you can compare products that you might invest your money in, you need
to know how the fees you pay will be treated for tax purposes.
It’s important that you find out if the fees are before or after
tax. A common way providers create a tax advantage for investors or
savers is by making the fees you pay tax deductible. Essentially, any
fees you pay are deducted from the return before you pay tax, so that
you pay less tax on the return overall. If the fees are before tax,
find out if they are deductible. If not, you could pay proportionally
Tax on investment returns
There are three ways you might pay tax, either directly or indirectly, on the investment returns earned by your provider:
Find out whether you must also pay GST on your fees. Generally, GST
is not payable on financial services (like investment management or
record keeping associated with the product). However, a proportion of
the fee (say 10%) may be subject to GST because it relates to a
service, such as advice, that does not fit within financial services.
In some cases, GST applies to the full investment fee.
Content provided by Sorted.org.nz, Your Independent Money Guide.
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