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Cullen rubbishes switching claims

Tuesday 9th of May 2006

Finance Minister Michael Cullen has described the story as "not only blatant sensationalism, it's wrong."

"To say that people on a 39% tax rate will move bank deposits to the new investment tax rules so as to limit their tax to 33% is uninformed and inaccurate.

"The new rules do limit tax on savings to a maximum of 33%.

But that simply continues existing rules for superannuation and similar savings vehicles. What the new rules do is tax those on a 19.5% tax rate at their correct personal rate, but those on higher incomes will continue to be taxed at 33%.

"So if you earn over $60,000 a year and have a bank term deposit the interest is taxable at 39%. The same person can currently save in a superannuation fund investing in bank securities and the tax is 33%.

"The simple fact is that a bank deposit is different from saving through a superannuation fund and is taxed differently. This has been the case in the past and will be the case under the new rules," Cullen says.

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Latest Comments
FMA outlines its latest expectations for advisers
Paul Flood: The danger is that the 'goalposts' (regarding what is acceptable or unacceptable adviser conduct) may be susceptible to change. Our 'Principles based' legal/regulatory environment lends itself to “prevalence-induced concept change” over time, perhaps not so much in the written laws and Code, as in the interpretation of the prescribed principles.
1 day ago Steve Wright
FMA outlines its latest expectations for advisers
Just a tip, if you use more than six, six letter words in a sentence you lose most Kiwi's. So avoid client/adviser confusion when writing your post or article if you would like it read and understood. Ironically, my last sentence was not likely read.
1 day ago Backstage
FMA outlines its latest expectations for advisers
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3 days ago Jon-Paul Hale
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3 days ago Jon-Paul Hale
FMA outlines its latest expectations for advisers
To correct errors in my previous post: "policies, templates, and controls" should read "policies, processes, systems and controls", and "is more conductive" should read "is more conducive".
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