3 minutes of your life to get your Will sorted out…

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This question has come up quite a bit lately:  “Do I really need a will?”.

Of course you do.  And if you haven’t got one, here is a very simple template provided courtesy of Megan Williams, Steindle Williams Legal. http://www.swlegal.co.nz/ to get you started:

1. Please provide your full names and any previous names (e.g. maiden name)?

2. What are your current occupations?

3. Where were you born?

4. Please advise your address and brief description of your assets.

5. Who do you want to be the executor(s) of your Will? This is the person or persons who ensure the wishes of your Will are carried out. We will need full names and relationship to you. If you have a spouse you usually appoint each other for this role and then another person or perms if you died together. A partner of this firm can act in this role if you wish too.

6. Do you have children, if so, can I have their ages and full names please? Do you wish to appoint a guardian or guardians of any children below 18 years of age if they were ever without legal guardian?

7. Are there any specific gifts you wish to make to anyone? (e.g. jewellery, art, furniture, money?)

8. Do you have any burial or cremation wishes?

9. Your estate usually passes to your partner/spouse then to any children, then to any grandchildren. Please advise if this is not what you intend or if there are any “blended” family issues.

10. At what age should your beneficiaries/children receive – 25 years?

11. Do you have a family trust? Please provide a copy of the Trust Deed and any variations (including any Deed recording a change in Trustees)

Please also advise:

1. Do you have an earlier Will you would like use to collect?

2. Are you/ your partner/spouse and any ex-partner formally divorced and/or a Separation Agreement entered into? It is important to be aware that until you formalise your division of property, even if he is not included in your Will, s/he may be able to make an estate claim upon your death under the Property (Relationships) Act.
If there is any other information you think relevant please advise.


Hey, it wasn’t that hard was it!



Politics and Property tax here we go again. From Withers Tsang September 2017

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September 2017
Withers Tsang & Co Ltd.
Politics and Property tax here we go again
Dear Clients

Politics and Property, both start with P and have eight letters but why do they get so joined at the hip ?

Many of our clients at Withers Tsang are property investors, and our specialist topic is navigating the tax laws that affect our clients.

This election campaign though has been challenging. On the one hand we have the government effectively offering the status quo with respect to tax on property but we have the opposition offering significant change.

The only problem is, they won’t tell us exactly what those changes might be.

This newsletter seeks to cast some light on the proposed changes that are most likely to be implemented if we have a change in government. The commentary is my own thoughts on what the changes could mean and how they might impact individuals.

So what are the most likely changes under labour ?

