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FIF/FDR Tax Regime on Overseas Investments

If you are liable to this tax regime (Your adviser will have told you, and your tax report will have a section with calculations on it as shown below), it is IMPORTANT that you read this guidance. How does FIF/FDR and the exemption work? If you have less than $50,000 per person cost price of overseas investments (for Moneyworks clients this is generally Australian Dollar denominated investments, like Magellan, Platinum etc), then you have an exemption from the FIF/FDR tax regime and you pay tax ...

PIE Tax

Your KiwiSaver and some other investments may be liable to PIE Tax. A PIE is a Portfolio Investment Entity. PIE Tax calculations are quite complicated – the important thing that you need to know is that PIE tax is FULL AND FINAL. Your PIE tax rate is your PIR (Prescribed Investor Rate).  This is different to your Marginal Tax Rate – which is based on your earned income.  For more information on how to calculate your PIR (the rules are not straight forward) can be found here. https:...

Tax Adjustments/Package available for indviduals and businesses under the Covid-19 Crisis Environment

The NZ Government has been using the tax system to provide assistance to people and businesses to deal with the Covid-19 Lockdown.  We have outlined the benefits announced to date below. There is a full summary of the initiatives in the file below as of 23/04/2020. To get updated information, check out https://www.ird.govt.nz/roles/tax-agents/covid-19. 27th March 2020 Legislation ▪ The COVID-19 Response (Taxation and Social Assistance Urgent Measures) Bill was passed on 27th March 2020, a...

Questions about your KiwiSaver and Insurance under the Covid-19 environment?

Insurance policiesAll of the insurers that we work with and that our clients have insurance in place with (Life, Trauma, Income Protection/Mortgage Repayment and Health/Medical insurance) have confirmed to us that there are NO EXCLUSIONS for existing policies if you become unwell from Covid-19. This is a different situation to the travel insurance, where most of the policies DO exclude any claims relating to pandemics. If you are in a situation where you have severely reduced income, some of the...

It is time in the market - NOT timing the market - the role of Finology in investing

It is tempting to stop making regular investments into markets when there is volatility and you hear the media pronouncing that the markets have 'crashed', 'plummeted', 'plunged', or even when they breathlessly talk about the markets falling - the biggest fall in 10 years. As financial planners, we do many things that are valuable to our clients, develop a retirement savings analysis so that our clients can see how long their money will last in retirement, make sure that they have well diversifi...

Investment Markets and Recent Fluctuations

You will have heard comments in the media recently that the stock-markets have ‘had their worst day since the Global Financial Crisis in 2008’.  You may have noticed that your KiwiSaver and other market linked investments have fallen in value as a result of these market falls. We thought it would be useful for you to have some context around these comments to help put this into perspective for you. For the last 12 years, the stock-markets have had the longest ‘bull run’ in recent hi...

Which insurance company was that again?

I have been involved in this industry in New Zealand since 1986 and have seen so many changes of names of suppliers. Stockbrokers names have changed, then changed again, and now some are changing back to their original names.  Fund Managers brands have changed, organisations have merged/folded.  And insurance companies have changed names and swallowed up other players. With life insurance products, because the products are for the life of the client, the contracts can only be cancelled...

Warning to DIY investors investing in foreign investments

New Zealand is a nation of Do It Yourselfers.  From the queues at Mitre 10 and Bunnings, to people managing their own investments because they can do it better than a professional. Although we DIY our gardening and some minor garden building projects, we do tend to disagree on the ability of most people to build a well diversified and well performing investment portfolio without professional help. A recent NZ Herald article highlighted the risks of DIY investing, when an investor had a $2,0...

Fast fashion and the impact on the environment

As our society becomes more socially aware, it is becoming clear that 'fast fashion' is a major contributor to not only landfill, but also as an intensive user of resources. As many of you will recall, when we were growing up - you would buy an item of clothing and expect it to last for a number of years.  Now, it appears that some items are only designed to be washed several times, before they are added to the landfill.  Personally, I have always preferred classic clothes made of good...

Building or Renovation insurance - who is responsible?

Is it you or is it me? Who covers what when it comes to renovating or building? Is it the Owner or the Builder? This is a question that is often raised late in the piece when considering building or renovating, however it should be one of the earliest points of discussion. Whilst undertaking a new build or renovating an existing house can be a pretty exciting time, it’s also a time to be seriously organised.  There’s the potential for things to go wrong in a project, starting right fr...

How your insurance actually works for you when you need to claim

Over the last two years we have seen our clients insurance policies working actively for them.  While we are thrilled that the insurance claims have been paid to our clients – proving that good insurance cover works – we hope that no more of our clients become ill and need to claim on their insurance cover. When Moneyworks helps our clients to put in place insurance cover, our goal is to make sure that a claim will be paid if required.  Consequently we can be a pain, getting our cl...

