Finance – Tips on Taxes

About 2000 years ago this very week in history, Jesus Christ gave a huge boost to governments around the world when He made His famous statement, “…give to Caesar the things that are Caesar’s, and to God the things that are God’s.” (Luke 20:25)

Of course, Jesus didn’t make this statement randomly; He was answering a question that had been put to Him about whether people should pay tax or not. In fact, the question was asked of Jesus just a few days before He was crucified on what we now call ‘Good Friday’. His answer was that they should – which Governments should forever be grateful for!

It seems I have something in common with the people of Jesus’ day and age, as the New Zealand tax year just ended three weeks ago and, after completing my personal tax return, it turns out I have about $10,000 of unexpected tax to pay that I wished I didn’t have to pay! (Actually, it’s $10,000 that my wife has to pay – but that’s a technicality!)

Anyway, I thought I would write this blog on this issue on tax and give some helpful tips that have served me well over the years as I have grown in my knowledge of how tax works. To keep things orderly I will use the three headings of Attitude, Strategies, and Information.


Someone once said that ‘Your attitude determines your altitude’. While I don’t relish the idea of having to come up with $10,000 to return to the NZ IRD this year, one’s mindset on the subject of tax can make a difference to their enjoyment of life! So here are a couple of pointers under the ‘Attitude’ category:

1. Paying tax is always better than not paying tax.

I guess the guy who asked Jesus the question about whether he should pay tax or not wasn’t too excited about having to pay tax to the Romans but – on the flip side – paying tax at least means you have made some money over the past year. (If you haven’t made any money then you don’t, or won’t, have to pay any tax – but that’s not a good thing!) So be thankful if you have to – or when you have to – pay tax, because it’s a far greater problem to not have any money and have no tax to pay than the other way around! I try to keep this in mind at all times and adjust my attitude appropriately when I feel like grumbling about taxes.

Also, to sleep well at night you should ensure that you pay your legitimate taxes to the  Government, as it can cause you a heap of worry and concern – even jail time – if you don’t! Any Government in authority – even those of small nations – have coercive powers available to them (i.e. the military and police, etc). If you want to have good mental health then make sure that you pay your taxes. There are many legitimate ways to minimise tax and no-one is obligated to have to pay more tax than is necessary. However, if you find that you owe tax to the Government and you perform illegal acts like tax avoidance and tax evasion to escape this responsibility, it will eventually come back and cause you a world of hurt. (If you don’t believe me, go ask Wesley Snipes how he’s enjoying life at the moment – although you probably can’t speak to him until July 19, 2013, which is his official release day from the McKean Federal Correctional Institution where he is serving time for tax evasion!)

2. Paying Tax provides us with many benefits

I don’t believe that all the money we send to the Government through taxation is spent wisely. There’s always waste and inefficiency in any bureaucracy, and stories of Politicians excessive and abusive spending abounds in many countries just as it does here in Aotearoa (e.g. MP’s paying for girlfriend’s trips to London at the taxpayers’ expense, or spending $89 from public funds on pairs of underpants etc). However, in a country like New Zealand there are many good things we receive from paying our tax dollars. The Police, Fire Service, subsidised healthcare, cheap education, good roads, having a military to defend us (possibly debatable in NZ!) and even the most obvious thing of having an organised government, are all services we personally benefit from through the payment of our taxes.

While we might grizzle and grumble about having to pay taxes, I’m sure there would be a lot more grizzling if these services did not exist or -worse – were left to private enterprise to provide and profit from. (Imagine having to pay a toll on every road you drove down, or being barred from driving on certain roads because you hadn’t paid your annual subscription to ‘City Roads Ltd’! Even more disturbing would be the Fire Service or Police not turning up after you called them in an emergency situation because you weren’t a shareholder of ‘NZ Fire Inc’ or hadn’t paid your annual subs to ‘Police Ltd’!!) Again, I try to remember all of the benefits I receive as a citizen through paying my taxes before I gripe about having to pay them!



There are a lot of strategies out there to help people reduce or minimise taxes. This blog post is insufficient to cover all the ideas that abound – nor would I want to try and be too comprehensive, as tax law is constantly changing and if you give ‘bad’ or illegal advice you can go to jail! The best advice will always be to seek out a professional tax adviser (more on that later).

However, the broad strokes when it comes to minimising tax usually revolve around three basic strategies which are (i) Reducing Income (ii) Increasing Deductions, and (iii) Using any available Tax Credits to which you may be entitled.