  1. Ring Fencing tax Losses. This proposal is in my view the most likely change option that has received the least air time during the campaign. Ring Fencing of tax losses has certainly been labour party tax policy under previous leaders and it was one of the options considered but rejected when the existing government looked at changes to property tax policy that lead to the removal of depreciation on buildings. Ring fencing is also already a feature of losses on mixed use assets like holiday homes, this crept back in under National when they tightened the rules for rented holiday homes. Ring fencing simply prevents legitimate cash losses from a rental property from being offset against other personal income to derive a tax refund. Typically the losses must be tracked into the future and carried forward to be offset only when and if the properties can produce a taxable profit. Ring fencing then artificially inflates the taxable income one must declare by denying an offset for the activity that causes a loss. Ring fencing would therefore put those that are negatively geared on their properties under significant extra pressure but would have virtually no impact on property investors that are profitable. Is it fair that within the property investment community those that are less profitable pay more tax but those that are profitable pay nothing more ?The number of property investors though that would be directly impacted by ring fencing is much smaller now than the days when losses were higher due to depreciation. Lower interest rates have also meant that those with some equity in their investments are typically profitable and paying tax. Consider though the plight of investors hit hard by an adverse event, like discovering that a property is leaky and requiring huge remedial costs or discovering that a tenant has smoked P and a significant remediation is required before the property can be re let. These events almost always lead investors to record losses in years where money is spent to address repairs to properties. Ring fencing these losses rather than allowing them to be utilized immediately to reduce a tax burden strikes me as particularly harsh.
  2. Increasing the bright line test from 2 years to 5. No doubt here, this measure has been announced and is definitely on its way under labour. This measure is capital gains tax by another name, but, its capital gains tax at the income tax rate of 33% ! Previous proposals to introduce a standalone capital gains have not suggested the rate of tax would be set at the income tax level so this one would have a real impact. The bright line test legislation is already in law so it would be the easiest thing in the world to simply set a date where the test moved from 2 years to 5. Now the bright line test applies to all residential land including vacant land with an exclusion for the family home and the exclusion of sales of inherited land. So if this change comes in, effectively any gain on disposal becomes taxable at the full income tax rate if the property is not retained for 5 years. The main impact of pushing the bright line test out to 5 years is that most investors would simply mark their diary 5 years from acquisition and not contemplate a sale until the tax could be avoided. This would of course limit the supply of rental properties coming to the market, the very same houses that are often purchased by first home buyers. A limit on supply, as we have seen, always results in price increases. This also sets up a situation where genuine investors, those who invest for rental return, don’t take decisions to sell low yielding property simply because they are focused on avoiding the bright line tax. If these properties did come to market and investors could increase their profitability as a result, more taxes are then collected by the government on the higher net rental incomes. The bright line test therefore creates an artificial distortion in an otherwise free market that could have unintended consequences. Consider also that the Brightline test only applies to residential property not commercial property. This may well suit a political agenda aimed at helping first home buyers into property but it also creates a significant distortion between the tax impacts felt by residential investors when compared to their commercial cousins.
  3. Capital Gains tax – Looks also to be likely this time round. It’s the old chestnut and again no detail is being offered on how it would work or what it would be applied to except that the family home would be excluded. Whether capital gains on the family bach, farm or business though would be included is anyone’s guess. Something that should be understood about capital against tax though is that it would be unlikely to be retrospectively applied. To introduce a capital gains tax step one is to establish a market value for all properties at the date the tax is introduced. This in itself would be no mean feat but the tax would operate to tax gains relative to the value at this date in time. The tax would not be applied to historic gains on properties that are long held. The opposition has not ruled out applying capital gains tax to inherited property which creates a further contrast with the bright line test. The irony of introducing a capital gains tax now though is that the property market is now flat to declining. It would therefore be a very expensive tax to introduce that would be unlikely to actually yield much revenue from the property sector until such time as the market turns around. In comparison with the ease with which the bright line test could be extended the problems with a capital gains tax makes it look like a real dinosaur by comparison. But the oppositions political view does seem to be that the tax is needed to arrest growth in the housing market so you would seemingly have a tax being introduced, that if it works as intended to reduce property values, actually won’t function to increase government revenue. How ironic.
  4. Land tax – A blast from the past, back to the future, however you like to term it, land tax was a hated wealth tax that we enjoyed back in the early nineties. It was imposed at a rate of 2% annually on the government valuation of land owned other than ones family home. A straight out tax on wealth held in property regardless of the income that the land produced and in addition to income tax on the rental income. The opposition have ruled out a land tax being applied to a personal home but have not ruled this type of wealth tax out altogether. It was a compliance nightmare as it required the annual filing of stand-alone land tax returns. My days as a junior accounting clerk tasked with completing these hated returns sends a particular cold shiver up my spine at the thought they could be back. Let’s hope not.
  5. Whilst not tax policy, the opposition also has big plans to strengthen tenant rights under the residential tenancies act. The planned changes include:
    – Extending notice periods from 42 to 90 days
    – Abolishing no cause terminations
    – Restricting rent increases from 6 monthly to yearly
    – Forcing landlords to include a formulae in tenancy agreements to set rent increases. This is very worrying when you consider that the bundle of policies seems set to drive up rental costs to tenants.
    – Abolishing letting fees
    – Passing the Healthy Homes bill that will impose minimum standards on rental housing and force landlords to make upgrades.
    Landlords though are promised nothing more than extra resourcing of the tenancies tribunal so that they can have their grievances dealt with more efficiently which would seem like something of a two edged sword when the RTA is already so tenant right dominant. Nothing substantial at all there to assist landlords to deal with the scourge of the P problem or coping with leaky building problems.

