Who Inland Revenue consulted on the quashed GST on fund fees policy

Inland Revenue discloses who it consulted with ahead of Revenue Minister David Parker attempting to change tax rules affecting KiwiSaver. Photo / Mark Mitchell

Inland Revenue has disclosed who it consulted with ahead of the Government's now reversed decision to charge the same rate of goods and services tax (GST) on all investment fund fees.

Inland Revenue policy lead for indirect tax Graeme Morrison said officials consulted with Alvarium Wealth, Devon Funds Management, Elevation Capital Management, Mint Asset Management, Nikko Asset Management and Pathfinder Asset Management.

As previously reported, they also consulted with the Financial Services Council, whose members include banks and large fund managers.

This consultation occurred between November 2021 and April 2022.

Revenue Minister David Parker quashed his proposal to bring GST rates on all fund management fees up to 15 per cent within 24 hours of introducing the change in late August.

The proposal was criticised because it was expected to cost investors – including KiwiSaver members – $225 million a year. It also surprised the public and wasn't mentioned in a press release Parker issued on the tax bill in which the change was included.

At the time, Parker said he expected small fund managers that already pay 15 per cent GST to come out and support the policy, because it would level the playing field between them and their competitors that are allowed to pay no GST or a rate of 1.5 per cent.

However, in the short length of time the policy was on the table, the public didn't hear anything from these fund managers.

The Herald asked Parker and the Inland Revenue to specify who they talked to. They said the request would need to be dealt with under the Official Information Act, which meant a response would take up to 20 working days.

So, the Herald rang around a range of fund managers, including Booster, Devon Funds, Implemented Investment Solutions, Kernel, Simplicity, and others that didn't want to be named, to ask if they'd been consulted.

All 11 spoken to said no, so a story was run accordingly.

However, two of the 11 fund managers who told the Herald they weren't spoken to, are among the six (excluding the industry group) the Inland Revenue said were consulted.

One of these is Devon Funds. On Friday it clarified it was in fact asked to share its view on GST on managed fund fees, but not on KiwiSaver fund fees. It understood the Herald's queries earlier in the month to specifically be about GST on Kiwisaver fund fees.

The other fund manager only ever agreed to talk to the Herald anonymously. The person the Herald spoke to, who's in a managerial role, on Friday reconfirmed they weren't aware of any consultation but conceded they couldn't rule out the possibility that one of their colleagues was consulted without their knowledge.

As reported on earlier in the month, the Inland Revenue also ran a public consultation on how GST is charged on managed fund fees in early 2020.