4
tips for investing in offshore funds
Prepare
an investment policy statement (IPS)
A
respectable wealthmanager
should prepare an IPS document for their client, which is vital in
order for the investor to make an informed investment decision. The
investment policy statement should outline your investment objectives
and risk tolerance, among other things. It should state your motives
for investing in the offshore funds and that tax minimization or
deferral is not one of the main factors behind your decision to
invest offshore.
Document
discussions
It
is important to clarify with your wealthmanager
what your objectives are and, if reducing taxes is not one of the
primary reasons for investing offshore, explain that to your wealth
manager.
Choose
local if you can
If
there’s an investment fund in your region that is equivalent in all
important respects to the offshore fund you’re considering, you may
want to choose the local investment instead in order to avoid any
questions from the applicable tax authorities. It’s more than
likely, that you may have difficulty finding an equivalent localized
fund if the investment adopts an alternative strategy (something
esoteric, and not simply a fund that purchases stocks on a long-only
basis). If there is no localized equivalent investment fund that
you’re aware of, be sure to document that fact.
Watch
your cost amount
In
general, if the value of your offshore investment is less than
$100,000 USD in aggregate, you won’t have to report these assets to
your tax authority. It is likely that your local tax authorities will
raise this threshold, so it is advised that you keep abreast of all
relevant tax laws and any changes to them pertaining to offshore
investment.
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