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UPDATED: Saturday 1 November 2008

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They want all our money but should we?
W e are in a world wide depression, have no doubts about this.

In the last few weeks the tones of many of the business writers has changed. The stories they tell are of families selling furniture to pay school fees, separated couples living together because they cannot sell their homes, food banks running out of supplies, mortgagee sales and franchisee failures. These are just not USA stories but they are happening here in South Canterbury.

Mad and reckless investment in property happened here as well. It took down most of our finance companies and yes, some of the NZ banks did a small amount of the sub-prime lending. These low document loans were available in SC.

We have not seen in NZ the lines of investors waiting outside banks and may not.

But the attention is turning to the NZ banks. And it is not something they are liking to hear.

It is now a common question in this practice and at the desks of banking staff.

Should I leave all my money in one bank?

So just what are the staff saying. Their answers go along the lines, we are regulated, we are conservative and we are have large overseas owners. Should one follow this thought process?

No.

Ask your self this. Do you get a premium interest rate for putting all your money with one bank? Surprisingly the answer is almost no. On Saturday 13 September I went to many of the major banks.

Other than the BNZ there is no published increase in rates once you invest more than $10,000.  Even BNZ just offered 1/10 of one percent more for the larger investments.  Of course they say on their websites that if you ask there are better rates for those big investments. So either the banks are either very sure of their future or no one is yet demanding a premium.

TABLE Showing the additional interest rates payable over $10,000. The rates are percentages and are they are the banks standard term rates. As of 13/9/8 from their websites

We have re-opened after our summer break

Explainer:
Why don't drawings reduce my profit and tax?

11/11/2006 D rawings don’t reduce your business’s profit as they are cash taken from your bank account and are not a deductible business expense.  Likewise they are not taxable when you receive them.

The tax rules have what can and can’t be deducted from your sales.  The bit that is left after expenses have been deducted from sales is called your business profit.

Inland Revenue rules say that tax is paid on business profit.

A lot of the time business profits are lower than the drawings taken for the year. If you had to pay tax on your drawings you could have to pay more in taxes.

Sometimes you have a high profit and have significant taxes to pay for the year but you don’t have the cash to pay in your bank account as it has already been taken in drawings.

Answer contributed by staff member Marie Wells
Everything is going up.
Pop-up Window Link Inflation Chart
The cost of living now seems very high. If rates and food are gone through the roof and fuel is heading skyward, how can inflation be sitting at 3 percent? We have chartered recent price date from the Department of Statistics. This chart looks at the last 16 months and shows that many categories have dropped in cost, some of them significantly. Click on the chart to see the 10 biggest movers up and down.



They had a bad business - but they had a solution and now all they needed was a victim.
17/5/2006  Their solution was deceptively simple.  They would rebank their drawings from the business and call it sales.  Now they just needed was a victim.

 

Home loans - assistance for home buyers.

1/8/2007  Rule changes have made it easier for home owners. If you have owned a house in the past you can still qualify. The income limits have gone up and more than 3 borrowers can join up to buy a house.

 
The misery index has reached a seven high.
20/6/2008
Every things up, unemployment, interest and inflation and there is more to come. Pop-up Window Link Misery Chart

Tax question
15/11/2006 Self employed dance teacher has a back problem.  Can she claim the visit to her back therapist?

Micah Wolfe playing at the Arthur Street Cafe.
Micah Wolfe playing at the Arthur Street Cafe.

Explainer:
Why do tax refunds take so long to be processed?

11/8/2007   Most times your return will go through without any issues, and will typically take between 2 and 5 weeks.
However, once your tax return is lodged by this office with IRD, matters move out of our hands to a certain extent, as IRD has a minimum processing time of 10 weeks.

If you have family assistance, it can take longer, particularly if the IRD computer system refers the return for a ‘manual calculation’ – this means an IRD staff member has to calculate your family assistance entitlement. In this instance, it can take up to 14 weeks for the refund to come through.

If you are expecting a large refund – typically anything over $2000, the return may also be referred for ‘checking’ – this is a procedural issue, and can take an extra 2 or so weeks.

If your return, for any reason, has gone the full 10 weeks without being processed by the system, we can at this time contact IRD and request the call centre staff to take a look at the return. This may result in the return being fixed there and then, or it may need to be referred to the processing centre or district office, depending on the action required.

Sometimes IRD staff make a mistake when processing the return. When the assessment is received back from IRD the refund may be incorrect or not assessed as a refund. Most of the errors can be fixed with a phone call to the call centre, and the refund will then be released almost straight away. If we need to send in a letter, it can take up to 3-4 weeks.

The last delay in the system is the IRD cheque printing process – once the system releases the refund, it can still take 10 working days to reach this office.
Produced by the Staff and Practitioner of Thomas Lawson - Chartered Accountant
Po Box 462, Timaru, New Zealand
Phone 03 688-3074 Fax 03 688-3073