This article was published on 2 November 2013. Some information may be out of date.


  • Bankrupt couple could make a new start in a small town…
  • And another reader has an idea for a job for them…
  • And yet another reader suggests trying the Australian outback
  • How capital gains tax would work for family with two homes and trusts
  • Younger reader asks for a stop to school marm comments about grammar

QI wonder where the bankrupt correspondents who wrote to you live. If it is in Auckland or environs I suggest they think about relocating to a country town for the following reasons.

Rent is much cheaper and in some towns doctors’ fees are heavily subsidised and access more available.

If accommodation is not far from town, transport costs are minimal.

After settling, it is often easier to establish a friendly network, especially if one or both do a voluntary stint in the Citizens Advice Bureau or similar. (CAB is also an excellent way to learn about the local employment environment. Word of mouth is a powerful tool in the country!)

Regardless of religious beliefs or lack of them, joining a church group helps in meeting others, and in time you gravitate to those you’re comfortable with.

The local free paper is a great source of activities and employment available.

Free advertisements for work can be placed on supermarket notice boards.

In thinking of the future, some towns have retirement homes established by local trusts where costs are far less than the larger villages.

There would be some research required using internet or letters etc, perhaps CABs in a variety of small towns or even their councils.

Perhaps you could grow plants, flowers, vegetables etc for the local farmers market to supplement cash.

Whatever they decide, I most sincerely wish them well. Bankruptcy is no cause for shame when you have “had a go” at business. True success is about being an honest citizen and kind friend and neighbour, not wealth.

AI quite agree that nobody should be ashamed of failing at business. Business people have probably got more courage and get-up-and-go than the vast majority. And I won’t argue with your definition of success.

You make the case well for moving to a smaller town. And our next correspondent takes us a step further, with a job suggestion.

QI drive a school bus and because the company I work for really does wish to retain our professional services, we school bus drivers are paid a lot more than the minimum wage.

Just in this last week, there were two advertisements for bus drivers here in Taranaki. One was for picking up students for a private school and returning them home. And for this job, the driver will be paid to sit it out for the day if the school was say, 45 minutes away. It’s too expensive to take the students there, come back to New Plymouth and the return in the afternoon.

The other job was a full-time job as a coach driver taking groups from New Plymouth elsewhere. Again, this would be a well-paid job.

Most of our drivers are over sixty. They are not all ex-truckies. About six months ago, a woman in her early forties became a driver. The company does help to train people for the job and that includes driving a heavy vehicle. The cost of getting a licence? This would depend on the training available from the company approached.

There is the possibility of very much cheaper rent if the couple move out of a big city. Rent in a small town will be cheaper than an apartment in Auckland.

AWhat a great idea, possibly for both husband and wife. And if Taranaki isn’t far enough away…

QMay I suggest a total rethink of the couple’s current situation — press reset if you like.

There are a whole host of jobs available in Australia that they may find suitable, BUT they are not in the major cities. Outback Australia is filled with opportunities and whist Mt Isa or Fitzroy Crossing may not be everyone’s first choice, they have developed their own communities and lifestyles — they are just different from ours.

Not better or worse — just different.

This couple have many years ahead of them, and they really need to think outside the box for the next 10 years at least. Just a few minutes on the web will uncover a host of well paid opportunities — but just understand this will require a total mind shift change.

AIndeed. But it just might work.

More ideas for the couple in next week’s column.

QI read with interest your comment on capital gains. We have two family properties in different trusts. One is in Auckland where we have lived for 30 years from bare land, and one on the seaside in the family for 40 years and literally carved out with blood, sweat and tears from rubbish land no-one else was interested in.

We live in Auckland two thirds of the time and at the other place at least one third, and continue to work from both.

The reason for the trusts is primarily because we regard these as “forever” family assets, not individual, meaning our children will benefit from value not frittered away even after we move on. In one we are direct trustees and in the other are directors of a trustee company, and for both have a professional trustee and do all the right things such as meetings, accounts etc.

So how does this situation affect capital gains? For both trusts we pay full taxes owed. Too many people knock trusts just because a few use them inappropriately.

