BI13 Tax obligations (04/07/2005)

1. The investment funds held by the Government will be paid an investment return based on the rate of inflation as determined by the changes in the Consumer’s Price Index as calculated by Statistics New Zealand. The investment return will be calculated and compounded on an annual basis. The investment return will be paid into the principal applicant’s New Zealand bank account when the investment matures after five years (or until the date of withdrawal if the total investment is withdrawn prior to maturity).
2. Principal applicants will be required to pay tax on the investment return.
   1. If the principal applicant is a New Zealand tax resident, the investment return will be grossed-up by an amount equal to the Resident Withholding Tax (RWT) rate likely to be paid by the majority of eligible tax resident investors. The rate to be used at implementation will be 0.39. On an annual basis, RWT will be calculated on the investment return for the period and deducted and paid to the Inland Revenue Department (at an elected rate being either 19.5%, 33% or 39%).
   2. If the principal applicant is not a New Zealand tax resident, Non Resident Withholding Tax will be set at zero per cent and Approved Issuer Levy paid to the Inland Revenue Department. The investment funds are a registered security for the purposes of the Approved Issuer Levy regime.
3. Principal applicants will receive a statement of these transactions.

   Note: Principal applicants may need to pay income tax on an annual basis. This must be determined by the applicant and the IRD.  It is the principal applicant’s responsibility to ensure that any other tax obligations are met.  Principal applicants are encouraged to contact the IRD directly for further information regarding tax requirements.

Effective 04/07/2005