Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Super Fund focuses on pre-NZ tax returns - United

Media statement

For immediate release

Friday, August 22, 2003

United Future unhappy that Super Fund focuses on pre-NZ tax returns

United Future finance and revenue spokesperson Gordon Copeland believes that the focus of the Cullen Super Fund managers on pre-NZ tax returns needs to be questioned.

"Dividends and interest earned on the 78% of the Fund invested overseas will be subject to Withholding Tax in those foreign jurisdictions. For example, dividends received from US based companies will be subject to US income taxes.

"So the Guardians are quite right to look at the return they will make on overseas investments after such taxes have been deducted. Surely they should then however take into account the tax which will be payable in New Zealand. That's a vital component. A worked example will illustrate this point.

"Let's suppose that a dividend in the US and in NZ both yield a pre-NZ tax return of 6% but that the NZ dividends carry with them imputation credits. NZ tax at 33 cents in the dollar will be payable on the US dividends reducing the after tax return to 4%. By contrast the imputation credits on the NZ dividends will completely offset that tax yielding a tax paid return of 6%, i.e. 50% higher than the US equivalent.

"Since the Fund will pay NZ taxes I don't see how the Guardians can ignore these realities. They have a statutory obligation to maximise returns and, and as every businessman or woman knows, that means "after tax". This must surely have asset allocation implications in favour of NZ Company equities.

"I think the people of NZ deserve a detailed response and rationale concerning the position the Guardians have taken. I also invite media financial commentators to look into the issue because if the rationale is flawed then it needs to be put right sooner rather than later."

Ends

BACKGROUND COMMENT FOR PRESS

This press release is based upon the specific advice given by the Guardians of the Cullen Super Fund that one of its key responsibilities and objectives is to "focus on pre-NZ tax returns" even although the Fund itself is subject to NZ income tax. Section 58 of the NZ Superannuation Act 2001 holds the Guardians responsible for investing the Fund to, amongst other things, "maximized return without undue risk to the fund as a whole". Since the Fund pays tax it is logical to assume (and this is my assumption) that the returns which are to be maximized are after tax has been paid. Accordingly the Guardians need to be asked to justify their focus on pre-tax returns for unless this is challenged how can we be sure that they have not incorrectly interpreted their responsibilities under the Act?


© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Ruataniwha: DOC, Hawke's Bay Council Developer Take Supreme Court Appeal

The Department of Conservation and Hawke's Bay Regional Investment Company (HBRIC) are appealing to the Supreme Court over a conservation land swap which the Court of Appeal halted. More>>

ALSO:

With NZ's Marama Davidson: Women’s Flotilla Leaves Sicily – Heading For Gaza

Women representing 13 countries spanning five continents began their journey yesterday on Zaytouna-Oliva to the shores of Gaza, which has been under blockade since 2007. On board are a Nobel Peace Laureate, three parliamentarians, a decorated US diplomat, journalists, an Olympic athlete, and a physician. A list of the women with their background can be found here. More>>

Gordon Campbell: On The Key Style Of Crisis Management

At Monday’s post Cabinet press conference Key was in his finest wide- eyed “Problem? What problem?” mode. No, there wasn’t really a problem that top MPI officials had been at odds with each other over the meaning of the fisheries policy and how that policy should be pursued... More>>

ALSO:

Mt Roskill: Greens Will Not Stand In Likely Post-Goff By-Election

“The Green Party’s priority is changing the Government in 2017, and as part of that we’ve decided that we won’t stand a candidate in the probable Mt Roskill by-election... This decision shows the Memorandum of Understanding between Labour and the Green Party is working." More>>

ALSO:

Wellington: Predator Free Capital Plan

Wellington City Council (WCC), the Greater Wellington Regional Council (GWRC) and NEXT Foundation, today announced a joint collaboration to make Wellington the first Predator Free capital city in the world. More>>

ALSO:

Gordon Campbell: On Judith Collins’ Efforts At Self Correction

Thousands of prisoners currently in prison may be entitled to an earlier release than expected – and compensation – because Corrections has incorrectly calculated their term of imprisonment. Unless of course, the government buries its mistakes by changing the law and retro-actively getting itself off the hook… More>>

ALSO:

More Justice & Corrections

Sector Opposes Bill: Local Government Bill Timeframe Extended

The Minister of Local Government Peseta Sam Lotu-Iiga has asked the Select Committee to extend the report back date for the Local Government Act 2002 Amendment Bill (No 2). More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news