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KiwiSaver Personal/ Employee Contributions- Take Action Before 30 June 2014
Your Payment of Tax Options are Changing
Time Period for Claiming Donation Tax Credits reducing
Buying at Mortgagee Sale- Things to be Aware of
Every year the Government will make a contribution to your KiwiSaver account as long as you are a contributing member aged 18 or over. This is to encourage you to save. This is paid every year around July/ August to members of a KiwiSaver scheme or to a "complying fund" until the member is eligible to withdraw his/ her savings.
To receive this credit you must be:
What if you havent made contributions of $1024.86, through your pay or directly?
You can voluntary contributions to ensure your annual contribution is at least $1024.86 by the 30th June. This will then allow you to receive the full member credit from the government, provided you have been a member for the preceding 12 months prior to 30th June.
What is the position if you havent been a member all year?
If you have been a member for less than 12 months, then the government tax credit is prorated to the period that you have been a member for that year.
How can you claim this Tax Credit?
Your KiwiSaver provider will claim the tax credit on your behalf after 1 July each year. You don't have to do anything.
Kids Joining KiwiSaver
Children are entitled to join KiwiSaver and the government gives a new KiwiSaver member, including children, $1000 towards their account as a one off tax free incentive contribution for him/her when they join. If the child is under 18 years he/ she does not have to make KiwiSaver contributions, unless required by the elected KiwiSaver provider.
YOUR PAYMENT OF TAX OPTIONS ARE CHANGING
Payment Services at Westpac
From 1 October you will no longer be able to make cheque payments or drop off returns and forms at Westpac.
You will still be able to make cash and eftpos payments at Westpac or use online banking, credit/debit cards and international money transfers, or post cheques direct to IRD.
Cheque Payments Must Arrive on Time
From 1 October 2014, cheque payments posted to IRD must arrive on or before the due date to avoid interest and late payment penalties.
Electronic Refunds are Quicker
It is beneficial for taxpayers who receive refunds to provide IRD with their bank account information. This ensures that they receive the refund within 2 working days of it being processed instead of 10 working days for cheque refunds.
Payment of Tax Electronically
IRD are recommending taxpayers to pay tax electronically. In that way you could process it on the last day without incurring interest and late payment penalties (if you prefer cheque payments you will have to post them early to avoid interest and late payment penalties, and postal holdups are not valid excuse). Last year over 70% of IRD payments were made electronically)
TIME PERIOD FOR CLAIMING DONATION TAX CREDITS REDUCING
From the 2014-2015 (the current year we are in) and later tax years you must claim any donation tax credits within 4 years of the end of the year the donation was made in.
You have choices when you buy, including buying property which is a mortgagee sale. What is the difference between a mortgagee sale and a nomal sale of property? What are the things to look out for if you buy at mortgagee sale?
As the sale is being undertaken by the owner's bank or finance company there are some potential issues that mean you need to take more care than you would in a normal property transaction.
A lender owes certain duties to the home owner when exercising its power of sale. There is a general duty to obtain the best price reasonably obtainable at the time of the sale. This includes advertising the property correctly and undertaking adequate marketing. However, although this duty of care is owed to the owner, the protections available to a buyer in a mortgagee sale are more limited.
When buying a property in a mortgagee sale, you should check whether the agreement for sale and purchase is conditional on the mortgagor failing to repay his or her debt by a certain date. Even in an "unconditional" agreement for sale and purchase, there may be a clause allowing the mortgagee to cancel the agreement if the mortgagor discharges the debt, or brings a legal action to stop the sale from going ahead. This means in some cases you will not be certain that the sale will go ahead until the actual settlement date.
It is also important to check who the agreement for sale and purchase is with. From the time the lender gains the right to exercise its power of sale, the owner is not able to sell the property without the lender's consent. It is therefore unwise to enter into an agreement for sale and purchase with an owner without checking that the bank has consented.
An agreement for sale and purchase in a mortgagee sale is usually different from the standard contract in other property deals. The lender will require removal of some of the more common contractual provisions.
As the lender wishes to dispose of the property as soon as possible, it may be unwilling to negotiate the terms of the agreement, or allow the purchaser to make it conditional. It may be difficult to make the agreement subject to finance or a builder's report, which means that you need to arrange finance and be satisfied as to the condition of the property before entering into the agreement.
Another potential pitfall is that a lender's agreement for sale and purchase will not usually guarantee vacant possession. You should find out whether the mortgagor is still occupying the property, or whether there are existing tenants. If this is the case, it may become your responsibility to make the previous occupiers vacate the property after settlement.
Furthermore, there is usually no vendor's guarantee for the condition of the property, including compliance with the building code. If you are able to inspect the property before the sale, it will not necessarily be in the same condition on the settlement date. The owner has the right to remove any chattels that would usually be included in a sale and purchase agreement.
You as the purchaser must bear the risks for any defects or damage to the property, so it may be a good idea to adjust your offer to take this into account.
You should also insure the property as soon as the agreement for sale and purchase is signed, so that you are not out of pocket in the event of damage to the property.
Given the numerous potential issues associated with buying a property at a mortgagee sale, it is important to do your homework before signing an agreement for sale and purchase. Find out as much as you can about the property, read the agreement carefully, and discuss the proposed purchase with your solicitor.
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