This article was published on 22 October 2005. Some information may be out of date.

Q&As

  • Several on how families are taxed.
  • Can property sellers and agents lie to buyers?
  • Protestor over tax on international shares gets stroppy.

QFor both parents to be working someone needs to be looking after the kids. It has cost us over $1,000 per month, per child, for full-time day care.

Do you build this into a tax spreading system — as discussed in last week’s column? How?

Both parents can’t work unless the children are cared for. If that’s not possible, a skilled person may be lost to the work force. And some people’s mental health is better if they can work whilst raising a family.

Any tax spreading system would be complicated, expensive and have unfair elements, as all tax regimes do.

Anyway who says raising a family is so important?

I wouldn’t be without mine, but it’s not for everyone, and surely that makes our world a better place.

I couldn’t stand living in a society where we all had to have the same house, car, two-point-whatever kids, etc, etc.

Variety is the spice of life, and we should be encouraging it.

AHow about we add the child care worker’s pay to the parents’ income, and split the tax three ways? Or, if the child care worker also cares for other kids, split the taxes two and a fraction ways?

Just kidding! But I quite agree with you. An income splitting system that tries to be fair to everyone will be horrendously complex.

I get the feeling, though, that most of those pushing for income splitting don’t want to look after two-earner couples. They want to encourage every family with young children to have a stay-at-home parent.

That’s lovely for some. But again I agree with you, it’s not everyone’s cup of tea.

QI seem to remember that some years ago the government practice of manipulating the tax system to provide welfare (and subsidies) was discredited by the electorate.

Experts had long lobbied against such use of the tax system.

When taxes are manipulated to provide welfare to working families the true cost is lost in the system. It becomes simply tax not collected instead of a welfare expenditure item.

Governments that do not want full disclosure of the continuing costs of their policies misuse the tax system and avoid accountability. Is this honest and ethical?

ASince when has politics been honest and ethical?

But do citizens always want honesty? I’m sure many of those who will receive the new Family Tax Relief will prefer to get the money that way, rather than as handouts. It’s more dignified.

While people like BNZ chief economist Tony Alexander are referring to “middle income welfare”, the recipients won’t.

Perhaps that’s what this is all about. The Government can conceal the cost of its handouts, and those getting the handouts can pretend they’re not getting them.

I guess it will be up to the Opposition to point out what’s really going on — if they have the courage to antagonise all those voters.

QIt was interesting to read the scenario of the Happy family and the various tax versus family versus supporting others scenarios last week.

This was I thought the reason Roger Douglas was trying to bring in a flat tax rate and set up a separate body to provide for those with needs. Tax is a method for earning money for our government to run, not a method of distributing welfare.

I am not sure Douglas’s proposal changes the bottom line much, but it does make the emphasis more clear (well to me anyway).

AIt certainly does.

What’s more, if we had a flat tax, we wouldn’t need to consider such complications as income splitting. All families making the same income would be taxed the same, regardless of how many parents were working.

And there’s no reason why those in need couldn’t be cared for as well as they are now, via a separate welfare agency. Indeed, a flat tax would simplify tax administration, perhaps freeing up extra money to go into welfare.

Come back, Roger. All is forgiven.

QIn a recent column, you had a theoretical non-parent saying to a parent: “Why should you get all the good stuff? You’re lucky enough to have a family, which I would love to have. Now you’re getting lots more money as well”.

I love your articles but I assure you, as a single person, I don’t think married couples with children have all the good stuff.

I am taking a well earned break from a job as a doctor to go to the South Island for five weeks. No nappies, no squalling teenagers, no marital woes, no domestic rut…

Think again!

AI don’t have to. I already agree that there’s much to be said for the single life.

I was just trying to show the way some single people feel. I’m glad you’re not one of them.

Have a great holiday.

QYou recently suggested to a reader that “it’s actually a good idea to directly ask an owner, before buying, if they’ve had any problems with a property”.

I agree that this is a good suggestion, but it is my understanding that the benefits go well beyond the impact of looking the owner in the eye. I have long believed that it is actually a statutory duty for an owner (or its selling agent) to respond truthfully and completely to any question about the property.

In the event of providing an untruthful or incomplete reply (and being found out), the owner would be subject to prosecution for a criminal offence.

I would be interested to find out whether I have been under an illusion all this time.

ANot an illusion, but perhaps an exaggeration.

Our jails aren’t overflowing with sellers who fibbed about their properties. But there certainly have been some actions against real estate agents, including one who lied about sea views.

The Fair Trading Act applies to agents but not property owners, says David Russell of the Consumers Institute.

“If you ask the agent a direct question, such as ‘Is that fence the actual boundary?’, and the agent says ‘Yes’, and it’s not, you have a claim against the agent, because they are in trade,” says Russell.

If it was the owner who lied to you, “There could be a civil action, possibly under the Contractual Remedies Act. And there could conceivably be criminal action for fraud, but that’s far less likely.”

Under the Contractual Remedies Act, “if something is important to you and you were given an assurance about it, and on the basis of being misled you bought the house, you might be able to rescind the contract or at least get compensation,” he says.

Russell adds, though, that neither a seller nor an agent is obliged to point anything out to a buyer. “Unless you ask a leading question, you’re on your own.”

He suggests that you ask questions of both the agent and the owner.

“If the agent says they don’t know, you’ve got to do more research. Talk to the seller or get a LIM report.”

QFrom a regular contributor who usually sends you an email: I have no intention of complaining to the Inland Revenue about their ludicrous taxation of overseas investments.

I shall simply continue to not tell them about mine.

AFor the benefit of other readers, the words in this letter were printed in many different type faces.

It looks like a message from a kidnapper who has cut out the words from newspapers and magazines and stuck them on a page, so there is no handwriting that can be analysed.

The letter was mailed to me from the Auckland Mail Centre, with no return address.

But — wait for it — the address on the envelope was handwritten. They say every crim makes one mistake.

The handwriting is currently being scrutinised by Inland Revenue’s top experts. Sorry, tax dodger, but your days are numbered!

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.