04 Aug Tax and Retirement
Sound fair?
Ahhhh the election year. the time that parties of all stripes ignore the systemic issues and try their best to play the populist hits. Meanwhile, we collectively yawn as either side of the political spectrum tinkers at the edges without really fixing anything – yes we judge both sides of the spectrum harshly.
One area that as a nation we seem completely unprepared to address is tax reform. For many August is the month where the first whack of provisional tax is due for the financial year, so it’s timely to look at what some of the big multinationals are paying.
August is the month that – if you’re a provisional taxpayer – there’s a good chance you get slugged with your first tax bill. So think about the number on that tax bill when you consider the following: in 2025, Google generated $92,045,442 and paid 5% income tax on this amount. It’s still a smidge over 4.5 mil in tax, but still, 5% seems skinny, right?
Well, they are rank amateurs in comparison to Facebook. Off the back of receipts from customers of $199,865,562, they paid just 0.4% in tax in the 2025 year. Not even a whole percent!
We wanted to look at Netflix, however despite the Companies Registrar saying that they were looking into why Netflix hadn’t filed their financial statements 2 years ago, they are still not filing them. And don’t get us started on the price-gouging that the fuel companies are presently engaging in!
Why is this such a big deal? If Facebook paid the same amount as Google (which, as a percentage is still way too low in our opinion), that would be an additional 9.12 million in tax. Based on the average rate of pay for New Zealand Police Officers, this would pay for an additional 107 cops. Maybe if they both paid a bit more, we could get some more medical staff for the hospitals, or some fire trucks that don’t break down quite so frequently.
Paths to resolve this internationally have been put forward, but in NZ – like many Western nations – we seem to be shying away from it. Wouldn’t it be nice if someone in Wellington put their hand up to level the playing field a bit?.
Time to put your feet up
Another can that’s getting kicked down the road is retirement savings. As a nation, we’ve got an aging population. According to Treasury, in the 1960’s, there were 7 working age adults for every retiree. That number has now dropped to 4. By 2065, its projected to be just 2. NZ Superannuation is already the biggest transfer payment by quite some margin and with current policy settings, it’ll only get bigger.
We don’t highlight the above to pick on superannuants, rather to point out that sooner or later, policy settings are going to need to change. And the longer this is left, the more ‘abrupt’ the change will be. As much as Kiwisaver is a good idea, it lacks a number of features of the Australian super system and the unfortunate reality is that not enough of us are preparing adequately for a retirement where National Super will be less of a feature. Put simply, we’re not disciplined enough at saving and investing.
There are a number of factors that have put us off saving and investing but see above: the government isn’t coming to save us. So if you’ve not done so already, time to peel the plaster off and get into it. Here are some decent suggestions around getting started. And getting started is the hardest part, so if you can do that, you’re on your way!
If you’re stuck, get in contact.
Have a great August!
