The Last Winterbottom becomes a RESIDENT
Details of how the hell this happened to follow – because you probably won’t believe it.
As soon as I get my head round it myself, and get some sleep.
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Tax Changes – boring but important.
Filed under: Cost of living, Economics, General Budgeting, Property Investing
In fact so boring and dull, I’ve been putting off writing about it for weeks. But I figured I really ought to get it done, because it could make quite a difference to whether emigrating here is affordable for you or not.
Kiwi’s generally think they have really high tax levels. Coming from the UK, I have always thought they are wonderfully cheap, and its one of the reasons I have always thought you could do financially well here.
So, I’ve already written about the taxes that should be going down – basically the top income tax rate. The finance minister has now “suggested” that the top tax rate will drop from 38% to 33%. That in itself will make a huge difference for many skilled migrants, even if it isn’t going down to the 30% that the Tax Working Group wanted. Company tax looks likely to go down from 33% to 30% – good if you are thinking of running a business, but won’t do anything to fix the fact that people supposedly use companies to hide income for tax purposes.
So the question remains – what’s going up?
Because make no mistake – these are not tax cuts. These are tax cuts equalled by tax increases. For every 1% drop in Income Tax, there has to be a 1% increase elsewhere. Whether people think its fair tends to depend entirely on whether they are paying or saving.
GST
The main increase is likely to be GST – up from 12.5% to 15%. Which basically means you get to keep more of what you earn, but pay more of it out when you spend. So depending on your spending habits, and ability to save money, you may in the end come out better off. At least this is a tax you have some control of. While your fixed expenses are – well – fixed, and they will go up – you can determine how much tax you pay on your non.-essentials by budgeting and shopping around.
Closing a Working For Families Loophole
There’s also talk of making sure that property investors can’t use their tax losses to lower their income and get access to Working For Families benefits. I’m personally a fan of that. Although we lower our income by claiming tax losses, as far as we are concerned we still earn $150,000 – we just plough a lot of it into our investments. So it actually wouldn’t occur to us that we were eligible for WFF (if we had kids).
Property Investor Taxes
Most of the tax hit that Property Investors were going to get look like they have gone. We are still going to take a hit somewhere – but not as much as the people in the Tax Working group (all of whom work in the Share Investment field) would have liked. Which means that a lot less people are about to be bankrupted. It looks like the main rise will be that you wont be able to claim depreciation on the building. It could make investing a property harder for lower earners, but we wont know for definite.
And so far – that’s about it.
Like most things – a report from a bunch of academics and vested interests comes out (at huge cost to taxpayers) which says a load of “academically sophisticated” ideas about reducing tax (I hope they took their own sandwiches to their meetings!). But when you boil it down to what might actually work – you aren’t really left with a whole lot.
We won’t know for definite until the budget in May, at which time everyone can work out whether they win or lose.
For us, while we are highly likely to lose a fair amount in any property tax changes – we also make a fair amount by our income tax going down. The GST will cost quite a bit on our fixed expenses – which is a pain because I’ve just reduced our fixed outgoings by a huge amount lately – and it will make me feel a bit deflated for a while.
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Seriously- pay off your credits cards!
Filed under: Avalon's Money Thread, Banks, Cost of living, Economics, General Budgeting, interest rates
From Credit Cards on Cracked.com
You will find a very good explanation of who this works on the website. Although this refers to the US, its a cautionary take in any country. I believe in the UK the minimum payment has to cover the interest and charges, and your statement should now tell you how long it will take to clear the card if you just make minimum payments, but that does assume that stop spending. And not many people do that!
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Beach Time
Filed under: Beaches in New Zealand, Hubby's Views, Life in New Zealand
I’ve learnt to relax about time since we came to NZ.
In the UK I’d always be wearing a watch and needing to keep an eye on the time. Time to be somewhere, do something, time to get somewhere else – especially during the working week. Much like Alice in Wonderlands mad march hare – mustn’t be late!
Holiday’s always used to be down time, where I didn’t wear a watch ‘cos I’m on holiday and the time generally didn’t matter.
So having moved to NZ and got used to people being more relaxed here, I stopped wearing my watch. While of course mobile phones are everywhere, and I’m hardly without mine these days, there is still some symbolism for me in not wearing a watch.