(i) Ways to Reduce Income

  • Income Split – Most Western Nations use a graduated tax system, so if you can reduce your income legally so that your earnings fall into a lower tax bracket this is often a simple way of reducing tax. Unfortunately as most people are employees, there is often very little they can do to reduce their income. However, for people who are self-employed or employers there is usually a lot they can do to reduce income. For example, if you operate a family business as a husband and wife team, try and ensure both spouses receive the same income (i.e. income split), because having one partner on a higher wage or salary than the other will often mean paying a lot more in tax. E.g. John and Jane earn a combined $100,000 in salary from their business, but John is paid $70,000 and Jane is paid $30,000. This arrangement means they will pay $18,290 total income tax between them. However, if their salaries were set at $50,000 each then their total income tax would be $16,040, which represents a saving of $2,250 p.a. This saving is achieved because much of John’s $70,000 salary is being taxed at the higher 30% tax rate. (The worst possible arrangement would be for John to earn $100,000 and for Jane to get paid $0.00, as this would mean John would be paying $23,920 in tax which is $7,880 more than if John and Jane were paid $50,000 each!) Of course, it’s not always possible to employ family members (including your children) in your business, but if it is possible then it can be a great way to minimise tax legitimately!
  • Joint Accounts – Although employees can’t do much to reduce income, sometimes in the case of husbands and wives their money can be invested more efficiently to minimise tax. The easiest way to do this is to ensure that any investments (outside of the family home) are held in the name of the spouse who is earning the lower salary. E.g. John and Jane earn $70,000 and $30,000 respectively. They have a term deposit of $25,000 held in both of their names with the BNZ Bank earning 5.0% p.a. (or $1250 interest for the year). Because they are on different tax rates, the combined tax to pay would be $296.88 whereas if the investment was held solely in Jane’s name the tax on the $1250 interest would only be $218.75, or $78.13 less. This may not seem like a lot of saving, but money is money.  (John and Jane could have a nice meal out away from the kids and build into their relationship, just from making a simple change on paper at the bank as to whose name the investment is held under!)

(ii) Increasing Deductions

  • Start a Business – You would have to be dumb as a box of rocks to start a business just to pay less in tax! The purpose of starting a business must always be twofold. First, to make or provide a great product or service; and second, to earn a profit. That said, owning a business – even a small one, like breeding guinea pigs from your home – allows a business owner to claim a lot of legitimate expenses which can reduce their tax by reducing income –  which an employee cannot do (as the business owner is claiming all the expenses!) For example, if you operate a legitimate small business from your home and have a dedicated office or work area set aside for the purpose of running the business, then you can usually claim a percentage of home expenses in proportion to the work area size. For example, if your home office takes up 15% of your total home area, then you can legitimately claim 15% of your rent or home loan interest, your power, water etc., all as legitimate business expenses which you can then offset against your income, hence you pay less in tax while experiencing no real change in quality of life as a result. A good tax professional should be able to assist you in calculating all of the legitimate deductions which you can use to lower your tax.
  • Asset Depreciation – Not all business investments are subject to depreciation, but some assets can be depreciated and this depreciation expense can be legitimately deducted against income to lower your tax. Perhaps the most obvious one is where you own a rental unit or house. The capital value of the improvements on the land (not the land itself) can be depreciated every year. In fact, it is required to be depreciated by law, and this can work in your favour. Of course, the purpose of the Government allowing depreciation on fixed assets is because they do wear out over time and will eventually need to be replaced.  So through its tax policy, the Government is acknowledging this fact and allowing business owners to depreciate and claim a certain amount of the cost of the asset every year in anticipation that the owner will, one day, need to replace the item.

(iii) Using Tax Credits in your favour

  • Donations – Perhaps the easiest form of Tax Credit to make use of comes from making donations to legitimate charitable organisations. While once very restrictive, New Zealand tax law relating to charitable donations has become much more generous in recent years, with one third of charitable giving now being able to be claimed as a credit in your favour. If you make a lot of income in a given year and wish to reduce your tax bill, consider making a large donation to a favourite charity to offset the tax payment.
  • Imputation Credits – This usually applies to investors who own dividend paying shares, and where their personal income tax rate is less than the NZ company tax rate (currently 28%). For people on lower incomes in New Zealand, owning shares of dividend paying companies can give them an advantage tax-wise, as a company pays tax on its income at a 28% rate and deducts withholding tax at the same rate from the dividend which it then pays out to the shareholders. If you earn under NZ$48,000 in salary, then your top tax rate on the current NZ graduated tax scale is only 21%, and so you will be granted an imputation credit. In other words, because you will have been taxed too much by the company (i.e. 28% instead of 21%), you will get a tax credit from the NZ Inland Revenue department which can give you a rebate of tax when you file your tax return!


