Mike Heath on the RaboPlus Blog: RWT changes coming into effect next year

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RWT changes coming into effect next year

Submitted by Mike Heath on Tuesday, 14 July 2009 | Category:

You may have caught the news last week that the IRD are planning changes to change Resident Withholding Tax (RWT) changes from April 2010.  Following on from the Individual Income Tax changes that went through in April of this year, RWT rates would change and come into line with the marginal income tax rates. 

Like all things there are pros and cons.

If you are currently on an RWT rate of 19.5%, but then end up on the new rate of 21%, clearly not a good thing.  However if you go down to the 12.5% RWT that's a significant benefit, particularly for those retired persons who need to derive an income from their savings.  Plus there is always the upside associated with standardising things.  I'm sure people struggle with the differences between RWT and Individual Income Tax … at least this move goes someway to making matters clearer.

Have a read of what was reported about this on Stuff last week.

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9 Comments

Comment by Marilyn Pagel on 16-07-2009 04:04


Your call account and term deposit rates have gone to the pack. ALl other banks are offering better rates.

Comment by Mike Heath on 16-07-2009 11:06


Marilyn, I’m not sure what you use as a source for making your comparisons with the major banks, but if you refer to Interest.co.nz it will confirm that our On Call rate @ 3.60% is the best in the market, even better than the rates offered by those banks that have a bonus element to their On Call product. Plus, because our minimum balance for Term Deposits is $1,000, if you make the comparison on that basis we offer the best rates in the market for all Term Deposits for all terms except the 1 Year. In fact our rate for $1,000 is better than the rates that some banks offer for $100,000 for some terms.

Comment by E McCready on 21-07-2009 11:53


Your bank has been a breath of fresh air.Keep it up.

Comment by Catherine Grenfell on 22-07-2009 04:17


I agree with Mike Heath and am more than happy with your rates.
I think every investment rate is down wherever we invest.Just bite the bullet,it will improve!

Comment by Linda on 22-07-2009 07:02


I would like to see a higher interest rate for those loyal investors who need to keep large amounts of money on call at 3.6%.

Comment by KJ on 25-07-2009 06:34


On the question of RWT, for tax purposes why isn't it possible with Raboplus to split interest and RWT between both account holders of joint accounts? We haven't had this issue with joint account savings at other banks and didn't realise it would be an issue with our Raboplus joint acount when we opened it.

Comment by Mike Heath on 27-07-2009 10:59


Thanks for the feedback Linda. Our approach is to not tier the rates we offer … we simply offer the highest rate we can irrespective of how much money people can afford to put on deposit.

Comment by Mike Heath on 27-07-2009 11:01


Thank you for your kind words E McCready– we are very proud of what we offer and have achieved, and acknowledgements like this are a great source of motivation

Comment by Mike Heath on 28-07-2009 12:55


Thank you for the question KJ. I believe our Customer Contact Centre sent you an e-mail on this matter. In case you missed it, it said that banks do not divide interest income between account holders where the account is held jointly. Normal procedure is for the IRD number of the lowest tax payer is used and therefore when the IR15 is issued it’s address to the joint account holders and uses the rate entered.

I trust this answers your question. If you require more information on this or any other matter please do not hesitate to give us a call on 0800 22 44 33.


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