$80k isn't much, how have I ended up near the top tax rate? Ask Susan

Got questions? RNZ has a podcast, 'No Stupid Questions', with Susan Edmunds.We'd love to hear more of your questions about money and the economy. You can send through written questions, like these ones, but even better, you can drop us a voice memo to our email questions@rnz.co.nz.I recently discovered something called fiscal drag - which you'll be aware of - I had no idea. It's unfair how our tax system works these days, as 20 years or so ago, my $80,000 income would have been pretty decent, but in the current climate it's not a great deal of money.I'm still paying the same tax rate from decades ago, when the cost of living was not as tight. We definitely need an overhaul for our tax system.Is there a future plan to change the parameters for the tax brackets? The range for my tax bracket at 33 percent is $78,000-180,000.This issue of fiscal drag has been talked about in the past few days, because Nicola Willis, as National finance spokesperson, said her party would address bracket creep, if it was in power after the election.Adjusting tax settings would ensure "working people on average wages aren't being slapped with bigger and larger effective taxes every year", she saidBracket creep or fiscal drag refers to the process by which inflation pushes people into higher tax brackets, even if they are not earning any extra in real terms.You're right that $80,000 would have been worth a lot more in real terms in 2010, when the top tax rate was set at 33 percent for income more than $70,000.That threshold was adjusted in 2024 to $78,101 and there is a 39 percent rate on income more than $180,000.Infometrics managing director Gareth Kiernan said that 2024 tax bracket adjustment helped address the bracket creep since 2010, but not enough to undo the impact of inflation."They took it back maybe 4-5 years, rather than all the way back to 2010."A joint report from IRD and Treasury last year showed that, if income tax thresholds had moved with inflation between those two adjustments, the lowest rate would now apply on income up to $19,323, not $15,600.The 33 percent rate would only affect income over $96,615.It said anyone earning between $70,000-90,000 had experienced the biggest impact of the bracket creep, because inflation had shifted more of their income into the 30 percent tax bracket.The median fulltime wage and salary worker earned $48,024 in the year ended June 2011 and paid $7427 in personal income tax. In the year ended June 2023, the median full-time wage and salary worker earned $73,417 and paid $15,148 in personal income tax.Those people probably didn't feel any better off in real terms, but they were paying more tax.As Kiernan points out, while there are lots of arguments for why we should address bracket creep, it would come at a cost."Given the fiscal position and the structural deficit we're running, while it would be a good thing in one sense, there's not a lot of room to realistically operate, without addressing some of the bigger structural issues," he said.If we moved tax brackets significantly or tied them to inflation to remove the problem completely, the government would probably have to find that tax revenue somewhere else.I do have sympathy with the view that it is a bit of an underhanded way to increase the tax take though.I was wondering if I am able to withdraw the Australian portion of my KiwiSaver when I turn 60 in 18 months' time. I would prefer to do a transition to retirement (TTR), but I think I have to be living in Australia to access that option.I have been back living in New Zealand for 10 years and I am a New Zealand citizen.Chief executive of Pie Funds chief executive Ana-Marie Lockyer says, assuming you transferred your Australian super into your KiwiSaver under the trans-Tasman portability rules, you should be able to access that Australian-sourced portion from age 60, provided you meet the Australian definition of retirement."Importantly, they don't need to be living in Australia to do this - the Australian money can still be held within their KiwiSaver in New Zealand."It only applies to the amount originally transferred from their Australian super - the legislation disregards subsequent positive or negative investment returns when calculating that amount."The remainder of their KiwiSaver would generally remain subject to the normal KiwiSaver withdrawal age, currently 65. They would need to apply through their KiwiSaver provider, who would confirm that they meet the relevant retirement criteria."She said a TTR was different and would not necessarily be available.Do I have to let my lawyer know before I put in an offer on a house or can I wait until it is accepted? I am keen to avoid paying legal costs for something that might not go anywhere.It's recommended but not absolutely required.A legal executive who wants to remain anonymous told me she recommended that her team look over the unsigned agreement first."If this is not possible, I like that there is at least a three or five working day condition for solicitor's approval of the form and content of the agreement."Looking at the agreement prior to signing is preferable, as it is harder to change things after the agreement is signed, and the standard solicitors' approval condition is very limiting on what we can require to be changed."I usually say I will have a quick look at the agreement as a courtesy/no charge to encourage clients to let me review it before it is signed."She said problems could include things like dates that did not align or were insufficient to satisfy conditions, or non-standard conditions or vendor warranties inserted in the agreement by the agent that did not work in practice."Purchasers often forget that the friendly agent is acting for the vendor and I am the one looking out for their interest."That being said, I have seen clauses in signed agreements for the detriment of vendors. Just recently, there was one saying the purchaser could have access to the property from the unconditional date to complete renovations, which seemed simple on the face of it, but opened up a huge can of worms for a number of reasons, including that there was no definition on what 'renovations' meant."Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money