Like I said, there are a lot of strategies around to help people reduce or minimise taxes as well as a lot of information out there on how to do so. But here are a couple of pointers on tax information which I have learned over the years.

Get Good Tax Advice

I’m a big fan of doing it yourself. Perhaps this is because I am from New Zealand stock, where ‘Do it yourself’ has been bred into the gene pool since the nation was colonised. Or perhaps it comes from my personality and experiences, having suffered at the hands of some very incompetent advisors in other fields over the years. However, when it comes to tax advice my recommendation is that you get the best advice you can afford. This is not an area where you want to go it alone as it is vast, constantly changing and also potentially incriminating because you are at ultimately at the mercy of the Government! (Put a photo of Wesley Snipes on your bedside table to remember this point at all times!)

While the NZ tax system is basically an honesty system and all working citizens of our nation are basically ‘innocent until proven guilty’, it is also an area where ‘ignorance of the law is no excuse’! As you begin to handle larger sums of money through your working life, you will want to make sure that your accounting, recording and cashflow are managed and overseen by a responsible professional tax advisor. Also, having an advisor working for you gives you credibility as well as liability-protection. (If for some reason a big mistake is made with your taxes, then at least you will have the option of blaming your tax advisor, whereas if you do it all yourself then the NZ IRD will not go looking for anybody else!)

Another advantage is that a good tax advisor will (or should) save you money, and maybe even help you make more money. By way of another personal example, my tax advisor gave me some advice over the phone a couple of weekends ago that will potentially save my wife and I from losing $70,000 simply by rearranging some of our affairs differently. This kind of advice and saving makes it well worth paying the advisor’s annual fee!

Continually Learn about Tax

While I am a fan of getting good tax advice, don’t stop learning about tax law and its implications. There are many good resources available out there such as books, magazines, internet articles – even friends.

Continuing to learn about the field of tax, how it works, and what your rights and responsibilities are will also help you interact in an intelligent way with your tax professional – and occasionally you may even pick up mistakes which they have made on your return, or items they may have overlooked, (After all, they’re only human!) My willingness to learn and keep learning about tax has given me the knowledge to prepare my business and personal tax returns accurately for my accountant and to present them to him in a form which is 95% completed. This saves me money by not having to have him spend time on menial tasks (like getting receipts in order and basic book-keeping/data- entry which I am perfectly capable of doing myself), and allowing him to focus on what he does best – namely giving me good advice and checking that everything is in order for the tax authorities!

Bryce Staveley – Fit 4 Life Staff


Fitness – What does being ‘fit’ really mean?

I have had the privilege of working as a team chaplain with rugby players since 2005. These guys are the epitome of being fit. They eat, breathe and sleep fitness. If they aren’t as fit as the coach, trainer or nutritionist wants them to be, they are immediately told how to get back where they need to be! Unless you’re training as an elite athlete, you probably don’t have the luxury of a fitness team around you like that.

So how do you get fit and stay that way?

I have a different outlook on fitness than most. Yes, physical fitness is beneficial, but there are 2 areas that are overlooked, one more than the other. I’m talking about mental fitness and spiritual fitness.

Mental fitness is easy to figure out. Read a book, take a class or even study a subject on your own to increase your knowledge.

But what about spiritual fitness? How do you increase your spiritual fitness? I believe God has put us on the earth for a reason. He wants us to have personal relationship with Him. He loves us and wants us to rely on Him for strength and wisdom to make it through this life. We are spiritual beings and He wants us to be fit spiritually!

You can start being fit by reading theBible and understanding how God wants us to be spiritually fit. A good place to start is in the book of John in the New Testament. Talk with friends who go to church and ask how they stay spiritually fit. Visit a church and find out why people go to stay fit.

One verse in the bible that sums this up is found in 1 Timothy, chapter 4, verse 8. It says, “Physical training is good, but training for godliness is much better, promising benefits in this life and in the life to come.”