AThis column has already included the following information about baches from Labour’s finance spokesperson, David Parker: “Primary homes are exempt (from the proposed capital gains tax or CGT). Second homes and baches are not exempt, but carry-over provisions for inherited property including baches means capital gains tax is not triggered by death/inheritances.”

But there are some other issues in your letter, which another of Labour’s many Davids — tax spokesperson Dr David Clark — has addressed.

Let’s start with trusts. Broadly, Clark says, the approach to trusts is based on two principles: “firstly, that we intend to ensure trusts are not used as a means of avoiding a CGT; but, secondly, that people who use a trust to protect their main residence from legal liability, rather than out of a desire to minimise their tax liability, should be able to benefit from the family home exemption.”

Details on this and other issues are yet to be worked out by an expert panel, says Clark.

He also points out that a CGT would apply only to gains made after the tax is brought in, on what he calls Valuation Day or V-day. “What this means in the context of your reader is that gains in values on their property that have accrued to date (including as a result of their blood, sweat and tears) will not be taxed — only future increases in value will be.”

What’s more, he says, the tax would apply only to net gains. “Costs associated with improving the value of the asset are deducted from the gross capital gain before any tax is incurred.”

Which of your houses would be subject to the tax? “We’ve stated that the main residence is ‘the residence where you live most of the time’,” says Clark. Labour hasn’t yet worked out details for complex situations, but it’s “likely to draw upon experience in other jurisdictions.

“For instance, in Australia the rules state: ‘If for a period you have two homes that could be regarded as your main residence — such as your home and a holiday home — you must choose one of the homes for this exemption and CGT will apply to the other property. (You don’t have to make the choice until you sell one of the homes.)’.”

How will it work for inherited property? Clark gives “an indicative guide based on the Australian experience.”

“If a property were used as a main residence prior to inheritance, then CGT calculation would start with inheritance (so long as this was after V-day).” But if the property wasn’t a main residence before the inheritance, the calculation would start from V-day — or when the property was bought if that’s after V-day.

Either way, the tax wouldn’t be payable at the time of inheritance, but it would be payable when the property was later sold.

If several siblings inherit — which sounds likely in your situation — and one later sells his or her share, CGT would apply just to the share of the property that was sold.

Clark adds, “this reply reflects our 2011 policy, and Labour reserves the right to make changes to that ahead of the 2014 election. Any such changes will be clearly signalled in advance of the election, however, and no changes in relation to any of the specific aspects of the policy covered in this reply are currently being considered.”

QI would like to chime in on the grammar discussion.

I am 37 years old. I would love to have better grammar skills. The fact is that during my entire high school years at a prominent Wellington state school, I received zero instruction in grammar.

Any grammar rules I can recall are sketchy as they relate to grammar instruction at a private school I attended during some of my primary years.

Some of us (my generation), are actually embarrassed by our grammar skills. I am frustrated when I can see that what I have written is not quite correct but am unsure how to correct it. (A bit like that sentence there — I know something isn’t quite right!)

I would also add that the bits of grammar I can recall have been further confused because I was encouraged to study Chinese — to help New Zealand succeed in the future. Chinese grammar structures further compounded the issues I was already having.

I am not making excuses. I am simply stating that my generation did not receive your educational advantage in this area, and some further help and tolerance is needed.

It would be lovely if this could be done without a school-marmish tone. After all, I have to withhold my school-marmish tone when I have to continually re-educate perfect grammar senior citizens who have “lost” their letter in their computer or cannot open an attachment or work the cellphone that they brought themselves.

Have a great day!

AYou too. And I hope your day won’t be spoilt if I point out that you should have written “bought themselves”. “Brought” is the past tense of “bring” not “buy”.

Having said that, the sentence you worried about is fine. And, more importantly, I hear your plea. My generation was lucky to be taught grammar. Ironically it was probably my generation who made the decision not to teach grammar to your generation.

Tell you what: I’ll promise to hold back on the school marm act if you’ll promise to keep being kind to oldies struggling with technology.

Meanwhile, next week a correspondent will give you a helpful grammar tip.

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Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to [email protected] or click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.