An alliance of boutique managers has hired consultancy firm EY (formerly known as Ernst & Young) to help argue the case against dropping GST on fund fees in a submission to the Inland Revenue Department (IRD).
Rebecca Thomas, Mint Asset Management chief, said the group of managers had engaged EY to present the technical arguments in favour of maintaining the status quo or raising the GST on fund fees.
“We’re going to have two components in the submission,” Thomas said. “The technical side will be prepared by EY but we’ll also look at the business implications of the IRD’s proposed changes in interpretation of the GST rules.”
As reported on Investment News NZ (IN NZ) last month, the IRD has proposed making funds management fees GST-free. Currently, the sales impost is levied on 10 per cent of fund fees.
Thomas has previously argued the proposed changes would disproportionately affect stand-alone funds management firms compared to financial conglomerates that are more able to shift GST claims across business units.
She said if the IRD proposals go ahead as is it could result in “less than optimal business outcomes” such as managers shifting to separate mandates as opposed to tax-efficient portfolio investment entity (PIE) structures.
The IRD has extended the deadline for submissions on the GST changes to December 20, Thomas said.