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New Zealand's tax amendments 1 April 2007

From 1 April 2007, significant changes to the taxation of investment income in New Zealand will apply.

New Zealand Investors in the Platinum Trust Funds (and non-New Zealand funds and equities, with the exception of “certain Australian listed equities”), with less than 10% holdings, will be deemed to hold an interest in a FIF unless the Funds fall within the very limited FIF exemption for certain Australian unit trusts. This exemption will not apply to the Platinum Trust Funds.

As no exemption is available, the New Zealand Investor will need to calculate their FIF income each year under one of the following six methods:
- accounting method;
- branch equivalent method;
- comparative value method;
- deemed rate of return method;
- fair dividend rate method; or
- cost method.

The default method is the 5% Fair Dividend Rate (“FDR”). Under this method, most Investors are
taxable each year on 5% of the opening market value of their investment in the Funds. Special
calculation rules apply to unit trusts or similar type Investors.

Under the FDR method, no tax is payable on any excess above 5% including actual dividends or any gain on disposal. Individuals and family trusts have a “safety net” option which allows the Investors to be taxed on the actual return if it is between 0-5%. No deduction is available for any losses.

Quick sale rules apply to units bought and sold during the income year which result in the Investor being taxable on the lesser of any gain achieved on the quick sale and 5% of the cost of the shares (determined on an average cost basis).

A de minimis concession applies to individual Investors who hold offshore (excluding relevant Australian listed equities) equity investments with an aggregate cost of up to NZ$50,000. Investors below the threshold will be taxable on dividends only (unless they are revenue account Investors).

Upon entry into this regime, New Zealand Investors are deemed to have disposed of their current
portfolio investments at their current market value. The accompanying tax liability for revenue account Investors will be payable over a three year period.

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