental income, rather than the 28% rate for Fund Managers.
• Unlike the Fund Management Industry, property investment does not receive tax payer funds to enhance the returns it provides.
• Unlike New Zealanders using Fund Managers, property investors’ do not have to pay around 1% of their investment to the manager regardless of whether a profit is made or not.
• Property investors do not receive Government money to help pay for property management, yet the NZ Government give up to $500 to each Kiwisaver account every year as a contribution towards their funds management fees.

President of the NZ Property Investors’ Federation, Andrew King, say’s “it’s clear that rental property doesn’t have a tax advantage over Managed Funds, so I guess the Financial Services Council must want a lower tax rate because they simply can’t compete with property investment returns. Perhaps they should lower their fees or just get a better return for their clients rather than attacking an industry that is simply outperforming them.”

ENDS

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