OK, so I'm bored today. Ran across this internet CD rate in NZ.
1 year CD is 8.55%.
Too bad it's only available to residents of NZ.
<Homer voice> Mmmmmm. Interest rate porn. </Homer voice>
I guess their
nasty tax rates make up for it. Anyone live there?
-CC
I actually toyed with the idea of wiring over $5k-$10k to put in NZ CDs a few months ago (LOL...if only I had! both the exchange rate and current market performance make me wish I had done differently).
One thing that left a bad taste in my mouth is that they have a sort of asset tax on investments. You can either pay income taxes (not good for a non-resident) or a flat 'asset tax', which I think was something like 0.5% of the asset. Another problem: some banks can have their CDs qualify for the smaller asset tax, instead of having you report the interest as income taxable to NZ, but you don't know ahead of time unless you go through a variety of people to find out the answer.
Some NZ banks allow foreign CD investors, others don't. Some require you to have a savings account (again, some charge monthly fees!) in addition to having a CD. And, some ream you on the US$:NZ$ exchange, some don't even offer foreign exchange, and others are reasonable.
During my analysis, at the time (May 2007) I came to the conclusion that Westpac offered the best combination of exchange rates and interest rates and low/no fees. However, given the asset tax/NZ non-resident income tax, possibly having to file annual NZ income tax forms, report/pay US income taxes, and other potential/known fees, I passed since the interest rate advantage didn't seem to be worth it (although I was tempted by the foreign exchange potential gain as well).
Another temptation to getting the CDs was that I was strongly looking into purchasing forest partnership units. They're a great deal for NZ citizens, since you can apparently roll over your annual expenses that exceed income from the forests, and deduct it from your final harvest proceeds. However, non-citizens/residents can't carry over these losses. I was hoping that I could buy some CDs/dividend paying stocks to get income to declare to use up my annual forest losses, but it appeared that they were two different classes of income, and couldn't be offset by each other. (significant, considering that NZ takes something like 20%-30% of your gross harvest proceeds!)