If you provide your IRD number to the share/bond registry (Link Market Services at: PO Box 384, Ashburton), you can ask them to deduct RWT from your interest at either 10.5%, 17.5%, 28%, 30% or 33% as appropriate.
The registry is required to deduct RWT from dividends at the flat rate of 33% (less imputation credits attached).
Alternatively, if you have a valid exemption certificate you should send it to the registry and it will not deduct any New Zealand RWT from your interest or dividends.
Infratil registers all of its bonds under the approved issuer levy (AIL) regime, which is an alternative to deducting non-resident withholding tax (NRWT). Due to a law change effective from 7 May 2012, all coupon interest paid by Infratil to non-resident bondholders qualifies to have AIL deducted at a rate of 0% (prior to 7 May 2012 the rate was 2%).
In practice, this means that there are no longer any taxes withheld or levies imposed on coupon interest paid by Infratil to non-resident bondholders.
Imputation credits effectively match the New Zealand income tax paid by the company. To avoid double taxation of dividends, imputation credits can be transferred to shareholders to reduce or eliminate the tax shareholders have to pay on dividends.
Full imputation means providing 28 cents of imputation credits for every 72 cents of cash dividend that is received in the hand by the shareholder. At this level of imputation all resident shareholders who pay income tax at the rate of 28% or less will not have to pay any further New Zealand income tax. New Zealand resident shareholders who pay tax at the highest New Zealand tax rate of 33% will be required to pay a further 5 cents for each $1.00 of gross income (i.e. to leave them with a net 67 cents of cash in the hand). This additional tax will be covered by RWT that Infratil is required to deduct from the dividend.
If less than 28 cents of imputation credits were provided (with every 72 cents of cash dividend), the dividend would not be “fully imputed” and all resident shareholders that have a marginal tax rate that is higher than the imputation credits attached would also be required to pay additional New Zealand income tax. Again, this additional tax will be covered by RWT deducted by Infratil from the dividend. In any event, it is Infratil’s policy that all dividends should be fully imputed.
To the extent that dividends paid to non-resident shareholders are “fully imputed” (i.e. 28 cents of imputation credits are attached for every 72 cents of cash dividend), the company will not be required to deduct any non-resident withholding tax (NRWT) from the dividends (as long as the shareholder holds less than 10% of the total Infratil shares on issue).
Whether New Zealand imputation credits reduce overseas shareholders tax liability in countries other than New Zealand depends on the tax laws of the relevant country. You should ask your taxation adviser for specific advice.
All of the Infratil Bonds are listed on the NZX and most trade on a regular basis. Mainly however investors hold to maturity so trading is much less than for Infratil’s shares.
This website has bids/offers and the last price of listed bonds, including all those issued by Infratil.
The secondary market price tends to reflect the number of buyers and sellers and will tend to fluctuate over time.
Because the Bonds are convertible debt obligations (with the exception as noted above of the Perpetuals and the new issue) Infratil has the right to either repay the Bonds with cash or to redeem the Bonds by issuing Infratil shares. In certain situations (which are detailed in the Investment Statements and Prospectus) Bondholders may demand redemption for shares.
In each case when Infratil Bonds have matured they have been repaid for cash.
Infratil has issued twelve series of Bonds (four have been repaid) and there have been different factors behind each. The first issue in 1999 was of approximately $66 million and was used to purchase an interest in Wellington International Airport. Other issues have similarly been invested in assets Infratil has acquired.
Not usually. In certain extraordinary situations the holders of each class of Bonds may vote on matters that effect them.
The Bondholders' rights are set out in the Investment Statement. However as there are technicalities and complexities in some of the terminology contained in this description it is a good idea to talk with a professional adviser such as a broker or financial planner. The Bonds are not subordinated, but in certain situations Bondholders may not have priority claims to the assets owned by Infratil.
The Trustee is Trustees Executors Limited, Level 5 10 Customhouse Quay, Wellington. Telephone : 04 495 0999.
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