[crispyking]

I was bit shocked to discover how much tax had been deducted from the interest on my savings - 39% !! :mad:

Is there a better place to keep my savings where I won't get stitched for huge amounts of tax? I would prefer instant access but could probably wait a month if necessary ...

[IanW99]

If you are earning interest from savings in NZ then you will pay tax on them and I assume that you are earning more than $60K so you will get taxed at 39%

If you arrived on or after 1st April 2006 then you can claim tax exemption from foreign savings for 4 years, so maybe you could keep your savings offshore (although you may be taxed by the offshore country).

As NZ has a very good interest rate, you would of course have to decide which would save you the most.

Personally my savings go into paying off the mortgage, but sure others will be able to advise on other options.

Ian

[Super_BQ]

NZ taxes income at source. That means in all aspects of income, the tax is already deducted off at your marginal tax bracket. By doing so, the person is not required to file an income tax return - unless they're expecting a tax refund.

I thought this was unusual. I learned in that in other nations (ie Canada/US), a manadatory annual tax return is a must file according to tax law regardless of income. The tax act hindges that a return is filed so in the case of a future audit, the auditors have a record to go by (the signature that declares your total income of the year).

[phatsharpie]

You can probably buy US tax exempted money market funds through a brokerage and claim the 4 year tax foreign income tax exemption. That way you won't be subjected to US income tax and NZ income tax for four years. However, it looks like the average return on tax exempted money market funds are about 3 to 4% currently, so you definitely don't get the high interest rate as in NZ. You may be able to purchase regular money market funds, which has higher returns (~5 to 6%) but you'll probably be liable for US income tax (consult your tax specialist).

Brian

[eternalkiwi]

Have you provided your IRD number to the Bank (or investment firm) you have your money saved with?
If you do not advise them of your IRD number they are required to tax you at the maximum tax rate.

At the end of the year you may request a Personal Tax Summary from IRD which will show all your income and taxation. If you pay too much tax during the year you can receive a refund at the end of the year.

So while you will get back any over paid tax, you still do miss out on the interest you could have gained during the year.

Shawn

[diforsyth]

If your partner does not work then put the savings into an account in their sole name to reduce the tax.

If the interest earned pushes it into higher earning bracket then you can afford to employ the services of an accountant to do something clever with your money.:nice1

David.

[isv]

Stick your savings in an offshore NZD denominated account and earn NZ rates of interest tax free (assuming the 4 year tax exemption applies to you).

Alan.

[Carey]

If your partner does not work then put the savings into an account in their sole name to reduce the tax.

David.


Is there a specific form to be filled in to do this ( similiar to R85 (I think) in Uk)?

[marcia]

Is there a specific form to be filled in to do this ( similiar to R85 (I think) in Uk)?

Not that i know of - you just open an account in your name only and put all your savings in it - (that way he can't run off with some blonde bimbo and leave you penniless!!! Or spend it all on a new superstock without you knowing EXactly how much hes spending!! :D )

Seriously - all I did was open another account in my name, which I can manage online along with all the others, so its easy to transfer money from one account to another. Oterwise you have to declare half the interest to each of you and it could push your partners income into the higher tax bracket. If you are not working its the most tax efficient way to do - other than giving it to your kids! :nice1