Managed funds get a boost from the Budget

Collective investments within New Zealand will no longer be taxed as entities.

“Rather they will be able to elect to have the income earned by a fund regularly attributed to the individuals investing in it and taxed at their marginal statutory rates,” Cullen said in his Budget speech.

That is a form of the “look through” regime advocated by Craig Stobo last year in his review of how collective investments are taxed.

That means people in managed funds will be taxed at their marginal rate and not at a flat 33%. “Some taxpayers on the 39 cent marginal rate could pay more, depending on how their financial affairs are arranged,” says Cullen.