Dart Throwing Monkeys - can they do better than active investment managers?

In December 2019, Kiwi Wealth released a research report analyzing the actual returns of tracking ‘passive’ investment funds, versus random ‘dart throwing monkeys’ versus ‘active’ investment management. The research confirmed what we have known all along, which is why our preferred investment strategy is to select active investment managers, who make actual decisions on what stocks to include in your portfolio’s. Bernard Hickey wrote an excellent article on Newsroom, putting the re...

The Sky City Fire - who will pay the bill?

The Deconstruction of a Fire At 1:15pm, Tuesday 22nd October a fire broke out on the roof of the New Zealand International Convention Centre in Auckland. Close to 100  construction workers were on site at the time. What followed? -          Large scale disruption for over 48hours forcing areas of the central business district to be shut down, in part by the smoke that was deemed toxic.  -       &nbs...

Rental income - new ring-fencing rules

The rules for reporting rental income have changed from the 2019-2020 income year.  This means that you can’t offset losses on your rental properties against other income and new rules apply to deductions claimed for residential properties. Residential property deductions will now be ring-fenced, meaning that they can only be used to offset income from residential property. This means that the residential property deductions you claim for the year cannot exceed the amount of inc...

Enduring Power of Attorney - why you need to put them in place

These documents are often associated with ‘old’ people, who are losing their mental capacity.  And yes, we agree, having Enduring Powers of Attorney in place are very important at that stage of life. However, we recommend that all of our clients put the two Enduring Powers of Attorney in place from the start of their financial planning process, as you never know what might happen. I am working with a specific example right now, a 50 year old very active woman (skier, golfer) had a sever...

Using an adviser adds more than 5% to a client's portfolio

Research recently carried out in New Zealand by Russell Investments, recently confirmed the findings in the USA and Australia, that using an adviser can add 5.2% pa to a clients portfolio returns. There are three areas that advisers make a difference to their clients investment strategy: 1. Rebalancing (0.4% extra return) 2. Getting it Wrong (2.9% extra return) 3. Avoiding Behavioural Mistakes (1.9% extra return) In addition, there was the intangible benefit for making investing simpler, but als...

Online Relationship Break-Up Tool

The Ministry of Justice has released an online collection of information for people navigating a relationship break up.It says while it has had a lot of helpful information on its website, it has been told it could be overwhelming."We took a look at how we were presenting information to people navigating a relationship break up and came up with a more individualised approach."The new tool acts like a funnel. People select the topics that are important to them and can then delve deeper ...

Sole Trader vs Company?  What should I do? (with thanks to Beany)

Our support team at Beany are asked this question frequently so if you've ever wondered.......The short summary is that if you are a Beany client there is very little additional cost and 3 key advantages - read the  blog (I'm a Sole Trader, Should I restructure my business to a Company?) to find out what they are.What happens when the shareholding of your company changes This one catches out a lot of people as shareholdings are often altered in periods of major chan...

Changes to the Trust Law

Over the last 4 (or 17 depending on your source) years new legislation for Trusts has been working it’s way through the consultation and legislative process.It has now been passed into law as the Trusts Act 2019 and it comes into effect on January 30th 2021 and replaces two pieces of existing legislation – the Trustee Act 1956 and the Perpetuities Act 1964.  The goal is to make the trust law more accessible and to clarify and simplify the core trust principles and essential obligations ...

Renting a vehicle and insurance issues

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Permanent or Temporary Loss of your Capital

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More changes for rental property owners and tenants

On 27th August 2019 - more changes were introduced for Landlords and Tenants - but these didn't seem to have as much publicity as the 'warm and healthy homes' changes but are important. These changes were in the Residential Tenancies Amendment Act 2019 and include the following important changes.  The Act now limits tenants’ liability for careless damage in rental properties. gives the Tenancy Tribunal full jurisdiction over cases concerning premises that are unlawful for residential purpos...

Walking the Talk - Moneyworks new Wellness Coach and Mobile Fitness Trainer - Sally Mellor

When we meet with our clients we spend most of our time talking about what has happened in the last year, and how clients are going in terms of reaching their goals.  One of the main goals for our clients is having a financially comfortable retirement. As a consequence, we worked out that we do is - 'Help get you to and through retirement'. While we arrange the financial solutions for people to achieve those goals, we also spend a lot of time discussing health and wellbeing with our clients an...

It wasn't my fault - why do I have to claim? (With thanks to Bridges Insurance)

At Moneyworks, we aren't fire and general insurance specialists, but it is our job to make sure that our clients understand the issues that they have to think about in relation to these types of insurances (car, house, contents etc).  We work with Bridges Insurance Brokers personally, and have referred a number of our clients to work with Bridges.  This is an article from a recent newsletter of Bridges. ...

Understanding New Zealand Superannuation – and noting the pitfalls

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