And there you have it, some thoughts  on the measures that we may be facing in the property sector if we have a change in government.

All will be revealed after September 23

Withers Tsang & Co Ltd.
This email has been authorised by:
Withers Tsang & Co Ltd
24-26 Pollen Street
PO Box 47-145
Aucklandphone: 64 9 376 8860
fax: 64 9 376 8861
email: reception@wt.co.nz
web: www.wt.co.nz
This publication has been carefully prepared, but it has been written in general terms and should be read as broad guidance only. This publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact us to discuss these matters in the context of your particular circumstances. Withers Tsang & Co Ltd, its directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
Copyright ©2017 Withers Tsang & Co Ltd. All Rights Reserved.
24-26 Pollen Street | Ponsonby | Auckland 1021 

Be in to win a $3000 Travel gift card with Sovereign

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Every eligible new Sovereign Risk or Health policy submitted between Monday 14 August and Friday 6 October 2017, and the resulting policy issued by 3 November 2017, will go in the draw to win a $3k Flight Centre gift card.


*Terms and conditions apply.  Enquire at support@stml.co.nz


Finding gold when it’s dark and cold.

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The midwinter blues are real. The calendar confirms it.

We’re now well into June, and Kiwis have returned to work after the last long weekend until October. Unless you’re lucky enough to be planning some fun in the snow or a break somewhere tropical, for most of us, the next four months of winter are often a grind.

It can be hard keeping your spirits up – and focusing on achieving your long-term goals – when the days are wet, dark and cold. So how do you hang onto your passion for life and stay in the best mental shape? Here’s a tip from my mentor Dr Fred Grosse.

Dr Fred tells us to focus on our ‘10s.’ That’s shorthand for the little things we can do to make every day a ‘10 out of 10 day.’

It’s about making time for the simple, life-giving activities that provide pleasure every day. If you love animals, make sure you play with your cat or take the dog for a walk. If you need the endorphin boost of exercise, make the gym a regular habit. Love music? Pick up that guitar, lift the lid on the piano or make sure you get your daily dose via Spotify.

Don’t let anything get in the way. Find time for life’s simple pleasures – whether it’s the humorous tweets from a comedian who makes you smile or a great coffee from your favourite barista.

Your daily 10s shouldn’t cost a lot – in fact they can be free. Most of all, they should be things that are special to you. I personally love cleaning my mountain bike after a muddy weekend ride. (That reminds me – time I got back on it!)

So what are your 10s? Why not write out a list of 10 things you can do on a daily basis?

By making each day a ’10 out of 10 day’ you’ll be building up a store of positive energy to help you find gold in the dark winter months and stay on track to achieving your life goals.

Once your 10s are part of your daily routine it’s time to go to the next level, with fortnightly, six-monthly and annual treats and targets. These can really unlock the magic. I’ll share these insights with you next time.

Would you like to find out more or work with Sue as a mentor to help achieve your goals?  Get in touch.


If you can’t afford insurance, you can’t afford a home.

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I’m not talking about house and contents insurance. I’m referring to the insurance that protects your ability to earn a living.

Health and income protection insurance should be the priority if you’re providing for your family or taking on a big financial commitment such as a mortgage. All too often, clients take out pet insurance to cover vet bills but forget about the most important person in the household.

Winter, with its colds and illness, is a gentle reminder that no one is immune from poor health. And you don’t have to be in your sunset years to suffer a cancer diagnosis or heart attack.

