Managed fund changes will 'boost savings culture'

The proposals for taxation on investment will encourage savings and deepen capital markets, the managed funds industry says.

But the planned introduction of a tax on unrealised gains on investments in shares outside New Zealand and Australia would act as a disincentive to invest further afield.

Jim Minto, managing director of financial services group Tower, said: "We are pleased. It creates an environment of certainty."

Minto and others praised the proposals for putting local investment classes - including shares, managed funds and property - on a equal footing.

Previously, direct investments in the sharemarket and property were exempt from capital gains tax. The proposed changes now treat managed funds in the same way as these asset classes.

They expected a gradual increase in investment in managed funds.

"This means better long-term returns for investors in managed funds," said Fisher Funds Management managing director Carmel Fisher. "Not only is the abolition of taxation on gains good news for New Zealand investors, but we believe it will assist the development of New Zealand's capital markets."

AMP Savings and investment general manager Roger Perry said the proposals, combined with earlier announcements on workplace savings, amounted to a significant boost to the savings culture. However, the tax treatment of investments outside New Zealand and Australia would see less funds being invested offshore.