Fund moves to Cook Island for tax benefits
ING is moving its successful CDO-backed fixed interest fund, the Diversified Yield Fund (DYF), from Australia to the Cook Islands for tax reasons.
Wednesday, June 1st 2005, 6:58AM
by Rob Hosking
All but the cash assets from DYF will be moved to a Special Purpose Vehicle, administered by HSBC Bank.
ING’s Wayne Becker says ING looked at a number of places following tax changes by the New Zealand government introduced last year.
Those changes closed an anomaly that benefited investments in Australian unit trusts (AUTs).
Places such as Ireland and Luxembourg were looked at but were too expensive, he told an ING road show in Wellington.
The Cook Islands – despite its historical reputation as a somewhat dubious route for investments – has cleaned up its act, he says.
The inter-governmental Financial Action Task Force on money laundering recently gave it the thumbs up. “We’ve taken comfort from that,” he says.
And he says the involvement of multinational HBSC Bank should take care of any concerns about the financial robustness and security of the move.
ING has also discussed the legality of the move with the Inland Revenue Department.
The law change last year means the bonus issues within the AUTs are now treated as dividends and taxed accordingly. The move to the Cooks gets around that, although Becker warns the opportunity “may go in 12 months time, or sooner.”
If and when that occurs the other destinations looked at might become more attractive, he says.
“We’ve been asked if this is tax evasion, and it isn’t. This is quite legal tax minimisation.”
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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