New Zealand’s Low Tax Burden for High Earners

Service graphic_corporate tax_1_RGBEastern Europe and emerging economies offer most generous tax regimes for highest earners.

New Zealand has one of the lowest tax burdens for high earners of any major economy, according to a new study by UHY, the international accountancy network.

New Zealand has the 8th lightest tax burden out of 25 countries, ranked by UHY according to how much tax and social security it takes from its highest earners’ wages (on a salary of US$1.5m – see table below).

UHY notes that New Zealand is making itself more attractive to high earners than neighbouring Australia, which levies 46% in tax on a salary of US$1.5m, compared to New Zealand’s 32.6%. However, UHY also notes that New Zealand does not have a compulsory retirement savings scheme and individuals do not make social security contributions other than as part of normal Income Tax and ACC levies. Instead, individuals have the choice not to participate in KiwiSaver or choose to contribute 3%, 4% or 8% of their gross earnings. The data used in this survey assumes that the individual has chosen not to participate in KiwiSaver, even though there are significant incentives for participation. Furthermore, retirees’ are also entitled to a state-funded pension and any savings amassed through KiwiSaver are intended to supplement the pension.

Details

New Zealand The Rock Star Economy … Yeah Right?

Tim Livingstone, Director at UHY Haines Norton, explains why he doesn’t buy into the hype around New Zealand’s economy.

Maybe I have been in business too long and become cynical, but I don’t buy into all the hype around the New Zealand economy being a “rock star”.

The facts make great reading: New Zealand has had the best commodity prices in 50 years, and our terms of trade are impressive, even under a high NZ dollar regime.

It’s important to understand the drivers for our current economic success.  The facts are that 40% of our exports are from dairy and log sales.  China represents 30% of NZ export sales.  NZ’s second biggest export market is Australia, and guess what? Their biggest export market is China (27% of Australian exports are to China).

Details

Industry Benchmarks

In conjunction with Statistics New Zealand, the IRD provides industry benchmark figures for a range of industries.  The benchmark figures enable small to medium-sized enterprises to compare their performance against industry benchmarks. Forty-five industry benchmarks are available, including accommodation and food services, retail, manufacturing and construction services amongst others. The industry benchmark information can be…

Details

The Value in Admitting Your Mistakes

Over the past month I have been following with great interest the Fonterra fiasco, and the roles various parties have played in creating and sustaining the controversy.

As is often the case, media have played a major role in beating up an issue and creating hysteria amongst the general public in both New Zealand and China.

Yet underneath the hysteria, perception is very important and given this age of political correctness and the litigious society we live in lies a very important lesson.  That lesson is to be upfront in any dealings from the very start and this is something Fonterra did not do well.  Westland Milk Products, on the other hand, coped admirably when faced with a similar predicament – probably learning from Fonterra’s mistakes.

Details

Recruitment Trends in New Zealand

 Jennifer Wyatt Sargent of Wyatt  Wyatt Sargent Fern Logo 2.pngSargent & Associates Ltd discusses recruitment trends in New Zealand.

New Zealand’s unemployment rate of 7.3% for the September 2012 quarter was the highest in 13 years.  Yet organisations are still complaining about the difficulty of recruiting quality candidates.

Back in 2002 Ira Wolfe, a leading US recruitment specialist, said he believed labour shortages would not blow over, and that they had no industry or geographic boundaries.  He put this down to several factors: continuous growth in economies since the early 1990s and therefore higher demand for skilled labour; falling birth rates; a higher percentage of older workers combined with longer life expectancy; also fewer working adults as a percentage of total population.

Details

MS Outlook for Personal Efficiency and Team Productivity:”Do It Now”

Business Computing Skills Logo In the fifth of a series of five articles, Jacqui Hinchliffe of Business Computing Skills discusses how to manage your emails. Previously Jacqui introduced the four D rule for managing email.
This final article discusses rule number 4: Do It Now

1. Delete 2. Diarise 3. Delegate 4. Do It Now

Productivity is determined by how effectively you process the inbound flow of work. Your email account is often the hub of your workflow so it makes sense to start looking here for efficiency. You need a system that enables you to get the most amount of work done while minimising the amount of time spent on unproductive tasks.

The Four D Rule is a great way to start systemising your email management. We’ve introduced a few of the practical steps you can take to get this system working for you.  Our articles have focused on the use of MS Outlook, but the techniques can easily be adapted for almost any email client or web-based email account.  See our previous article on Delegation here.

The Last of the Four D’s: Do It Now

Remember around half of your (non-spam) inbound email can be deleted immediately.  With the other half ask yourself this question: ‘Can I complete this within two minutes?’  If the answer is yes, ‘do it right away then delete the email.’ Leaving mail in your inbox to re-read and action later, or file it elsewhere is simply inefficient.

If you’re using MS Outlook 2010, the Quick Step feature enables you to perform multi-step tasks such as replying to an email and deleting the inbound email with a single click or keyboard shortcut.

Details

Corporate Tax Competition Heats Up

By Jim Martin, Tax Manager, UHY Haines Norton, Email jmartin@uhyhn.co.nz

In an increasingly globalised world, governments are under pressure to find ways to attract and retain businesses to their country and then to help those businesses compete against their international competitors.

An increasing number of government’s now realise that one powerful tool they have to achieve those goals is lowering the level of corporation tax that they impose on business profits.

Clearly a high corporation tax rate can make one business location unattractive compared to overseas economies with lower tax rates. A high corporate tax rate can also suppress a corporate’s growth by taking money out of a business and its shareholder’s pockets that could alternatively be invested in marketing or R&D to further grow the business.

The latest research project from UHY’s international network has found that some developed nations are still dragging their economies down and hitting businesses with far higher corporation tax rates than faster growing emerging economies.

Details