So today in talking with Avalon about some other people saying they haven’t got time to do stuff, I was pondering beach time as we drove back from Riversdale.
Beach Time, it’s a bit like Island Time for anyone who has been to the smaller south Pacific islands.
It goes something like this;
- What time is it? – time to head to the beach
- What time is it? – time to head into the surf
- What time is it? – time to dry off and read a book
- What time is it? – time to apply more sunblock
- What time is it? – time to turn over and continue reading my book
- What time is it? – time to have a snooze
- What time is it? – time to head back into the water
- What time is it? – time to get some ice cream
- What time is it? – time to go back and get some coffee
- What time is it? – time to catch some more waves
What time is it? – who cares, we’re at the beach!
Progress on the Rimutaka Hill Road.
It’s scarily impressive to be honest. Diggers are perched high up on the hill, cutting a way through the sharpest bends. Sometimes it really does look as if they are about to go hurtling down the hill and end up somewhere in the valley.
These photos were actually taken a few weeks ago:
These are taken from the summit looking south towards Wellington.
This is looking up towards the summit, traveling from Wellington (The weather was crap that day!):
And a Closer view of what they are doing – not that it makes much sense to my untrained, un-engineering eye.
Sorry the photos aren’t the greatest – they are taken on an iPhone !
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So, what are the IAA doing to protect migrants?
Not a lot funnily enough. In their February newsletter there is no mention of the number of complaints they are dealing with and what they are doing about it. In fact the whole newsletter is about the “Marketing Message” the IAA are using to promote its members.
Thats actually not what they are there for – as I am reminded by the Minister for Immigration.
It also seems that, as it now renewal time for licensed members, that some of them can’t even get their own applications correct. Which begs the question: how can you be sure that these people will not screw up your application.
So, how many Immigration Agents are now licensed?
At the start of the newsletter it says:
There are currently 352 licensed immigration advisers. Of these, 269 advisers are based in New Zealand and 83 are offshore advisers.
At the bottom of the News letter, we find out that only 296 of those 352 people have full licenses. I think we are supposed to ignore that fact and focus on 352!
As at 27 January 2010, there were:
296 full licence holders
29 limited licence holders
27 provisional licence holders
26 initial applications in progress
31 renewal applications in progress
Nine people have been refused a licence
Funny, there were supposed to be 1000 licensed advisers by April 2009. Think they’ve cocked up a bit there. One of the reasons for this is that the IAA is supposed to be self funding. The point of this was that the fees from the Licensed Agents ($2000 a year) is supposed to cover the cost of running the IAA, so it wouldn’t use Tax Payer funds. Hmmm – I foresee a bit of a shortfall there.
I also looked at the latest Reference Group Minutes. This is something else that concerns me: the reference group is made up solely if Immigration agents – and yet the IAA is supposed to be independent. It is NOT supposed to be the mouthpiece of the Agents – it’s supposed to protect Migrants.
One of the things these agents want to do is get the IAA to work on their behalf to get the preferential treatment with Immigration New Zealand:
- The group stressed that the main message, that advisers improve INZ efficiency is not yet realised at branch level. Advisers want more from INZ – including feedback on the issues they raise and preferential treatment. Preferential treatment is already given in other schemes such as with DHBs and universities. INZ needs to support licensing (IAA to follow up)
- INZ should create an adviser relationship manager (IAA to follow up)
- One member suggested that INZ fees should be decreased for licensed advisers in light of the efficiency gains they create (IAA to follow up)
Now this tells me two things:
Firstly – the IAA and its members know full well that Agents are lying to immigrants when they calim they already get preferential treatment at INZ and that their application get dealt with quicker.
Secondly, no matter what they claim, INZ is NOT working at the behest of Immigration Agents – and I personally hope it stays that way. Your ability to immigrate to New Zealand should be based on merit, not on who fills in your form. What these agents are asking for is against every policy that Immigration New Zealand and the New Zealand government has created. Talk about corruption!
One way or another – the IAA is not working in YOUR interests.
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The IAA is in the news again :)
Filed under: Life in New Zealand, NZIS & Immigration issues
See- it isn’t just me that thinks this supposed licensing body needs a leash on it – it really isn’t!
