Got a spare NZ$10 million and not sure what to do with it? You could always chuck it in a term deposit at the ASB.
In a real sign of the times, ASB says it’ll now accept term deposits worth up to NZ$10 million from a single customer. Both ASB and its subsidiary Bank Direct introduced this policy on July 1. Among the other major banks ANZ, National Bank, and Westpac say they don't have an upper limit on how much they'll accept. However, none are openly promoting term deposits as high as NZ$10 million.
The major banks are all fighting hard for term deposit money because of the introduction of the Reserve Bank’s core funding ratio (CFR) on April 1. Under the CFR banks must source at least 65% of their funding from retail deposits and bonds with durations of at least one year. The central bank wants to increase the CFR to 75% by mid-2012 to offset New Zealand banks’ reliance on international wholesale, or 'hot' money, markets before the Global Financial Crisis.
An ASB spokeswoman said the bank had introduced a new policy from July 1 whereby there was now a NZ$10 million per customer maximum for both ASB and BankDirect term deposits. Before July the maximum was NZ$250,000 per individual deposit.
ASB’s chief executive Charles Pink recently told interest.co.nz the bank was meeting the CFR “with some comfort.”
The ASB spokeswoman said the NZ$250,000 maximum had been in place for many years and had been increased due to demand from some term deposit customers. Sone customers had held several term deposits, she added, although it was more common for them to negotiate to invest a higher sum.
"Some customers do want to invest up to NZ$10 million," she said, noting ASB offers term deposits to business, corporate and trust customers as well as retail customers.
"Many customers also choose to spread their investments across a range of terms, rather than invest one large sum in one term deposit."
ASB says retail deposits rose 5.3% to NZ$31.5 billion in the year to June.
Among the other major banks, a spokesman said Westpac had no limit with customers able to enquire about rates for amounts of NZ$250,000 or more. Although there was no limit, he said the rate secured would be decided by which part of the bank the customer was with, ie: whether they were a retail or institutional customer.
"Individuals can invest from as little as NZ$5,000. Customers can enquire about rates for amounts of NZ$250,000 or more," the Westpac spokesman said.
A BNZ spokeswoman said her bank accepted term deposits of up to NZ$1 million. If a customer wanted to invest more than that, they’d probably be advised to talk to BNZ’s private wealth department.
A spokeswoman for ANZ New Zealand, which also owns the National Bank, said there was no specific policy to limit the size of a deposit from any one customer. However, above NZ$1 million at ANZ and north of NZ$250,000 at the National Bank customers can contact the bank for pricing.
Westpac and BNZ, the two of the big four banks to have released June quarter General Disclosure Statements so far, secured NZ$329 million and NZ$277 million worth of new term deposit funding, respectively.
Banks are advertising rates around 5.5% for two year retail term deposits, while the two year wholesale swap rate is around 3.8% currently. See all bank term deposit rates here.
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20 Comments
That depends Chris....a govt bond paying 4.5% with an untaxed cpi adjustment, is a good deal for many. It sure has to be a part of any portfolio. As is a 'tennis' ball of capital being smacked between aus and Nod to catch the fx gains on offer taxfree. Include some staple food producer shares paying 7%nett and pick up gold on the next big Fed/Bis orchestrated collapse! Last and of equal value would be something like fph at these cheap prices and paying 4%plus nett with great upside and buyout prospects. Note that only the bond 4.5% out of the lot attracts the attention of the IRD...the gold fx fph and other shares are all giving nett returns.(either on the divs or the capital gain on sale!)
Moving your capital to and from aus is not trading. It's just moving your capital. You clearly are not doing it to generate income because you rely on your share divs and interest payments from the bonds for income. It is not your fault that both currencies are fiat poop. If both had a gold standard the need to move your capital would not exist. You move it to protect it against the damage done by idiot govt and stupid media.
Glad I don't use an accountant...! So a client of yours sells up and thinks the Kiwi is about to spit the dummy....moves the munny to aus.....the kiwi spews it's guts as the client thought it would...the munny is brought back...the client has not made a profit...the client has protected the capital...you advise the client to sent the IRD 30% of the difference. Jeeez you must have a heap of clients!
I don't think I would want you as a client Wolly - you seem to be suffering from a bad case of knowitallism. Yes, if you enter into a transaction with the intention of making a profit, it's taxable. If the IRD figures out what you're doing you will be found to have taken an unreasonable position (at best) or be guilty of negligence or avoidance at worst.
That transaction has nothing to do with protecting captial. If you have NZD$100,000 in a NZ bank account the the NZ dollar tanks, you still have NZD$100,000. You have less purchasing power overseas, but that's not the concern of IRD. If you move that NZD$100k and buy AUD$90k because you think you will make a buck, and later move it back at a favourable exchange rate and end up with NZD$110,000, you have realised a NZD$10k taxable profit. Likewise if you lose $10k (and TBH you seem like a loser to me) then it will be an assessable loss.
By all means Wolly, attend to your affairs however you please. I'm not in the business of enforcing the law, but I am in the business of advising people. We have seen too many audits to be negligent of these issues. If you were my client (heaven forbid) I would advise you of your obligation - I don't have a habit of dobbing in my clients, but I correct them if they wrongly believe their undertakings are tax exempt.
Not quite right. While that is a taxable activity, IRD have determined that in most cases "actual costs" are about equal to the boarder's rent, and so they consider it to be a net zero profit activity. As such they don't expect people with boarders to file a tax return. Search "boarder" on IRD's website for more informatino on this.
Define commercial versus non-commercial? Those are ahiry terms which aren't considered in our income tax structure, quite rightly.
Think of your boarders situation in another light - if someone is using the boarders to pay the mortgage, than they're undertaking a business for profit - as such, part of the mortgage would be deductible against the income. Likewise, repairs and maintenance, depreciation, electricity and other expenses are deductible. Furthermore, you're probably feeding your boarders which is deductible.
All the IRD's determination does, in a rare fit of common sense from IRD, is say that the boarder's rent is probably quite similar to all of these expenses when correctly apportioned to the boarder. It's a smart way of reducing compliance costs and unnecessary paper work - and don't worry, I don't think we're seeing any huge rort though this loophole.
IRD has clearly distinguished between boarders and tenants - like I said, for more information search the IRD website. The case you just described would probably attract income tax, and by not declaring the income s/he is risking being prosecuted for tax avoidance.
Wolly, intent is an interesting beast from the IRD's point of view.
It is determined on a number of levels not just what you tell the IRD. For example your actions, your domicile, your previous actions can all be used by the IRD to interpret your intent (as far as I'm aware any how).
Nice work if you can get away with FX transactions that gain but not taxable unfortunately if you get investigated you'll have a microscope on you.
Quite right expat....a number of levels....shifting loot to aus to earn interest and pay tax on it...waiting months and maybe a year for the right time to bring it back, while in the meantime earning an income in Noddy on interest and divs and maybe selling the house....all these plus your history of activity...these are all factors. Chris seems to see "profit" where it does not exist and rushes to a conclusion that tax is owed...for what...for being lucky. Next step Chris...the Lotto winner must pay tax because there was an intention to make a gain!
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