Government screws savers?

[Maki]

Can someone help me to understand something. It seems like an evil, almost criminal scam to me, but is that possible with the NZ government behind it and nobody seems to be complaining?

The thing is, if you save your money and put it into something like a bank account or some investment the government takes a huge chunk out of any interest/gains you make but if you lose money the government does not want to know. Is that fair? To me it seems ridiculous and bordering on the criminal, definitely a huge disinsentive for saving, unless of course you are investing in property.

Of course property is non productive so why should investors be rewarded for investing in that and not productive entities?

I am sure the answer to all this is staring me in the face, clearly the government is neither ignorant, short sighted, criminally greedy or stupid. So, can someone help me out?

[Drum]

So if you lose money you want the government to give you some back is that right?:scratch:

[Maki]

So if you lose money you want the government to give you some back is that right?:scratch:

Actually no. I think they should only take a reasonable amount of your interest, something like 10%. When they take as much as 30% I think they should help you out when you lose money.

Lets say you invest a certain amount, some years you lose and the government does not care, other years you make money and the government takes 30% or whatever. Keep this up for a number of years and the government effectively ends up taking a lot more than %30 of your interest. That does not seem fair to me.

Lets say you invest $100 and gain some years but lose others. During the years you gained the government takes it's chunk but on the others it ignores you. Let's say you made some bad choices so at the end of 10 years you still have just $100. You made nothing in the end, but the government STILL took your money during the good years. Is that fair?

Is this so hard for people to get their heads around that they don't see it. or just don't care?

[Maki]

And another thing, the chunk the government takes is NOT inflation adjusted. Lets say you get 9% interest while inflation is running at 6%. Your effective interest is therefore just 3% and the government takes almost ALL of that. Seems crazy, you would be better off buying a chunk of silver and putting it under your pillow.

I just don't see how the current policy encourages savings and productive investment. Maybe it's because it doesn't...

[Oakie]

Interest is revenue. You pay tax on any revenue.
Tax is for meeting the expenses of running this wonderful country amongst the people who have made revenue from this wonderful country.

The other side (I lost money ... pay me something) is:

Welfare Benefits (Unemployment, Sickness, Superannuation)
ACC
Free hospital care
'free' education
etc etc

[Maki]

Interest is revenue. You pay tax on any revenue.
Tax is for meeting the expenses of running this wonderful country amongst the people who have made revenue from this wonderful country.

The other side (I lost money ... pay me something) is:

Welfare Benefits (Unemployment, Sickness, Superannuation)
ACC
Free hospital care
'free' education
etc etc

It's not revenue if after paying tax and adjusting for inflation you have nothing, or less than nothing, is it? I guess the solution is to put on a neck brace and claim a sickness benefit. Seems like most people are encouraged to do that for the benefit of us all... No wonder wages here are much higher here than average for developed nations...

[WarlockNZ]

incorporate your own company, that way if you can prove that you made a loss, you can claim money back.

Simple really.

[Maki]

incorporate your own company, that way if you can prove that you made a loss, you can claim money back.

Simple really.

Thanks, that makes sense.

[carver]

socialisim must be paid for somehow

[bobsmith]

Sooooo you're complaining about the government taxing us about 30% on the interest???

You know what's REALLY CRIMINAL? Them taking a third of my hard earned money every paycheck. Now that hurts.

[Drum]

Do you use any of the services provided by the state? How do you think these are paid for?

Now don't get me wrong - I pay tax at a marginal rate of 39% and would dearly love to pay less. But if you want to live in a taxless society you were born a few centurys late....

http://www.taxworld.org/History/TaxHistory.htm

[carver]

Do you use any of the services provided by the state? How do you think these are paid for?

Now don't get me wrong - I pay tax at a marginal rate of 39% and would dearly love to pay less. But if you want to live in a taxless society you were born a few centurys late....

http://www.taxworld.org/History/TaxHistory.htm

not many, if any!
id rather have user pays!

[sidecar bob]

not many, if any!
id rather have user pays!

Thats fine if every user pays, But i get a bit ticked off when the benificiaries get a special discount to compensate them for their loser status.
The most loser comment i can ever recall being spat at me by a bitter & twisted benificiary was "I pay tax on my benifit", "Well guess what Einstein, Your benifit is my tax".

[Headbanger]

I wouldn't mind tax so much if it wasn't wasted on shitbags and bullshit. If you wiped out half the crap that is pure waste we could all live a little better.

When I say all, I mean those of us that work for a living, Not those that live off our work, They can get fucked ten ways till Sunday.

[TimeOut]

Sooooo you're complaining about the government taxing us about 30% on the interest???

You know what's REALLY CRIMINAL? Them taking a third of my hard earned money every paycheck. Now that hurts.

And when you spend some of that 60% they take another 12.5% :Oi:

[MadDuck]

Free hospital care


Thats if you are lucky enough to be seen by someone looking medical with 36 hours of having an accident!

[carver]

free?they work for nothing?

[alanzs]

No wonder wages here are much higher here than average for developed nations...

Thats the funniest thing I have read here in a long time! :msn-wink:

[Oakie]

It's not revenue if after paying tax and adjusting for inflation you have nothing, or less than nothing, is it? .

Yep. Revenue is what you start with before you deduct expenses and pay tax. What's left at the end is profit (or loss).