Fitness is very important to us all. We’ve all heard the saying, “If you don’t use it you lose it!” Make sure you stay sharp and in shape by using the abilities you’ve been given. Stay fit physically, mentally and most important, spiritually!


Jamie – Fit 4 Life Staff

Friendship – Making your guests feel welcome!!

I recently was able to have a lovely weekend away house sitting and dog walking for some great friends Jason and Sarah at a wedding.  Originally I thought I was helping them, but it turned out that I was the one receiving all the love!!  I arrived to what felt like walking into a 5 star hotel, but it was their home with an extra bonus of a super fun dog, Sammy, who you can’t help but fall in love with, for company!!

The house was honestly immaculately clean and so welcoming after finishing the late night shift at work, one of those nights  where you want to drop your bags and blob!!

Their place is one of my favourite home away from home houses.  It’s so warm and inviting and they always have some fun new creative projects displayed that they have been working on to admire and be inspired by!  Sarah had written lots of fun Post-it notes all around the house, (was actually fun walking through all the rooms finding them and reading them! haha) She had a bag of cute gourmet mini Easter eggs laid on my freshly made up queen size bed with linens….luxury!! You can never go wrong with chocolate right!! They didn’t last long while watching TV!!

One of my favourite things though were the Bath & Bodyworks moisturisers and shower gels on the beside table.  I’m not joking…there were 6 options available to choose from and I was allowed to have 2 bottles!  I was wowed!!  If you haven’t tried this brand before you are going to want to! Seriously though after smelling it, you almost want to eat yourself it’s that good!!  (You have to order it from Canada or USA or just have amazing friends like I do, who are incredibly generous and have connections).  I highly recommend the Warm Vanilla Sugar and the Coconut & Lime Verbena flavours (oops…I mean scents) :)!

Jason and Sarah and Sammy, you rock!  Love and appreciate you guys heaps!

So, if you have family or friends coming to stay as guest in your place over the Easter break or other holiday seasons then hopefully some of these ideas will inspire you to make them feel even more special. I know I appreciate it so much!!!

Kirstie – Fit 4 Life Staff

Faith – Forgiveness

This is a subject that I struggle with.  I have noticed over the years that I tend to hold grudges against people whom I feel have wronged me in some way.  I don’t think I consciously plan to do so or think about it a lot, but it is definitely there. It is a hard thing to forgive someone when they haven’t asked for it or shown any recognition of the wrong that was committed.  Sometimes they may not even be aware that they have done anything.

A few weeks ago I was challenged to think more deeply about this attitude and consider some of the consequences of not forgiving others.

Unforgiveness causes bitterness and poisons other areas of our lives.  It increases stress, it effects our emotions – we feel angry, irritable and drained and it can also affect our immune system lowering our resistance to disease.

So with all of these negative effects why have I been unforgiving?  Sometimes it is because I know that the person doesn’t think they are wrong so if I think that if I forgive them it lets them off the hook.  Other times it can be because of pride.  I feel that they owe me something.

As a Christian I have an amazing example of forgiveness in Jesus Christ.  Jesus died on the cross 2000 yrs ago as payment for the wrongs I have committed.  This is massive sacrifice, if you don’t think so go out and rent “The Passion of the Christ” and I think you will change your mind.  Jesus endured all of that pain and suffering because he wanted to forgive me of all the things I have done.

Compared to this act of forgiveness my grudges and feelings of injustice pale in comparison.  In the Bible Jesus tells a parable about forgiveness in Matthew 18:21-35.  He talks about a servant who owes his master more than he could pay back in 1000 lifetimes and the master clears the debt.  The servant then goes out and has a fellow servant thrown in prison for owing him aprox. 1/3 of a year’s wages.  The master hears about it and then has the first servant thrown in prison and made to pay for his original debt.  This story illustrates just how much I have been forgiven compared to things that I don’t want to forgive.

How do I practically do this though?  There have been some things that have happened in last few years that I have found very difficult to forgive.  But I have been learning recently that forgiving doesn’t mean that the person isn’t at blame or doesn’t need to answer for what they have done.  What it does mean is that I no longer have to carry the weight of responsibility for making sure justice is done.  Instead I need to turn it over to God an allow Him to take the responsibility.

Because Christ has forgiven me for so much, I need to forgive others and entrust justice to Him.


Jason – Fit 4 Life Staff