I’ll keep this post short!

A REIT ETF such as Phillip SGX APAC Dividend Leaders REIT ETF is a great tool to have at our disposal and I have been waiting for ages for one. It would fit in nicely if you’re trying to construct a portfolio like Rick Ferri’s Core Four, for example.

Image Source : Awesome Site @ PortfolioCharts.com

Image Source : Awesome Site @ PortfolioCharts.com

Portfolio Charts is a website that I really like, by the way.

Taxation

I’ve been waiting for someone to mention this and I could have missed it amidst the flood of blog posts.

Let’s check out the REIT ETF prospectus. At first glance, we have REITs from Singapore, Hong Kong and Australia. What? Did you say tax? The problem of taxation is just like what I’ve mentioned before on Dividend Withholding Tax. The impact is especially harsh on REITs.

Singapore

30% weight : 17% on distributions?

Taxable income distribution from Real Estate Investment Trusts (“REITs”) listed in Singapore derived by the Fund will generally be subject to tax withheld at source at the prevailing income tax rate, currently 17%.

Australia

59% weight : 15% on distributions?

Distributions from an Australian Trust (which is a MIT) to the Fund will be subject to withholding tax, however the ultimate withholding tax rate will depend on the nature and character of the underlying income or gain.

Hong Kong

11% weight : 0% on distributions?

It is understood that, under the Inland Revenue Department’s current practice, tax should not be payable in Hong Kong in respect of distributions made by Real Estate Investment Trusts (REITs) listed in Hong Kong payable to their unitholders, including the Fund.

If the yield is originally 6%, then it would look a lot closer to 5% after taxes. Uh-oh. I’m still in the process of learning more on this. Perhaps someone can enlighten me?

More Than Index Investing

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