Lincoln Tan reports in the Herald that Immigration Watch have now written to the Attorney General asking for the law to reviewed to give us back our right to free speech. Because no matter what our MP’s claim, the IAA is restricting that freedom by using the threat of prosecution.
“These freedoms supersede and overrule any other Act of Parliament before, or after, its passing into law,” Mr Ogilvy said in his letter to the Attorney-General.
“We are asking you to report to Parliament to inquire as to what constitutes “immigration advice” in the Immigration Advisers Licensing Act.”
I hope they get further than me, because other than some woolly “you can give personal experience” from the minister, which completely contradicts the stand taken by the IAA, I can’t get a straight answer still. Given that the IAA says anything I say is illegal if its about how to Immigrate simply because I own a website or blog – its a bit silly of the Minister to ignore the problem like this.
Funnily enough the immigration Minister Dr Jonathan Coleman now says he cant comment as the situation has gone to the Attorney General. I can’t help but see that as a cop-out.
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Kiwisaver Problems: keep your eye on your provider.
Filed under: Avalon's Money Thread, Cost of living, Future Finances, General Budgeting, Investing in general, Kiwisaver
I always thought putting the Inland Revenue in charge of Kiwisaver was a daft idea. Seems I may have had a point. The IRD passes on your information to one of the default providers, and then thats the end of what they care about. It seems that a lot of the default Kiwisaver providers (these are the ones you are automatically enrolled with if you don’t make your own choice), have got the wrong information, and cant get in contact with the people whose funds they are running.
It worries me that there appears to be an awful lot of people who are completely unaware that they have a Kiwisaver fund. There are 200,000 people who cannot be contacted by their fund managers.
The problem means people may not receive the letter telling them who their KiwiSaver provider is or the annual statement on their Kiwisaver balance and annual report explaining the returns of their fund.
McAllister [from ASB Group Investments - the larges Default provider] said some people could be in KiwiSaver for more than a year and still not know because it was new and they did not know what to expect from their provider or Inland Revenue.
“It appears it’s an IRD problem. It raises questions about how accurate IRD’s information is.
You need to be aware about Kiwisaver. You are automatically enrolled into a fund, whether you like it or not, and have to opt out if like us you think Kiwisaver is crap.
Make sure you understand what is at stake here – as immigrants you will face this the minute you start a job,a dn you have 2 weeks to make up your mind about staying in Kiwisaver forever or opting out. Do your homework.
More information on Kiwisaver can be found in Avalon’s Guide: 13 things you need to know, and 17 things you really need to know!
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Bank Guarantees on loans
When you take out a mortgage to buy your home, the mortgage is “secured” against the house. Most people get that, and understand it – it’s the bit that says “You can lose your home if you do not keep up the repayments on your loan” sort of thing.
But on top of that – you also get what is called a Personal Guarantee. Which says that even if we take your home, and you find some nifty way to try and get round paying us what you owe us, you personally guarantee that you will pay us what we want – even if its 20 times what your house was worth. Or something to that effect. Strangely enough its a nightmare of small-print and legal waffle.
And it’s the bit we seem to have no end of problems with in our dealings with ASB. I dread trying to organise mortgages with them now, because I can almost “guarantee” that there is gonna be a problem with the Guarantees.
We have yet another problem with them right because Ive actually paid off one of my mortgages.
Which is obviously a bit of a big thing for me. (Blog will be here as soon as I have the statement to copy and prove it!) It seems the ASB loan department have finally looked through the file, and worked out that one of the trustees in our Family Trust changed about 3 years ago. They were told, but it looks like everyone ignored it. Now they want us to sign another guarantee to replace that one.
For a loan that we have paid off.
Bloodsuckers!
So, as I am already a bit disgruntled with the loans people for screwing us around a few weeks ago, Ive said I wouldn’t do it unless they covered the legal costs – as Lawyers are needed (they are the trustees that changed). ASB have agreed to pay $250.00, so I’m instructing the solicitors that if it takes more than that, they need to stop working on it and tell me. I’m not paying for another bank stuff-up. They wont reduce my bank fees, so I’m not in the mood to indulge them right now.
