Sharesies Help article states
"Tax works differently for companies, exchange-traded funds (ETFs), and managed funds. Managed funds are more suited for a Kids Account because they're taxed at the prescribed investor rate (PIR) for the child." Then using their "kids" filter all the recommended investments are funds by Milford, PIE, etc. No ETF which I find rather strange.
My example calculation using some generic sort of figures
NZ Listed ETF – 0.25% fee, 5% growth and 2% dividend.
NZ domiciled Managed Fund – 1% fee, 5% growth and 2% dividend.
For the listed ETF, starting with $1,000 and the compulsory PIR of 28%, return = $50 growth + $20 div - $2.50 fee. Then at 28% PIR the tax on dividend is $5.60 so return = $61.90.
For the Managed Fund, starting with $1,000 and a typical child's variable PIR of 10.5%, return = $50 growth + $20 div - $10 fee – $2.10 tax on the dividend = $57.90.
The fund fees seem to outweigh the lower PIR tax rate. Am I missing something? Does the PIR also apply to the growth return and not just the dividend?
Your figures look correct to me. The PIR doesn't apply to capital growth.
Quote from: Bev on Aug 02, 2025, 05:07 AMYour figures look correct to me. The PIR doesn't apply to capital growth.
Thanks. I thought it seemed rather strange. Perhaps a case of Charlie Munger, "Show me the incentives, and I'll show you the outcome."