Posts by izogi
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Speaker: Why we can’t just fix secondary…, in reply to Paul Campbell,
my company largely exists as a tax dodge – in a good way: so that I’m not directly an employee of a US company, and so as a result the bulk of my tax is paid in NZ
That's very similar to what I'm doing with Australia (but not as a company). Basically telecommuting to my old employer in Melbourne, but everyone on both sides decided it would be a tax nightmare, so I've basically set up here and I send them monthly zero-rated NZ$ invoices for my time.
Fortunately Australia should no longer consider me a tax resident once I have this year sorted out, if I've understood all the dealings correctly, because I no longer live there. Without wanting to bag them too much, I can't wait to cut that cord and simplify everything to a level I can manage. And I'm more than happy for all my income tax to go to New Zealand rather than Australia.
Are you a US citizen, Paul? I've heard that the USA makes its citizens file annual returns no matter where they are in the world... just to make sure they're paying enough tax to somebody. Or is this just something about doing business with a US company?
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Speaker: Why we can’t just fix secondary…, in reply to Matthew Poole,
I was very confused when I first saw the reference to that fraction everywhere through IRD's documentation, the first time I had to deal with GST. In my head I'd already had it figured out as just multiplying by 1.15 to add the 15% GST component or dividing by 1.15 to remove GST.
Then I realised that 23/1.15=20, so I guess it all adds up nice and neatly. :)
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Speaker: Why we can’t just fix secondary…, in reply to Deborah,
From a joint income angle, what's the current state of people doing things like paying a [fake] salary to their partner in New Zealand, so that both have a lower income and avoid the upper tax rates to pay lower income tax overall?
I'm new as a sole trader and it's not something I do. It seems unethical if nothing else, but it's crossed my mind to wonder about it from a fairness perspective. Is it something that everyone does? Is it frowned upon? Is it completely illegal?
My wife's from a farming family and wasn't eligible for a student allowance when in uni, but has many stories about friends whose parents arranged the company accounts to make themselves have a low enough income for their children's eligibility for allowances. It seems about the same level of ethical value if that can be measured.
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Speaker: Why we can’t just fix secondary…, in reply to Deborah,
I haven’t double-checked the NZ rules but I’m assuming Matthew’s point is that I’d given that deduction as a throwaway example of complexity in Australia’s income tax, but that the same deduction is available in NZ (and I should have used the word ‘deduction’). I agree that it still costs the $670, or whatever it adds to for an income. :) Even if it was a complete 100% refund to the individual, money’s still being channeled to accountants to handle the complexity of a tax system so it’s arguably not ideal unless you’re in the business. I’m all for reduced complexity where possible.
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Speaker: Why we can’t just fix secondary…, in reply to Matthew Poole,
Got me there.
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Speaker: Why we can’t just fix secondary…, in reply to Rich of Observationz,
That’s completely true, and it’s not that tough to handle when you’re already handling so much complexity. I think my fascination is more with how much stuff is now being classified as ‘fresh food’ – it’s the classifying more than the different tax rates. We commonly had $250 shops that might have included $1 GST, and that was on something like washing powder. It’s just another exception which can be strongly taken advantage of by those who know the tax system, and thus it’s great for supermarkets because it plays into their ability to know exactly what they can get away with, but those who don’t are at a disadvantage. But even personal tax accountants are extremely common in Australia because the personal tax system is an order of magnitude more complex. Adding more exceptions to the personal tax system (like a tax discount on the cost of hiring a personal tax accountant) is good politically and irritates fewer people, because they’re already paying someone else to care. But overall I think there’s a much lower efficiency with people’s time because it's being eaten up in bureaucracy.
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Speaker: Why we can’t just fix secondary…, in reply to debunk,
Heh, thanks @debunk. Without getting into detail I think NZ's very fortunate to have such a simple tax system by comparison, that's not heavily shaped by politics with a few exceptions. I suspect the reason that countries like Australia can get away with things like taking GST off "fresh food" (a nice way to increase profits for supermarkets imho), is that its system is already so complex and dictated by a massive existing industry of tax accountants at every corner, who revel in additional ways to root the system.
This year it's just messy for us thanks to the overlap of some residency stuff, but generally speaking I hugely prefer the NZ returns I've done.. and appreciated that I don't have to do them if I've just had a straight salary job all year. At a personal level they're as simple as asking how much money was earned, how much tax was paid, and then calculating out the difference between that and what's owed. The web interface which IRD has given us, for many years now, is vastly easier and faster to use than the ATO's convoluted Windows application.
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Speaker: Why we can’t just fix secondary…, in reply to Moz,
The worst was in Oz when I transitioned from being self-employed (IT contracting) to cycle touring. The tax department came after me to make quarterly payments on my “assessed income” and it took a bit of work to convnice them that I was not actually earning anything.
I’ve generally found Australia’s tax system to be insanely complex and heavily politically influenced compared with NZ’s, in terms of the paperwork required every year. Tax accountant retail shops seemed about as popular on the streets around urban and suburban Melbourne as hairdressers. But in my case when the ATO wanted to shift me to provisional tax (based on non-salary overseas earnings from interest on some life savings in a NZ bank account), it really only took a phone call for me to ask them to switch me back to an annual return. This was on the grounds that I was in the process of leaving the country and was about to file my final tax return, plus they accepted my explanation that it wasn’t going to involve a lot of money.
That was in September, and I’ve yet to file my Aussie return because my partner still had a salary job there until December (whilst telecommuting from NZ with an ambiguous state where both countries might be treating her as a tax resident). Australia’s joint-income thing means I have to declare her income before I can submit mine, and her former employer (whose system she can no longer log into for payslips) is an Australian government bureaucracy that won’t provide any proper tax documentation until at least July when Australia’s tax year ends. All of this is causing frustrations with trying to sort out my NZ tax return after my first year back here as a sole trader, thanks to the ambiguous overlaps in residency and the need to declare income and tax paid in another country whilst being a NZ resident.
So… Does anyone know of a good personal tax accountant, preferably in or near near Wellington, who’s also familiar with Australian tax laws? With all the tax accountants out there, it seems surprisingly difficult to find one on either side of the ditch who’s qualified and interested in advising with personal tax on both sides. If it was only dealing with NZ I could see it being so much simpler, and I think I’ll be much happier once I have this year out of the way. :)
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In some reluctant defence of Patrick Gower (whose style I still find annoying), I’ve appreciated his and his team’s analysis of the the recent Simon Bridges and Victoria Forest Park thing, which I think is spot on, if repetitive, and it’s a shame that both TVNZ and Fairfax have so far completely ignored the entire thing.
I don’t see Patrick Gower as a biased journo so much as someone who often lets narrative based self-congratulatory entertainment value win out over provision of objective and relevant infomation.
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Hard News: Gower Speaks, in reply to Ianmac,
Balanced questions Paddy?
Whether it helps to create a definitive yes/no meaning or not, I don't understand the point in asking questions that need such a lead-in to make sense. If regular voters aren't going to have a controlled introduction towards forming an opinion, isn't a poll which does exactly this just inviting a biased response? It's doesn't seem that different from the Leading Questions scenario striaght out of Yes Prime Minister.