I’ve also said that I need it in writing that the old guarantee is canceled, and that they are only wanting us to guarantee the amount of the outstanding loan – a rather large $210,000.00 less than the original guarantee.
Banks will try and sneak in a silly amount, but you can tell them to make the guarantee for the size of the loan only – it will have a clause in there that they can come after you for any associated costs and interest anyway.
I wait with baited breath to see what they will do.
One of the things to note about this situation, is that you may be advised to set up a family trust when you come to New Zealand. Usually on the premise that it protects your assets such as your home. But then the bank makes you sign these guarantees, and they bypass the whole family trust anyway. SO don’t be fooled. We are happy to have a family trust, because we have a business and investments, and it will to some extent protect the home my parents and brother live in if we stuff up. But every business loan we have has one attached, so if you go belly-up, the banks can come after us – there no hiding.
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What can Evony teach you about how money works?
We’re fond of games, and personally we learnt a lot about property & money from playing things like Cashflow, Hybrid Property Game & of course Monopoly.
So to continue our series in things to learn about money from unlikely games you just wouldn’t expect, we are proud to introduce; Nine things Evony can teach you about Economic theory, tax & the art of war.
For anyone who doesn’t know what Evony is, it’s an online real time game, similar to Civilisation. You build up a city with infrastructure, have to defend it from other (real) players, go and invade valleys for resources, or other cities for plunder. The game keeps going in real time even when you’re alseep. So you need to hope you have enough defense to see off any attacks while you sleep.
It’s very addictive. (And while it may well have the tag line “Free Forever” it can be bloody expensive if you want to buy Game Coins.)
In the game you get gold: from taxation, plunder or selling resources to other players that you ‘harvest’ from the land.
Resources you can harvest are;
- food, needed to feed your army, and workers;
- lumber, needed for building & weapons;
- stone, more building;
- iron, yet more building and some other weapons.
You can buy & sell these resources from other players through a marketplace if you wish.
So, what can Evony teach you about money?
1. Gambling & The Wheel of fortune.
Each day you get a free spin on the wheel of fortune, where you stand a chance of winning a random item which is useful to you in the game. Annoyingly the main screen keeps popping up all the really useful things you just wish you could get your hands on, that ‘other’ players have won on the wheel. Only they are the exception, not the norm. Unless you are a guy called DeMontfort, in which case you are an exceedingly lucky git!
So just like with the real lottery, you keep hearing about all the great thing other people have won. Except when you play, you only win crap. Having used my daily spin for a couple of weeks now, I’ve yet to win anything really useful. Mostly I’ve won resources, which I was building anyhow.
A bit like a free ticket for next weeks lottery.
2. Taxation
You need Tax revenue to pay for Academic research, buy resources in the marketplace, and pay the salary of your hero’s. Two things define how much tax revenue you get, your total population and your taxation percentage. The higher your taxation level, the less popular you are, and the lower your overall population, hence a reduced tax take.
Low tax(naturally) gives you low tax income. High tax (also) gives you low tax income.
Why governments need to spend millions on “working groups” to tell them this I have no idea. They should play Evony and save the money for really important stuff. Like expenses claims.
There is a balance between population and taxation levels, which is around 50% tax. Not that we’d like the Tax Working Group to suggest this to NZ govt., and just look at the starting exodus of people from the UK because of impending 50% tax rates. Tweaking your tax rate for optimum income isn’t necessarily the best policy if you want to grow your city.
Unfortunately in the game, a 50% tax rate means that you have to invest a huge amount of time & resources building housing for people, and only 50% of it is occupied. Lower your tax and more of your housing stock is occupied, and you have more people available to work in the fields or join the army.
So just like real life, low personal income tax attracts people to your city, who then work in productive functions. As a Govt. you then have to balance your spending so you don’t run out of money before you’ve built that shiny new Town Hall.
3. Plundering – a great historical tradition going back millenia. Today we call it war.
If you can’t, or don’t want to, harvest the resources you need from your own lands and build a sustainable economic base for your city then you can always steal it off of someone else.
Only you need an army to do that.
So you need some ‘basis’ things like; resources, buildings, academic research, idle population and a hero before you can do that.
