I am thinking about using a company (already incorporated) to invest in New Zealand, and I'm wondering if anyone on here does the same?
The reason I'm thinking about this is that I'm on the 39% marginal rate and I'm wondering if using a company will enable me to compound my capital / dividends at a lower tax rate.
My concern is being able to eventually get the retained earnings without paying the full tax on them again (if they were previously fully imputed ). I'm happy to pay the top from 28% to 39% when the profits are paid to the shareholders of the company.
Quote from: Dolcile on Jun 09, 2024, 07:58 AMI am thinking about using a company (already incorporated) to invest in New Zealand, and I'm wondering if anyone on here does the same?
The reason I'm thinking about this is that I'm on the 39% marginal rate and I'm wondering if using a company will enable me to compound my capital / dividends at a lower tax rate.
My concern is being able to eventually get the retained earnings without paying the full tax on them again (if they were previously fully imputed ). I'm happy to pay the top from 28% to 39% when the profits are paid to the shareholders of the company.
...or...you could put ze 'excess earners' eento one or more PIE investments. Vhich means your maximum tax rate drops to 28%, vhich eez five percentage points lower than even ze company rate!
RB
Quote from: Dolcile on Jun 09, 2024, 07:58 AMI am thinking about using a company (already incorporated) to invest in New Zealand, and I'm wondering if anyone on here does the same?
The reason I'm thinking about this is that I'm on the 39% marginal rate and I'm wondering if using a company will enable me to compound my capital / dividends at a lower tax rate.
My concern is being able to eventually get the retained earnings without paying the full tax on them again (if they were previously fully imputed ). I'm happy to pay the top from 28% to 39% when the profits are paid to the shareholders of the company.
Provided the shareholder continuity rules are not breeched, the imputation credits will remain to be ultimately used as you suggest
However, if you're not a share trader, there will likely be capital profits which of course will have not related imputation credits, and therefore can only be accessed tax-free by winding up the company. I would think this is likely a bigger issue.
In addition, if owning foreign investments, the "CV" method is not available to companies, but is to individuals and Trusts
hi Dolcile
where did you get to - did you start a company.?
I'm in a similar situation - but looking to do the same for NZ and ASX-listed companies. yes there is a tax issue on dividends when I try to get the money back to me but at that time I'm probably retired and I'll be on lower tax rates anyway. And as you note, we can compound the returns before the 39% tax rates apply
Anyone got any thoughts on a broker that will let me trade as a company on ASX. I know I can thru ASB. but anyone with better brokerage rates?