OK, so I’m a newbie from the other side of the planet….. Namibia, Africa (no comments about our rugby team please)
After browsing some of the contributions (wow – how do you guys keep up with it all!) I see some interesting differences.
First off, Aussies spend half the year working for the government to pay personal tax, then how much more to pay GST? How do you guys survive?
Our max personal tax rate is 35% – a bargain, followed by a 15% VAT. Of course, if you are lucky enough to own a farm, the government may want to take it away from you to give it to a previously disadvantaged person.
Our inflation is presently around 6%, down from the 15%-18% we were used to, and more recently, our currency [1N$=1SA Rand] got “strong”, which means we can buy our PCs cheaper again and go on overseas holidays.
We don’t have capital gains tax (yet).
Trusts are taxed at individual tax rates (so far).
Mortgage interest rates are around 10-12%.The only pity is our political uncertainty which affects business confidence. We’re still optimistically investing in property though.
Hi Glenetti,
I won’t mention the Rugby – can I ask about the cricket[biggrin]?
Recommend you use the active topics section – it makes it easier to keep up.
Our marginal tax rates do vary according to your income level – the taxable table below explains the ‘deal’ if you can call it that in detail.
$6,000 $0 17.0%
$21,000 $2,550 30.0%
$52,000 $11,850 42.0%
$62,500 $16,260 47.0%Our GST is set at 10% with some goods and services being exempt. Typically these items are classified as being essential and include some foods, medical treatment and similar. It would be fair to say it is generally all encompassing.
Our current annual inflation rate hovers in the 2-3% range with interest rates at ~7% for standard variable rate. And we thought our rates were relatively high.
We have a Capital Gains Tax regime that is discounted by 50% if you own the asset for more than 12 months. Gains are added to your other income and taxed in accordance with the table shown above.
Interest incurred on borrowings used to purchase investments is deductible from our annual income along with other costs incurred owning and/or managing the investment. In property this includes rates, management fees repairs etc.
Our homes are exempt from CGT but costs and interest incurred on these loans are not deductible.
Rental returns in our capital cities range from around 3% and upwards – and without knowing every property in every capital city probably top out at around ~7% (with exceptions to be found by skilled investors). Returns in regional areas are generally higher than this.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks for the news Derek.
I was actually at the Namibia-Aussie World Cup match in RSA last year. The first-time Namibians were pretty good in the field but collapsed against the bowling attack. But MAN was the Aussie team professional! They did not hold back at all when fielding, even though they knew it was a cruise match. Our chaps told me that they were very friendly after the match though. Stand up guys!
I reckon the higher tax rates in the “western world” is the price you pay for having decent infrastructure and government services (like an effective police force).
Of course, your whole society is also more regulated. In Africa it is better to ask forgiveness than to ask permission.
I really appreciate learning about the economics in Aussie, because if we have to leave here because of a Zimbabwe situation, our first thought is to invade Aussie as most of our friends have done – and by all accounts are loving it. I’d prefer to get to Aussie with cash in hand to make a good start though.
Ta
GlennMore thoughts.
Interesting that in Australia you work with weekly rental. We work monthly for both loan repayments and rental, so the two are easy to compare.
Does this mean that rental in Oz is actually paid weekly? Do loans run weekly or monthly?
Also, I read that in Aussie interest only mortgage payments are possible? True?
My local brokers say it is not allowed here – capital must be repaid. Which is sort of silly when I can re-finance with any financier over and over again anyway (limited by costs of course).
Any answers on this one?
Hi Glenetti,
Are you addicted yet?
Most typical leases are paid at a weekly rate with a requirement, unless otherwise agreed that the tenant will be two weeks in advance.
Tenants are also required to pay a bond equivalent to 4 weeks rent upon taking up the lease.
Loan repayments are typically calculated on a daily basis but paid monthly.
Interest only loans are readily available with the typical I/O loan being for 5 years – some longer now as banks become a little more attuned to the needs of investors.
The banks generally have an expectation that the loan will revert to P & I after the I/O concludes but it would be a brave bank manger to ask that on an asset that has grown over five years, where you have met all repyaments as required, when you loan is readily transferrable to another bank if they get a little niggly and when mortgage brokers are now a clearly defined presence in the market place and can act as an intermediary between you and the bank – many banks.
P & I loans are typically up to 25 years although I believe 30 year loans are possible.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Derek
Total Addict. Sat up to midnight last night with the forum. Not doing much investment with the wife at the moment.[evil5]
Most typical leases are paid at a weekly rate with a requirement, unless otherwise agreed that the tenant will be two weeks in advance.Tenants are also required to pay a bond equivalent to 4 weeks rent upon taking up the lease.
Paying weekly involves so many more transactions – must be an ache. A four week bond (called a one month deposit with us)….. Strange customs from a strange land. Do you folks find these arrangements convenient? Would monthly arrangements not be more practical? Granted on daily basis interest calculations it would be better to deposit rental payments weekly.
I’d love to have a 30 year I/O loan. Let me know when it happens.
Thanks Derek, appreciate your responses here.
Our banks tell me that they only offer commercial loans over 10 years, but for me (yeah sure) they offered a 15 year loan after a board meeting. (Somehow I doubt it).
Do your banks “require” sureties? Can you refuse?