Accidents happen as well. A slip-up on a wet path or a mishap on the ski field could take you out of the workforce for months (or forever). Every week I hear of clients who have been struck by something out of the blue. When it happens, the last thing they want is financial stress.

The good news is that cover can be easily arranged. With some smart advice, it can even be highly cost-effective.

Have you reviewed your insurance recently?  If not, make an appointment


Different banks, different rules. Here’s how to make them work for you.

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Each bank has a different set of rules. If you aren’t aware of them, you could end up with a loan that doesn’t fit your needs.

The reason for this is that banking is competitive but highly regulated. On top of the Reserve Bank regulations that govern all lending in this country, each bank also sets its own rules. For instance:

•    How much marketshare the bank has. Does it want to grow its loan book or just cherrypick the easy loans?
•    Exposure to different areas of the economy. Perhaps a bank has lent too much to the apartment market or is over-committed to Auckland.
•    Exposure to a particular development. Banks are wary of having too much skin in a property developer’s game

So don’t take it personally if your long-term bank doesn’t say ‘yes.’ It may have nothing to do with your creditworthiness. Give me a call instead.

By understanding your goals I can match you with the bank that’s best able to meet them. For instance, if you are buying a property that needs major renovations, we will find a lender who’s willing to fund the reno as well as the purchase.

There are also some traps to avoid. One of them is choosing the cheapest rate, and then finding the bank won’t lend you the funds for the renovations. Once you’ve locked yourself in for a long term it can be very costly to break out of it.

If you want it, we’ll make it happen. That’s because we are more than just mortgage brokers – we’re strategists to help you achieve your goals

Do you know someone who’s looking at buying and could do with some smart guidance? We’re more than happy to help, even if they aren’t quite ready to apply for a loan.  Make an appointment.


Short term pain for long term gain

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It can be tempting to make life insurance choices based on price. Who wants to pay a bigger premium, especially when you’re young and money is tight? That’s why many tick the option that costs less in the early years but is re-adjusted every year.

However these stepped or ‘rate for age’ policies can become seriously expensive. Many people in their 50s and 60s see their annual life insurance bills climbing year after year. This is the flipside of cheap premiums in their youth.

The alternative is level cover. This sets a flat premium, which may be more costly early on but generally only goes up by the CPI rate. After 30 or 40 years your annual premium will seem like an absolute bargain. It’s like choosing a three-year fix for your mortgage instead of the cheaper six-month rate that could jump several times in subsequent years. You pay more initially but save over the longer term.

There are many life insurance options so get in touch to find the best one for your stage of life. It may not be the policy with the cheapest initial premium!

Have you reviewed your insurance recently?  If not, make an appointment


You are not entitled to a home loan.

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That’s a harsh way to put it, but we need to grasp a harsh truth. If, like me, you have been with the same bank since childhood, you may think you are entitled to their support. But in the bank’s eyes, you’re not.

2017 has been a shocker. I’ve seen good clients knocked back by their banks – even with those a solid credit record and years of loyalty. It’s nothing personal. The Reserve Bank is concerned about debt building up in the economy and has told the banks to dial back the amount they borrow overseas. Since we don’t save enough money in New Zealand, this means restricting the inflow of funds.

With less money to lend, banks have tightened their criteria. They can pick and choose who gets a loan, and if you don’t meet their model, they will turn you down. To add insult to injury, they may even tell you how to manage your finances.

What’s the way forward? Consider splitting your banking. Husbands and wives should hold accounts at different banks. Teenagers can have a KiwiSaver with one bank and their main account elsewhere. You’ll improve your chances of getting a yes from one of them.

Above all, make sure you talk to me before you refinance, go house hunting or start renovations. I’ll share my tips on the best way to get your loan approved.

Want smart advice on your mortgage? You don’t even have to brave the Auckland traffic – you can Skype us. Make an appointment.


3 ways to help your kids into property (and 1 mistake to avoid)

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It’s natural to want your children to do well in life, and that could mean helping them onto the first rung of the property ladder. I see this with many of my clients. So what are the best ways you can give them a leg up?