[RantyDave]

The thing is, if you save your money and put it into something like a bank account or some investment the government takes a huge chunk out of any interest/gains you make but if you lose money the government does not want to know. Is that fair?
No. Now, I'm no bean counter but I believe the investment vehicle to which you are referring is an LAQC. A Loss Attributable Qualifying Company - or something. Basically what this means is that the losses the company makes can be offset against your own income tax.

Again. I am not an accountant. But I give money to one and sometimes even listens to what he says. Until he starts harping on about Imputation credits then I'm totally lost.

Dave

[MadDuck]

A Loss Attributable Qualifying Company

Yes maybe.

There are many ways to "legally" minimise your taxation but beware of taking advice off the interwebby as it is fraught with danger! Everyones circumstances are quite different and require different methods - so as to speak.

[civil]

Yes maybe.

There are many ways to "legally" minimise your taxation but beware of taking advice off the interwebby as it is fraught with danger! Everyones circumstances are quite different and require different methods - so as to speak.

Is it any less dangerious than taking advise from one trained by he who's job it is to take as much of your hard earned money as possiable regardless of the statues they are supose to administer, and who have taken an othe to lie so as to achive this objective if so necessary to do this job?

[Clockwork]

The trouble is that there are people (so I'm told) who are so wealthy they can live off the interest returns of their savings. Should such people be able to live any more tax free than the rest of us?

Mind you, I do agree that inflation could be taken into account first. But then on the other hand my employer does not automatically adjust my income in line with inflation, perhaps that's just the other side of the same coin.

[SPman]

But then on the other hand my employer does not automatically adjust my income in line with inflation, perhaps that's just the other side of the same coin.
Shit - mine does!
Get another employer.

[oldrider]

Thats fine if every user pays, But i get a bit ticked off when the benificiaries get a special discount to compensate them for their loser status.
The most loser comment i can ever recall being spat at me by a bitter & twisted benificiary was "I pay tax on my benifit", "Well guess what Einstein, Your benifit is my tax".

Well said, sidecar bob!

Genuine beneficiaries are acceptable enough but Labour has raised the cost with freeloaders. (Their Labour voters)

Trouble is they (Labour) then chase all the real tax payers away overseas because the tax load is getting too bloody heavy here. :nono: John.

[Clockwork]

Shit - mine does!
Get another employer.

Yeah? Maybe that's an Aussie thing. It don't seem to work that way here in NZ

[Patch]

why not just invest where the goobermunt can't get their greedy mits on ya capital :blip:

[davereid]

Actually, its much worse than that. The biggest rip-off is still to bite you.
Its called Kiwi-saver.

Lets look at the BEST case.

Assuming your Kiwi-Saver provider doesnt go broke
Assuming your Kiwi-Saver tax subsidy is not reduced by a future government
Assuming your Kiwi-Saver provider doesnt charge fees that reduce your income to nil
Assuming your Kiwi-Saver eligibility date doesnt change

Assuming your Kiwi-Saver works exactly as planned !

Then you are rooted.

Thats because you arent the same age as your partner.

Right now, when the oldest of you reaches 65, you can BOTH go on the pension.

If you earn a bit of pocket money its OK, but once you income passes $80 a week, you lose 90% in the dollar to pension abatement.

Thats how kiwisaver will root you.

You turn 65.

The missus is a child bride, she's 55. You go on the pension, as a couple. But you don't get paid any money. As the child bride has invested in kiwisaver, she has an income. She can't get her hands on the money. She isn't even investing in it anymore. But the income she gets, (that she can't access until SHE is 65) abates the pension by 0.90 c in the dollar.

So, you are really rooted.

It effectively raises the age of retirement to 65 for the youngest partner, not the oldest.

[slowlegs]

To me it seems ridiculous and bordering on the criminal, definitely a huge disinsentive for saving, unless of course you are investing in property.

Of course property is non productive so why should investors be rewarded for investing in that and not productive entities?

I am sure the answer to all this is staring me in the face, clearly the government is neither ignorant, short sighted, criminally greedy or stupid. So, can someone help me out?

I agree totally, Maki. I am possibly in the same position as you. The government says kiwis should save more but then puts out clear disincentives to saving. I have saved a reasonable chunk of cash and have it in the bank. It earns a good amount per month in interest of which the government used to take 39% tax off that. I am taxed 39% on the earnings before I save as well and can't claim any expenses in earning that money or bank fees. Friends of mine have rental properties and have bought them with the clear intention of making a loss through negative gearing which they claim back to reduce the government tax take and often get a tax reduction for doing so. They won't be taxed on any profits they make when they sell their rental properties and are now upset that interest rates are going up and house prices are going down. They are only just learning that negative gearing works well when prices are going up and not when going down. I have put my appreciating assests and cash in a trust which means I pay less tax. Rental property can make a profit if it is positively geared but then you run into the same problems as you do with money in the bank, you are taxed at your highest rate once again. The government won't change the rules in my opinion for a couple of reasons;
1.a lot of them own rental property, why would they ruin their profits?
2.a lot of the growth during their term has been through speculative rises in real estate prices and associated spending, if they kill that off they kill the golden goose which has propped up a big chunk of the economy.
I would like to be able to say vote out Cullen and his "let them eat cake" government but I think the next bu99ers will do the same thing too.