How is this different from Kernel funds?
The most important thing to know is that you are responsible for managing your own tax with shares & ETFs. When you invest in Kernel’s funds, we handle the tax for you.
Understanding your tax obligations
Investing in US shares and ETFs from New Zealand involves thinking about taxes in both countries. We know this can sound complicated, so let's break it down simply:
US taxes & the W-8BEN form
When you invest in the US, there's usually a US tax on any dividends you earn.
The good news is we can help you reduce this! As part of signing up online for Kernel's US Shares and ETFs product, you'll fill out a quick digital form called the W-8BEN.
This form confirms you're an NZ tax resident, which automatically lowers the US tax withheld on your dividends from 30% down to just 15%.
Since it's built into the application, it's super easy to complete. Plus, it stays valid for three years!
NZ taxes and FIF rules
You'll also need to consider your US investments when doing your New Zealand taxes. Keep in mind that if the total cost of all your overseas investments (not just the ones with Kernel) goes over NZ$50,000, special NZ tax rules called the Foreign Investment Fund (FIF) rules may apply.
What about dividends from shares & ETFs?
When you own shares or ETFs directly, any dividends you receive are considered taxable income. In New Zealand, this is generally subject to Resident Withholding Tax (RWT) at your marginal tax rate.
If your total untaxed income is under $200 NZD for the tax year, you usually don't need to worry about declaring it. This is known as the "de minimis" rule. It covers things like your dividends from shares & ETFs, or any other income you receive where tax hasn't already been taken out (like interest). Once you go over that $200 mark, you'll need to include the full amount in your tax return.
Making tax time easier: What documents we provide
We aim to make tax season less stressful! Your account has downloadable reports that include:
Trade confirmations: details for each transaction, including trade specifics and related fees.
Monthly statements: a monthly summary of your account activity, including balances, holdings, income, any dividends paid out and fees for the month.
These documents should give you (and your tax advisor) everything needed for your New Zealand tax return.
Please note: It's your responsibility to calculate and meet your tax obligations for anything held in Kernel's shares & ETFs feature.
Important disclaimer
Kernel are not tax advisors. The information provided here is for general guidance only and does not constitute tax or financial advice. Tax laws and individual circumstances can vary, so we recommend consulting with a qualified tax professional if you have specific questions about your tax obligations.