Monthly Archives October 2008

IRD Continuing LAQC Investigations

October 31, 2008 New Zealand FinanceNew Zealand Taxation  No comments

The Inland Revenue Department (IRD) is continuing their investigation into the sale of private homes to Loss Attributing Qualifying Companies (LAQC) involving a mail out of over 45,000 letters to LAQC directors.

The issue at hand was first brought up by the IRD in a media release in the July of 2004, when the IRD voiced the concerns and objections to the possible practice of the selling of private residential property to a LAQC and renting it back, in order to claim a tax loss. While the IRD acknowledged that the mere selling and renting of a house from an LAQC does not constitute tax avoidance, and also that every suspected case of tax avoidance needs to be treated individually, they did release a general guideline of markers that they use to determine suspicion.

An individual who owns a...

Read More

New Zealand Stocks Undervalued

October 28, 2008 New Zealand Finance  No comments

According to a report released by Forsyth Barr, stocks traded on the New Zealand Stock Exchange (NZX) are currently trading at a median of 33.2% below their true value.

Even measured via a long run average prior to 2003, the NZX has been trading at a below value median of 8.2%, but this figure took an uncharacteristic sharp turn downwards in late 2007 to reach its current level of 33.2%. The NZX index has fallen over 1000 points since May, 600 of those have been since the post September “Financial Crisis”. It would seem that this trend will continue with the NZX falling further amidst the increased volatility of international markets.

Commenting on the report, Rob Mercer of Forsyth Barr research, said that while current prices are technically very good value for money, he does not expe...

Read More

Bank Guarantee Scheme Coming Sooner

October 24, 2008 New Zealand Finance  No comments

The government’s proposed bank deposit guarantee scheme is planned to be instituted before the November 8th election.

While previous government statements placed the timeline for the scheme as being before Christmas Day. This announcement seems to be a warning or an indication of intent so far, as there were a number of details omitted by Michael Cullen concerning the Bank Deposit Scheme. Predominantly the missing details are those surrounding the involvement and requirements from the Australian government and banks in regards. However, previous statements made by Michael Cullen indicate that there might be a requirement for participating Australian banks to float set amounts of their shares on the New Zealand Stock Exchange.

This quickening of pace is not thoroughly welcome by some key ...

Read More

Official Cash Rate Cut

October 23, 2008 New Zealand Finance  No comments

The Reserve Bank has cut the Official Cash Rate (OCR) to 6.5%.

On Thursday 23rd of October, the Reserve Bank Governor, Alan Bollard, stated that the OCR is cut by 100 basis points, or 1 %, bringing the rate to 6.5%. While this move may seem counter-intuitive considering New Zealand’s recent level of high inflation, the aim of the move was to counter-balance the oncoming times of credit tightening and fears. Governor Alan Bollard said in a statement, that New Zealand is likely to face an oncoming time of low export demand and decreased levels of credit availability. He also predicted a time of decreased consumer and business spending, justifying the OCR rate cut decision...

Read More