# STUDENT ID STUDENT NAME ISSUE 1A Conclusion If Betty invests in an

STUDENT ID

STUDENT NAME

ISSUE 1A

Conclusion

If Betty invests in an MRP on 1 April 2021, her prescribed investor rate is (0.175) 17.5% in the 2022 income year.

Reasoning

The Multi-Rate Portfolio Investment Entity (PIE) is attracted funds from the investor, and then they invest these funds. The MRP can be a company, superannuation fund and group investment fund, and they calculate tax on investment income on the return from the investor contribution. The rate applied by the fund is the prescribed investor rate. The natural person maximum rate is 28%.

Under s HM 56 of ITA 2007, multi-rate PIE is determined under schedule 6, tables 1 row 4. The prescribed investor rate from 1 April 2011 is 0%,10.5%,17.5% and 28%, and it is the responsibility of the investor to notify MRP about their correct PIR, and it can be decided based on two of the thresholds:

Taxable Income in either of last two years

Overall taxable Income in equating of last two years

In the given situation, the taxable Income of Betty in the 2020 income year (1 April 2019 to 31 March 2020) is \$40,000.

Taxable Income of Betty for 2021 income year (1 April 2020 to 31 March 2021) is \$60,000

Betty Taxable income in the 2020 Income Year is \$40,000. Taxable Income is \$60,000 in 2021, which means the taxable Income of Betty in either of the previous two income years is less than \$48,000, and taxable Income combined with Betty PIE in the last two income years is less than \$70,000, so the PIR Is 17.5%.

Issue 1 B

Conclusion

Yes, it is advisable for Betty to invest her \$ 1million in MRP

Reasoning

Investing in an MRP has a tax benefit because the investor will be taxed as per the special rules. The person investing in an MRP has a tax benefit because investment income will be taxed on the Prescribed Investor Rate (PIR) rather than getting taxed on the personal income tax rate. Furthermore, those investing in a New Zealand and Australian share need not pay tax on capital gain or losses from the investment. In the given situation, Betty wants to invest in MRP, which mainly concentrates on Australian and New Zealand shares which mean Betty need to pay tax on capital gain or loss made from the investment.. Moreover, as per s CX 55 gains made on the sale of Australian and NZ share is excluded Income of the investor. Further, Income attributed by MRP and any distribution or dividend paid by MRP will be excluded from Income of Betty under s CX 5B and CX56 of ITA 2007. Therefore, it is the first main reason it is advisable for Betty to invest her \$1 million in MRP because

Further, From the information, it can be seen that in TY 2021, Her taxable Income is \$60,000, and in TY 2022 income year, her taxable income will be \$185,000. As per the marginal tax rates, Betty will be taxed at 33% for the Income between \$70,000 to \$180,000 and above \$180,000 tax rate will be 39%. However, special tax rules will apply if investing in an MRP, and the maximum prescribed tax rate on the investment income will be 28% only. Furthermore, PIE will pay tax on Betty behalf when investing in MRP, which means Betty need not include this Income in her tax return as long as the correct PIR is provided. Therefore, the second main reason for Betty to invest in MRP is that the maximum Tax rate applicable to her will be 28% but as per own taxable Income attracts a tax rate of 30%, 33% and 39%.

Issue 1 C

Conclusion

When providing an interest-free loan to an imperial family trust, Bee Ltd, there will be an FBT implication under s GB 32 of ITA 2007.

Reasoning

Under s YB4 of ITA 2007, Evan and Betty is associate with each other as they are within the two degrees of relationship. Further, Evan is a settlor of Imperial family trust, which means under s YB 8, Evan and Imperial family trust is associate with each other. Now applying s YB 14 (tripartite test), Imperial family trust is associate with Betty.

Betty is an employee of Bee ltd, and an interest-free loan is provided to the imperial family trust. Under s CD4, a transfer of company value from a company to a person is a dividend if the value is transferred because of shareholding. Here, Betty is an employee of the company, so an interest-free loan is not a dividend.

