Change proposed for Blackrock iShares in AustraliaMay 3, 2018
As a shareholder of some of the ETFs that Blackrock offer in Australia under the iShares brand, I have received news that a change has been proposed.
iShares, Inc. and iShares Trust, in conjunction with BlackRock Investment Management (Australia) Limited (BlackRock Australia), are proposing to simplify the way fourteen (14) of their iShares exchange traded funds (iShares ETFs) are offered to Australian investors on the Australian Securities Exchange (ASX).
You have been recorded as holding at least one of these iShares ETFs as of Thursday, 26th April (Record Date), meaning you are eligible to attend and vote at an upcoming investor meeting. This letter outlines what you need to know about these changes, actions you need to take, and provides answers to some of the questions you may have.
What you need to know
Currently, your investment is held as a CHESS depositary interest (CDI) which gives you an interest in the shares of a U.S. domiciled iShares ETF. The proposed changes will mean that your current investment will be converted into units of a new Australian domiciled iShares ETF on a 1 for 1 basis (1 CDI for 1 unit). The new Australian domiciled iShares ETF will be issued by BlackRock Australia, as responsible entity, and will invest in shares of the corresponding U.S. domiciled iShares ETF.
Benefits to investors:
- Less on-going administration with a simpler tax regime by removing the need for Australian investors or their advisors to complete U.S. tax forms (known as “W-8BEN” forms)
- Dividend reinvestment plan available for future distributions
- Overall client experience aligned with all products in the iShares Australian product suite, including distributions, tax statements, and communications
The proposed changes will have NO impact on your investment exposures and management fees. BlackRock Australia also advises that it has received a draft Class Ruling from the Australian Taxation Office on the availability of capital gains tax relief for eligible investors in relation to the conversion of CDI interests to units in a new Australian domiciled ETF. Operational costs associated with the proposed changes will be borne by BlackRock Australia and will not be passed on to the iShares ETFs or investors.
The proposed changes relate to the following U.S. domiciled iShares ETFs:
|ASX Code||Issuing Entity||ASX Name (CDI)|
|IAA||iShares Trust||iShares Asia 50 ETF|
|IZZ||iShares Trust||iShares China Large-Cap ETF|
|IEU||iShares Trust||iShares Europe ETF|
|IOO||iShares Trust||iShares Global 100 ETF|
|IXI||iShares Trust||iShares Global Consumer Staples ETF|
|IXJ||iShares Trust||iShares Global Healthcare ETF|
|IVE||iShares Trust||iShares MSCI EAFE ETF|
|IVV||iShares Trust||iShares S&P 500 ETF|
|IJH||iShares Trust||iShares S&P Mid-Cap ETF|
|IJR||iShares Trust||iShares S&P Small-Cap ETF|
|IEM||iShares Inc||iShares MSCI Emerging Markets ETF|
|IJP||iShares Inc||iShares MSCI Japan ETF|
|IKO||iShares Inc||iShares MSCI South Korea ETF|
|ITW||iShares Inc||iShares MSCI Taiwan ETF|
I have already filled out quite a few W8-BEN forms for ETFs that I hold so the more that switch over to this method, the better!
If you are a Blackrock iShare investor, make sure you cast your vote! They have sent emails out to shareholders with voting links and instructions.
Submit your tax information
Your TFN or ABN: Currently, all distributions are paid as foreign income from the US domiciled iShares ETF. Post conversion, distribution payments will be paid from a new Australian domiciled iShares ETF. As such, you are invited to provide us with your TFN, ABN or claim an exemption. However, you are not obliged to provide us with your TFN, ABN or claim an exemption. If you do not quote your TFN, ABN or claim an exemption, then your income distributions from the new Australian domiciled iShares ETF will have tax withheld at the top marginal rate plus Medicare levy.