KEY POINTS:
Dutch giant Rabobank has announced a new savings account designed to give investors a slice of cash PIE.
The RaboPlus.co.nz Cash Advantage Fund is one of two new products brought to the market yesterday to take advantage of the new portfolio investment entity (PIE) rules introduced on October 1.
The fund is the same as an on-call cash savings account, where investors can get instant access to their money, but will allow them to take advantage of the new tax regime to pay less tax on their interest.
In a normal savings account investors are taxed at their marginal tax rate of either 19.5, 33 or 39 per cent.
But under the PIE rules investors pay tax at what's called the prescribed investor rate. Those who pay 39 and 33 per cent tax will pay 33 per cent on their interest through the PIE, dropping to 30 per cent in April. And 19.5 per cent taxpayers will stay on that rate if their taxable income in either of the past two years added to income from the PIE is less than $60,000.
The fund will be administered by AMP Capital investors and invested in a RaboPlus.co.nz savings account with an interest rate of 8 per cent. Those on a 39 per cent tax rate will receive interest equivalent to 9.18 per cent.
The minimum investment is $250 and there are no management fees for either putting your money in, taking it out or looking after the money.
Market analysts have widely predicted the announcement of cash PIEs as a simple way to take advantage of the new rules and other banks are expected to follow.
Barclays Capital Asia is also offering a new PIE fund through an initial public offering for a product called the Celsius New Zealand Income Fund Series 1.
The company hopes to raise at least $20 million through the IPO which closes on December 21 and plans to list on the stock exchange on January 4.
The fund will invest in 20 shares listed on the Dow Jones Stoxx Global Select Dividend 100 Index, selected on their high cash and dividend returns.
It will have the ability to use leverage of up to 50 per cent. It will target an after-tax return of 9 per cent and has a minimum investment of $5000.
