08
Mar

Inland Revenue Department – Online Services

It is often frustrating for clients wanting to apply for a loan that one of the requirements is to provide evidence of your past income. Did you know you can access this yourself online using the IRD website?
I have recently helped several clients set up a free online account at IRD and obtain past tax summaries. All you will need is your IRD tax number.

This is what you do: Click on the link below:
ird register a login

Follow the instructions, which take about 1 minute to complete.
Then make the call to the IRD direct line (yes believe it or not, they answer it quickly!). They will help activate the account, and then you are all good to go.

You will need an access code, and password. Using the theory of keeping things simple I was able to use an access code and password that I use for internet banking….and of course…as with all access codes and passwords, you do need to keep these details confidential.

10
Mar

Chocking the economy: OCR drops to help the economy.

The Reserve bank has today announced a .5% decrease to the OCR down to 2.5%. They stated that they found it difficult to determine how large or what the long term effects will be from the recent earthquake, but it was clear our economy would be negatively impacted, and that even before the earthquake our GDP growth was weaker than anticipated with consumer and business confidence down. The drop in the OCR was a clear message to us, an attempt to build up our confidence, and translates to a savings of $42 per month for every $100k you have borrowed.
Our philosophy is always to utilise these savings where you can and instead pay the extra amount off your principal. If you believe you can afford to do this please just send an email and we can facilitate the process with your lender. At some stage these rates will increase again, so planning and utilising the savings now could well help you in the future.

It appears that the “ powers that be” believe that the rebuild in 2012 could stimulate growth and be inflationary. At today’s media announcement, journalists were able to ask their own questions. We were particularly interested in the ones regarding the building industry and how we would attract tradesman back from across the ditch to repair and rebuild Christchurch
The focus of their attention seemed to be on the higher salaries able to be earned in Australia. Whilst we don’t disagree we have a couple of issues that may also be worth considering:
1. Will the government now realise that decision to stop allowing depreciation to be claimed on chattels for landlords is having a detrimental effect on the Housing industry. Landlords were providing a service that the government cannot do on its own with spending large amounts of tax payer funds – that is provide social housing to those that cannot provide it for themselves.
Landlords were happy to step in and fill that gap, but they can only go so far. The government has to come to the party as well.
The majority of landlords have mortgages and are paying the banks higher interest rates than the tenants pays them (we call it yield). This means that on a weekly basis they must subsidise their tenants, add on insurances and other costs and then the random repairs and maintenance that always seem to happen at the most unforgiving and inopportune time. I know far too many landlords who have had fires in their properties caused by tenants. This is the sorts of issue that we cannot predict. Yes we do budget for the unexpected but you can only do so much planning.
The depreciation claim was always just a “loan from the IRD”. You could claim depreciation on the chattels but all landlords knew full well that we would pay the tax on this depreciation back to IRD on the sale of the property. Every house gets sold at some stage. Always. This claim has been an important part of the cashflow and assisted many landlords to help make ends meet when the yields reduced so badly. To remove depreciation has without a doubt caused landlords to exit from the market. This exit then causes a smaller pool of rental property (Landlords aren’t flocking to the market to buy properties that lose them money). A smaller pool of rental properties and a greater demand from prospective tenants simply equates to rent increases. We have had to laugh at the recent media article about 100’s of applicants all seeking the same property and tenants offering more than the advised rent to secure the property. We are only laughing at the naivety of those writing the articles. I think it was clearly obvious to everyone involved that this scenario would eventuate.

The 2nd concern we have and question we are asking ourselves is:
Why would you want to be a builder or tradesman in NZ. I don’t have a single builder client that doesn’t just want to earn a decent salary for a decent days work. The blame that they shoulder when things go wrong seems to be too much for many to bare. Their point of view is that their workmanship is signed off by the council, the tools and products are supplied by the building companies and designs by Architects. Many have or are getting out of the industry because the risk is too great. Whilst the consumer may think that’s a good thing to get rid of shonky players, it never catches all but instead some good people leave the industry as well, and a shortage is created. At the end of the day we as consumers will pay for that shortage and increased regulation in the form of higher building costs.
Is that that we really want? When is enough, enough. Too much regulation seems to be chocking this whole industry.