Proposed Payment Method under Commerce Commission Settlement with ANZ National Bank Limited (ANZ) and ING (NZ) Limited (ING) ING Diversified Yield (DYF) and Regular Income Funds (RIF) (together known as 'the Funds')
What is the payment method and how was it determined?
How many eligible investors will receive a payment?
If I am an eligible investor, how much money will I get and when?
Will all eligible investors get the same payment?
I haven't claimed any tax rebates in relation to my losses in the Funds. Can I?
Will I have to pay tax on my payment?
What about any other losses I may have suffered?
What if I did not accept the ING Offer?
What should I do if I am not happy with the payment I receive from the Commission Settlement?
What is the payment method and how was it determined?
Under the terms of the Deed of Settlement (Commission Settlement), the Commission has directed ANZ to distribute $45m to eligible investors using a method it describes as a "targeted percentage capital return". In essence, the objective of this method is for all eligible investors to recover as high a percentage as possible of the capital they originally invested in the Funds. The targeted percentage is 95 per cent.
Payments to be made to eligible investors will be only an approximation of the capital losses suffered by each investor, based on assumptions the Commission and the ANZ have agreed. The use of general assumptions in arriving at a payment method was necessary, given that there are approximately 15,000 investors potentially eligible to share in the pool of settlement monies, each with differing personal circumstances, and each having already received differing payments or compensation relating to their investment in the Funds.
The payment method determined by the Commission was based on advice received from financial experts retained by ANZ using relevant investor information provided by ING and nominee holding companies.
Am I an eligible investor?
If you had exited or sold your holding of units in the Funds prior to 13 March 2008, you will not receive a payment under the Commission Settlement. (If you are uncertain as to whether you still held units in the Funds as at 13 March 2008 you should check with ANZ, ING, or your financial adviser).
If you were an investor in the Funds on 13 March 2008, you may receive a further payment under the Commission Settlement. You will not receive a further payment if you have already received, or will receive more than 95 per cent of your investment back through a combination of the following steps:
- By accepting the ING Offer of 60c/62c per unit in the Funds;
- Accruing past and future interest in an ANZ high interest on-call account;
- By accepting a settlement directly from the ANZ; and/or the Banking Ombudsman's Office;
- By claiming, or being able to claim, tax rebates for your capital losses in the Funds from the Inland Revenue Department on your tax return. (If you were a non de minimis investor - see below - you will have most probably claimed a tax rebate on your tax return); and
- By receiving cash distributions from the Funds over the life of your investment
How many eligible investors will receive a payment?
We are advised that about 80 per cent of investors should receive an additional payment. The other 20 per cent or so of investors will not receive a further payment as they have already received, or will receive, approximately 95 per cent of their capital back through other means.
The Commission's objective is for 100 per cent of investors to have received around 95 per cent or more of their original investment back.
If I am an eligible investor, how much money will I get and when?
The amount to be paid to individual eligible investors will be calculated using a model prepared by the experts retained by the ANZ and will depend on a number of factors, including the Fund invested in, the number of units bought and sold, the date of entry into the Funds, the amount of any distributions received, whether the investor had received any other payments over and above the ING offer amount from the ANZ, through the Banking Ombudsman's office or been recompensed through claiming tax losses.
Investors can expect to receive a letter within approximately the next three weeks advising them as to whether or not they will be receiving a further payment.
Payments should be completed by the end of November 2010.
Will all eligible investors get the same payment?
No. It is intended that the payments to eligible investors will take account of individual circumstances, however the actual payment will be linked to a number of assumptions as discussed above.
The Commission looked at using a pro rata approach. This would have seen affected investors receive approximately seven cents for each unit they held in the Funds. However, the Commission concluded that this method did not provide for the fairest distribution of the settlement proceeds, as it would have provided a further payment to those who have already received their capital back, at the expense of other investors who may have only ended up receiving 70 or 80 per cent of their capital back.
I haven't claimed any tax rebates in relation to my losses in the Funds. Can I?
You need to consult a financial expert or your accountant. The Commission understands that if you were a non de minimis investor, you were under an obligation to file a tax return including the capital gain or loss in respect of foreign investments (which includes the Funds). As the Funds generated capital losses in the years ended 31 March 2008 and 2009, you will have been eligible to claim tax rebates on the losses. If these losses have not already been claimed then you may still do so and you should consult your tax adviser or the Inland Revenue Department. Under the general assumptions used in determining the payment method, it has been assumed that tax benefits have been claimed by non de minimis investors. We understand that non de minimis investors include an individual with over $50,000 invested in Foreign Investment Funds (FIFs), a couple with over $100,000 invested in FIFs, all companies and the majority of trusts with investments in FIFs at or after 1 April 2007.
Will I have to pay tax on my payment?
You should take advice from your accountant or other financial expert. The Commission understands that whether you will pay tax on the payment will depend on the amount of your investment in the Funds and whether you have claimed or are eligible to claim a rebate from the Inland Revenue Department for your losses. ANZ has advised the Commission that investors who are de minimis investors (an individual with less than $50,000, or a couple with less than $100,000 invested in overseas investments) are unlikely to have to pay tax on any payment received from the Commission Settlement. Any non de minimis investors who have already claimed those losses from the Inland Revenue will need to pay tax on the payment.
What about any other losses I may have suffered?
The payment method does not attempt to return any payment for unpaid interest, lost income, opportunity cost or adviser fees in connection with investments in the Funds. As a result of the Commission Settlement, the Commission is not taking any further action against ING, ANZ or any other party arising out of its investigation. However, the Commission's settlement with the ANZ and ING does not prevent any affected investor from taking their own private action to seek recovery of these types of losses. You need to take your own legal advice as to your position if you are still concerned.
What if I did not accept the ING offer?
The Commission Settlement assumes that all investors accepted the ING Offer and sold their investment in the Funds at 60 cents for DYF units and 62 cents for RIF units.
The ING Offer is now closed. However, if you did not accept the ING Offer and now wish to sell your units, you may wish to contact the ING to discuss whether a sale of your units can be arranged.
Will the payment be paid to the same high interest ANZ On-Call Account that holds the funds I received from the ING Offer?
No. The payment is not eligible to be added to the high interest account where the ING Offer funds are held
What should I do if I am not happy with the payment I receive from the Commission Settlement?
You should contact ANZ or ING if you have any question about the payment process or payment amount.