Plus you’ll need defenses once you nick the stuff, so the other player can’t nick it back.
If you’re lazy with either attack or defense, you’ll lose the fight, your soldiers all die, and you have to replace them. Back to needing to harvest resources again.
4.It’s all about budgeting!
The game is all a big balancing act, which we more commonly call budgeting. If you have low taxation, then you need to plunder for gold. If you don’t invest in your own infrastructure (resources), then you need to plunder for the resources you need to build. And of course the bigger you want to build things, the more plundering you need to do. The more plundering you do, the further away you have to travel to do it, until in the end you invade a city because it’s building a catapult which could reach your city within 45 minutes.
All of which can be minimised by budgeting well, spreading the investment of your resources back into making more resources, building more housing, or increasing infrastructure. All the time keeping people happy.
5. Hero’s – today we call them leaders, less politely we’d call them politicians.
In a very odd parallel here, you recruit your hero from an inn.
Where they hang out until someone gives them a job.
Only then, they demand a feasting hall be built in their honour, and they hang out there while you pay them a salary for, well, feasting.
The more hero’s you have, the bigger your feasting hall needs to be. Which takes time, gold, resources etc.
I don’t need to say much more on that do I? 
6. Hero’s – part 2.
- In order to enhance the speed at which your people build things, you need a good mayor with high political acumen.
- In order to enhance the speed at which your academics under take research, you need a highly intelligent hero.
- In order to train your armies quicker and win more battles you need a hero with high military skill. Ideally you should have two of these, one to head off and fight a battle, while the other stays at home training more armies.
Typically these three attributes are not found in one person, and ideally you actually need four hero’s to make your city run well. For example if you demote your mayor, so you can send him off to battle, then the population slows down their working speed – i.e. while you leader is off fighting a war in another country productivity goes down.
Amazing how well this matches real life through the centuries eh? Of course if you want to fight lots, either for plunder or conquest, you’ll need more military leaders. Which require a bigger feasting hall, larger inn’s and higher salaries. And if you want to ‘entertain’ a foreign ‘dignitary’, we call them leaders who have been taken hostage in a fight, you need a bigger feasting hall! (yet again)
Basically, provide your politicians heroes with lots of perks, particularly alcohol, and they will love you and do what you want them to.
7. The Marketplace: commodity trading is a great way to make money.
The marketplace allows you to buy and sell the four basic resources with other players. Prices fluctuate a lot, even during a day. However, just like a real economy & stock market you can place an order for a quantity of food at the price you’re willing to pay, and wait for a seller to come along and accept that offer. Just like real stocks, you can see the highest prices people want to buy stuff at, and the lowest prices people are willing to sell at. A very active market has a small, or non-existent difference. A slow market for resources not in demand will have a big difference.
So just like the real economy, you have a price at which sellers are willing to accept for their item (let’s call it a house), and a price buyers are willing to pay for that same item, and eventually there has to be a compromise in price by one party for the sale to happen. And just like the real economy, you have lots of people selling food, so the price is low, and as a buyer you can ’shop around’, i.e. wait, until a seller comes along who is willing to meet your (low) price.
8. Academic research.
Part of the game requires you to research scientific advances to help you progress in the game. i.e. build things quicker, get a better defense, attack or movement speed to your armies. So just like the real world, where academics need research grants from Govt., here you have to pay gold & food for those academics to figure out how to make a faster wheel. And just like the real world, with a highly intelligent academic honoured in your feasting hall, academic research progresses faster. Academic research is one of those thing to invest in early, so when you’re trying to build a really big something, it only takes a day or two instead of weeks (real time!)
9. Alliances
Alliances are very important. A good alliance will come to your aid when you are being attacked by sending troops to help defend your city, or other troops to attack the city of the person attacking you. A really good alliance will also make donations of resources when you need them, to help you build your city or army. They’re also there to give sage advice. So whether it’s friends, neighbours, work colleagues, fellow countrymen, other countries you know well, or countries you can’t even spell – joining an alliance and working together means you all benefit.
Bake a bigger pie.
Failing that, your alliance may plunder the pie’s of other alliances, but teamwork always gets you more pies in the long run than playing fighting alone.
