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Thoughts After Seven Years, Part 4, by Nivek


Part 4

 

Taxes, everybody’s favorite topic

New Zealand has a top tax rate of 33%. Okay, you think that’s not bad, the U.S. is right up there also. Well the trouble is you get to the 33% much faster as there are only three tax brackets. Making over $65,000 NZ Dollars per year will get you into the top bracket. That’s around $50,000 US Dollars. There are no deductions for a private person and you don’t get credit for kids or being married. The way around this seems to involve having a business and taking deductions through the business. You will most likely need the services of an accountant to keep in line with the tax laws.

On the consumer spending side of things, the 15% Goods and Services Tax (GST) is built into the purchase of any items in the store. What you see on the price tag is what you actually pay at the checkout.

If you have U.S. income and you earn income in New Zealand it then becomes even more complicated. You will need to file taxes in both countries and so far I find that I come out on the short end of the stick. It is far less complicated to only work in New Zealand and have no income from the United States.

Utility Costs

Electric rates are quite high here. Most of the electricity is from hydro power and also quite a bit from wind generation. There are some areas in the country with piped gas. You also can use bottled gas if you choose but it ends up costing more than electricity. Most New Zealand people have one or two warm rooms and the remaining portions of the house have minimal heat. Many of the older homes lack insulation but the government is trying to remedy that with programs to help with the cost of insulating older homes. Newer built homes do not have this problem but they also take a different approach on home heating.

In the U.S. it’s most common to have central heating vented throughout the house but it is quite rare here. The climate is very humid and this also contributes to an uncomfortable home. The kiwis are tough and don’t seem to mind. It’s funny to see somebody outside walking or even working during the winter (June, July, August) where the temperatures are about 40 degree F. They are dressed in a puffer coat, wearing shorts and flip-flops ( “Jandles.”)

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Our house is about 3,000 sq. ft. and my electric bill ranges from $300 to $500 per month throughout the year. I have a fireplace also which I like to use in the rainy winter to dry out the house. Almost every home on the south island has a fireplace.

I do not have any additional utility bills for water, sewer and garbage collection. They are taken care of with the yearly property tax (rates) on the house. I pay about $2,600 per year.

Telecommunications Costs

My Internet costs about $100 per month and it covers a high speed fiber connection, unlimited bandwidth and a land line phone. The Internet speeds are pretty good. I just ran a test and I got 100.6 Mbps download and 19.6 Mbps upload. The government is finishing a program to put fiber in most of the country. Hard to reach areas will be covered with a wireless setup.

I hope that my comments in the series have helped you get a better idea of life in New Zealand. Now it is time to move onto the ‘points system’ that I use to help in decision making with major decisions. Too bad that I didn’t have this idea before I got married! (Just kidding.)

My Points System

This is a spreadsheet I came up with to list a wide variety of items and then place a value on each item. By including as many varied items as possible I try to balance out any skewing of the results.

I don’t include the spreadsheet as a download, but I describe how I set it up.

I have the spreadsheet organized into columns such as ‘category’, ‘group importance’ and ‘item value’. I then multiply the group importance by item value to get a number called ‘group times value’.

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The next step is to assign whether the category is a positive or negative towards the question. In my spreadsheet I would place a value between 0 and 1 under the positive or negative columns for New Zealand and the U.S.

I then place the result of the ‘group times value times the pos/neg value’ under the associated NZ/U.S. column. These columns are then totaled to compare the results.

I used a range from 1-10 to place the original value of the ‘group importance’ for each item in the category list. I base my value on the frequency of use. I use 1-2 for only doing the item a few times up to a value of 9-10 for things done daily. Take a look at the key table at the bottom of the spreadsheet.

My next factor is the importance I place on an ‘item value’. This will range from 1-10 also. I use 1-3 for an item that is not really needed or wanted and values of 7-9 for ‘got to have it’. I place a maximum of 10 for an item that is needed for life.

Once you have the items listed in your category column, you can print it out and view the list to mull it over and think more about your point values. You can add additional items to the category list and adjust the numbers as needed. I feel the more items you add to the category list should tend to smooth out any over weighted items. You have to be fair about grading so that you don’t push the results to either side.

This is just an example of the spreadsheet. Once you have it set up it is easy to modify for different scenarios. The math is simple using multiply and summation commands.

I hope this article is a benefit for you in thinking about a potential move to New Zealand. Our family has been very happy and we have met our expectations. I would be happy to try and answer a questions if I am able to. Just contact me through my web page.



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