MHJ.NZ in Taxable Income Report shows as NZ income?

In my portfolio I have both Westpac (WBC.NZ) and Michael Hill (MHJ.NZ) and both are on the NZ Register. I would have thought both would have the same treatment in the Taxable Income Report appearing in the Foreign Income section as both are Australian companies dual listed on the NZ exchange. However in the Taxable Income Report MHJ.NZ appears in the NZ section of the report and WBC.NZ appears in the Foreign Income section. Why are they treated differently by Sharesight and is there a way to move MHJ.NZ to the Foreign Income section of the report to align with IRD's tax return preparation guidance?
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  • Hi Paul,

    We currently display MHJ.NZ within the local income section of the Taxable Income Report because MHJ.NZ investors are entitled to imputation credits. It has been our understanding that if a company issues Imputation Credits then we should treat that listing as local.

    However, if we have this wrong, it is simple enough for us to make a change that ensures dividends for MHJ.NZ are listed under the foreign section.

    I can see under the following link that investors of MHJ are issued imputation credits: http://investor.michaelhill.com/divid....

    However, our data feed from the NZX does not contain any imputation credits, at least not for the most recent dividends.

    Would you be able to confirm if you have received imputation credits for the most recent dividends from MHJ? For example the dividend paid on the 29th September 2017?

    Perhaps other Sharesight users reading this post are familiar with MHJ.NZ and it's tax treatment and would like to post their thoughts on the matter!
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  • Thanks Ben,

    Both WBC.NZ and MHJ.NZ carry imputation credits on their dividends. My understanding from reading the IRD material is the the imputation credits for both should be included in the dividend imputation box on the tax return but that the actual dividend (and any w/h tax) would be included as overseas income.

    My personal preference would be for both of them to be handled consistently one way of the other, and, if my understanding is correct, listed as Overseas Income in the report. It still allows the entry of imputation credits and I have already found how to add an imputation credits column to the foreign income in the Taxable Income report.

    Maybe my understanding is incorrect and so I would be interested to hear how other investors are handling these shares in their tax returns.
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  • Thanks for your response Paul.

    Your explanation makes perfect sense to me.

    I will investigate further and see if we can make the change you've suggested.

    In the meantime, I'm hoping others might join the conversation as well!
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  • Hi Paul,

    I have asked both IRD and Michael Hill Jeweller to clarify wither MHJ.NZ dividends should be treated as local or foreign income on the Individual Income Tax Return.

    I will update this topic when I hear back from them.

    After some more digging around, my guess is that WBC.NZ should be shifted to the local income section alongside MHJ.

    But lets wait to hear back from IRD to get a more concrete answer.
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  • Hi Paul,

    I have heard back from Michael Hill.

    They referred me to the following snippet of text:


    The relevant statement being 'your NZ gross income will include...'

    As such we correctly show MHJ.NZ dividends under local income. I have now changed WBC.NZ dividends to also appear as local income.

    Regards
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  • Thanks Ben, Appreciate you going the extra mile on this!
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