Further, as s GB 32, a benefit provided to an associate to an employee would be treated as a fringe benefit if provided by the employer. In the given situation, Imperial family trust is an associate of Betty under s YB14, so the benefit of an interest-free loan provided (CX 10 ITA 2007) will be a fringe benefit. Therefore, applying s GB32, it can be concluded that an interest-free loan provided to an associate of employee (Betty) is a fringe benefit, and the benefit provided is a classified benefit under s CX 10 of ITA 2007.

ISSUE 1 D

Conclusion

No. There would be no dividend implications.

Reasoning

As per s CD 4, the transfer of value from a company to a person is a dividend if the value is transferred because of shareholding in a company. This means that if the employee in a company is not a shareholder, then the benefit provided to the employee’s associate, i.e., wife (YB 4 ITA 2007), will not be a dividend. However, if the employee is a shareholder-employee in a company, then as per s CX 17 company when providing non-cash benefit, they have the option under s CX 17(2) to choose benefit as a dividend or FBT, and when no election is made then the dividend is FBT. In the given situation, the Christmas gift hamper is an unclassified benefit, and no election is made by the company to be treated as a Fringe benefit. Moreover, as per facts, the benefit is provided to the employee’s wife, their associate under s YB4, so the benefit provided will be a fringe benefit under s GB 32 of ITA 2007.

However, under s RD 45 of ITA 2007, the minor unclassified benefit is exempt from FBT. The benefit is insignificant when it is \$300 per employee per quarter and \$22,500 per annum for all employees. In the given situation, Christmas hamper worth \$250 is provided to each of the six employee spouses. The benefit is the unclassified benefit, and it is minor because it is less than \$300 per employee for a quarter. And the overall value of the benefit is also less than per annum for all employees. Therefore, as per s RD 45 ITA 2007, the benefit is the minor unclassified fringe benefit exempt from FBT.

REFERENCES

BNZ. ‘Understanding Portfolio Investment Entities (PIE) https://www.bnz.co.nz/support/investments/essentials/understanding-portfolio-investment-entities

BNZ, ‘Working out for Prescribed Investor Rate (PIR) https://www.bnz.co.nz/support/investments/prescribed-investor-rate/working-out-your-pir

Income Tax Act 2007 https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512301.html#DLM1516989[supanova_question]

## Brainstorming: Third Formal Essay Provide a tentative thesis statement for your third

Brainstorming: Third Formal Essay

Provide a tentative thesis statement for your third formal essay. (This should be a complete sentence or two.)

For each Roman numeral, write a topic sentence for a body paragraph. (Remember each topic sentence should support your thesis. These should also be complete sentences.)

I.

II.

III.

IV. (optional)

Write a sample in-text citation for the academic database article you found.

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Write a citation for the academic database article you found. (It should be presented in the arrangement expected for the works cited page.)

How do you intend to incorporate the academic database article into your argument? (For example, does it offer information about your topic in the first body paragraph? Does it reinforce a point you’re making in the second body paragraph?)

Do you have any further questions on how to develop this paper? If so, list them here.[supanova_question]

## disc 10

Must be question/answer format. Cite all references.What’s the difference between “opportunity gaps” and “achievement gaps”?Can schools close opportunity and/or achievement gaps between students from different ethnic and racial backgrounds?[supanova_question]

## disc 10

Writing Assignment Help Must be question/answer format. Cite all references.What’s the difference between “opportunity gaps” and “achievement gaps”?Can schools close opportunity and/or achievement gaps between students from different ethnic and racial backgrounds? [supanova_question]

## disc 10

Must be question/answer format. Cite all references.What’s the difference between “opportunity gaps” and “achievement gaps”?Can schools close opportunity and/or achievement gaps between students from different ethnic and racial backgrounds?[supanova_question]

## disc 10

Must be question/answer format. Cite all references.What’s the difference between “opportunity gaps” and “achievement gaps”?Can schools close opportunity and/or achievement gaps between students from different ethnic and racial backgrounds?[supanova_question]