Glenn
Dear Glenetti,
Hmmm your loan structure and wages stucture sounds very much like the country i’m from < Malaysia > The rental there’s Monthly so is the Salary.. however, there isn’t any fixed time, even when you’re off work, u could essentially be working OT UNpaid.. such is the working conditions in most asian coutries, where u work work work and no relaxation at all..
neway, the income tax is 30% flat, Singapore is probably lower 20-25% ? anyway.. GST in M’sia was 5% but only on Foods but i think has been abolished 2 yrs back.. haven’t been back to keep updated with the economic situation there for some time.
Anyway… that’s just me wanting to say something
heheKev
Hi Motivstorm
How about we all find an exotic island, not too small, not too big. Set up a government run along business lines – set out the real estate and sell it off/ develop hotels etc., declare tax rates of 5% with 5% import duty and 20% VAT (hit the tourists, not the locals) – make it a tax haven to attract more capital. Import the labour as necessary, on contract. Anyone got one the these we could club together and buy? Call the country Utopia.
I saw the eastern work ethic on visits to Seoul in 2002 – they worked like machines, but as more material comforts have become available and they have become world leaders in manufacture of various goods (especially electronics) they are starting to question why all the hard work, and then you die…..
Glenn
Hi Glenn,
Cannot say that I have run into any Namibians though there are quite a large number of (white) South Africans living in Sydney (which appears to be their favourite destination).
Many have done very well here in business, some of them have even managed to create big empires.
Basically, I would think, because somehow they were able to bring money with them (which makes it so much easier than having to start from scratch).
Many of the African countries don’t appear to allow money to be moved out.
I have heard some amazing stories about that. People who have worked hard all their lives, providing employment for many people yet not being allowed to take more than a paltry sum of money if they decide to move on.
One party decided to solve the problem by smuggling out gold by exporting ladies clothing on metal hangers which actually were made of gold with a layer of zinc on the outside. They were caught !!
What is the situation in your country ? Free to bring money out ?
Regards,
Pisces
Hi Pisces
So far so good here. We are linked to the RSA Rand on a 1=1 basis with our Namibian Dollar, and have freedom to transfer as we wish to RSA. We are in a common customs union with RSA, Botswana, Lesotho and Swaziland, so rules about foreign transfers are similar.
However, we live in fear of our country going the way of Zimbabwe because of similarities such as: a) commercial farms are owned by whites (including many foreigners)
b) our government openly sympathises with Bob Mugabe of Zimbabwe, while not yet taking the same route, although a Minister recently announced that the Government was going to expropriate farms of farmers who mistreated their workers.There is a lot of debate on the land issue, which is a highly emotional rather than rational matter. Being election year we are awaiting trouble as politicians abuse the land issue. Needless to say, farms are not the number 1 investment at the moment. Farms must be offered to the Government to purchase first, who so far do offer a market related price.
How to get money out 101 (not all entirely legal, but apparently used):
a) Go on holiday and take your annual allowance N$750,000 with you and pretend to spend it.
b) Have friends/family visit, give them local currency and they deposit in your offshore account.
c) Buy as many luxury goods before you emigrate – to the extreme – import a luxury car, export same luxury car.We have a great climate with plenty of space and authentic african game (less than 2 million people- which might explain why you have not met ny of us yet – we’re rather scarce – possibly even endangered). So far we’re living in paradise, apart from the threat of violent crime. Our friends who have emigrated to Australia say the best thing is you can breathe easy – no fear of being highjacked at the traffic lights, armed robbery, rape, housebreaking etc. Still worth a visit though.
I must learn to be more brief, but hey, I type with all 10 fingers.
>>our government openly sympathises with Bob Mugabe of Zimbabwe, while not yet taking the same route, although a Minister recently announced that the Government was going to expropriate farms of farmers who mistreated their workers.<<
Sometimes it is very hard to see what the real situation is.
But judging from the outside, to me it is akin to the story of the Jewish man living in Germany who saw all the brutality and persecutions going on all around him and who said as he was hauled away
‘You can’t do that to me, I am an Iron Cross holder’ [an Iron Cross is a medal earned for valour during the first world war].He lived in fantasy land and didn’t know it.
Looking on from the outside it appears to me as if it is more a case of ‘get out now whilst the going is still (relatively) good’.
I am surprised to see you state that you can get out annually an amount of N$750,000, that is quite a lot of money. Praise yourself lucky.
>>So far we’re living in paradise, apart from the threat of violent crime.<<
Paradise ? Sounds more like purgatory to me, whom are we kidding ?
Pisces
Hi Pisces
Points taken, which is why we’re considering relocation options. Still a tough choice. You’re right about living in a dream world. When one is on the inside the downhill slide is gradual and we adapt to the changing circumstances – more electric fences, higher walls etc.
However, in the land of the blind, the one-eyed is king. We’re in a pond with very little competent competition, which means good opportunities.
For example, RSA companies understand the risks of Africa, which explains why RSA companies are doing extremely well expanding into the rest of Africa. Most infrastructure development (roads, railways, construction, cellular telephony, IT) in Africa are being undertaken from RSA boardrooms.
Of course incidents like 911 and Spain show that the sky can fall on your head almost anywhere.
I’ve had 3 family members relocating to Canada (all left again) only to try somewhere else, then somewhere else…. It appears Canada was just too cold and too highly taxed for them to replicate their business success.
See you guys in Oz for Christmas. We certainly won’t be the ones to switch the lights off here.
Hey Glenetti, thanks for posting this stuff. It’s fascinating to learn how ‘the other half’ live….
Your friends/family that left should maybe have done a bit more research on good tax areas before they went there. Not sure about Canada, but if you believe Kiyosaki, Allen et al, there are many loopholes in the States to carry on business paying little tax…..
Cheers
Mel
hehe
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