1. Start a secret savings account in their name.

It doesn’t have to be totally secret but it should be an account they have no access to. The earlier you start, the better.

When my nephews and nieces were babies I opened accounts in their names and – here’s the kicker – set up Automatic Payments of $1 per week into each account. On birthdays and Christmases I added another $100. It doesn’t seem much but over the decades compound interest works its magic. The goal is to have a lump sum ready by the time they’re thinking about buying a home.

It takes a bit of discipline but if you use APs, as I suggest, you’ll never have to give it a moment’s thought. If you worry it might be used as a slush fund, simply set up the account in joint names with someone you trust, such as a grandparent. You will keep each other honest.

On a side note, I am saddened when I see young children given large sums of cash for birthdays or Christmas with no guidance on managing it. They don’t understand money so it will likely be frittered on a whim. Why not give them a bank account and teach them effective saving habits?

2. Be smart with student loans.

Student loans are totally interest-free. This tempts some young people to load up with debt on the never-never. Well-meaning parents may offer to pay off the loan on graduation. My advice is simple – don’t.

Instead, encourage them to make regular payments off their interest-free loan. While they’re doing it, you should set aside the same amount of money in an interest-earning account. After graduation you can gift them this sum as a first home deposit.

The student is still incentivised to pass exams but not to go overboard with student debt. Meanwhile you’re earning interest on their behalf, which should result in a larger sum when it’s needed for a first home.

3. Let them inherit early.

If you’ve done well in life you might want to provide your children with an ‘early inheritance.’ Instead of waiting until you pass away and leave an estate, they can access some capital now to buy a first home.

This can be a great way to help the next generation, and it’s something I see many of my Asian clients doing. They often have an inter-generational view of wealth, and the idea of ‘paying it forward’ can make all the difference.

The caveat is obvious – don’t strain your own finances. ‘Inheriting early’ should be for families that already have a significant capital base. If you’re still paying off your own home, don’t dip into the equity or load yourself up with a bigger mortgage just yet.

4. Don’t be lax – see a lawyer.

Finally, a mistake to avoid at all costs. If you decide to release capital or guarantee a loan for your son or daughter, make sure you sign a binding legal agreement. Pay a lawyer to draft something that protects your child if things go pear-shaped.

Sadly, relationships break up and bankruptcies happen. You need peace of mind that the money you provided won’t disappear into the back pocket of the soon-to-be ex.

We all want the next generation to do well. We just have to be smart about how we help them.
Want to help your kids get on the property ladder, or get onto it yourself? Get in touch.


10-foot tall and bulletproof..

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If you’ve raised teenagers you know what I’m referring to. They emerge ready to take on the world and gloriously ignorant of life’s pitfalls. As a priority, insurance comes in about 88th place, below learning Esperanto and studying actuarial tables.

This is a risky time – but also a moment of opportunity.

If your young family members have had the benefit of insurance throughout their young lives, consider extending it. They will never be healthier than they are at this time, so now’s the time to lock in cover with no exclusions or loadings.

Maybe you could gift them a 21st birthday present of three to five years’ premiums on life and health insurance. It may not be the coolest birthday present but it could provide continuity of cover before they start chipping in from their own resources.

It can be seriously good value too. A 21 year-old male non-smoker could get $250,000 of life cover for just $28.50 a month. His 21 year-old female equivalent gets an even better deal – just $20.10 per month. Comprehensive health cover would cost $53 per month for a male or $59 for a female.

That might seem a bit steep for someone in their first job but I have seen clients in their 20s and 30s faced with bills over $20K for operations not funded by the public health system. If that happens, say goodbye to your house deposit.

At the other, cuter end of the scale, a newborn baby can be added to your health insurance very easlly. The cost is minimal and the benefits could be considerable.

Have you reviewed your insurance recently?  If not, make an appointment