Help I have no idea what it all means.Ok, so you have received your tax return from the accountant and it looks like gibberish with no recognisable term’s, yet.Below is a number of the term’s that you may find on your tax return summary, these are in order that they would appear, and a description of each. If its not on your summary don't worry it does not apply to you. If you have something that is not on the list, please feel free to email us so we can update this page.   Read More...

Payday filingFrom 1 April 2019 employers must:file employment information every payday instead of an Employer monthly schedule (IR348)provide new and departing employees' address information, as well as their date of birth - if they have provided it to you, andfile electronically (from payday compatible software or through myIR) if your annual PAYE/ESCT is $50,000 or more.Note: The due date for payment remains the same at the 20th of the month (or 5th and 20th of the month for twice-monthly ...  Read More...

Tax Working Group Interim ReportThe Labour Government established the Tax Working Group (“the Group”) in January 2018 to review the existing New Zealand tax framework and to provide recommendations for improvements to the fairness, balance and structure of the tax system over the next 10 years. An Interim Report was released on 20 September 2018, to provide interim conclusions on twelve areas of concern for New Zealanders, based on the thousands of submissions received during their t...  Read More...

Spring is here!There is no better time to clear out old clutter. So while you are having a quick clean up around the house why not look at that musty box in the shed full of old records. The general rule is 7 years for all records, electronic or paper from bank statements to receipts.There are two main exceptions to this 1) Trust financials (these need to be kept longer depending on what it is).   Read More...

There is a growing trend for businesses today, whatever their size, to move to the “cloud”. The cloud is an online platform to make data and software accessible, anytime, anywhere and from any device. Gone are the days of being chained to your desk in a small cubicle.   Read More...

Another so-called tax ‘loop-hole’ about to be closed:On the Labour party's pre-election tax policy wish-list was the ring-fencing of residential rental losses. Over the weekend the Revenue Minister, in his speech to IFAC in Queenstown, confirmed that this was a current priority of the Government and we are therefore likely to see draft legislation to this effect in the next Tax Bill. This will mean that investors will no longer be able to offset tax losses from their residential ...  Read More...

Brightline Test ExtendedWe wanted to alert you to the fact that the government has now introduced legislation to parliament that will make good their policy of extending the existing 2 year bright line test to 5 years.The bright line test will impose income tax on any gain made from disposal of a residential property that is acquired and sold within five years, regardless of the reason it was purchased and regardless of whether the owner is a property developer or dealer.There are exemptions for...  Read More...

Is The Grass Really Greener On The Other Side.Once again the migration numbers are starting to flow back to Australia. It is timely to point out to those that have not immigrated to Australia in the past (and those that have forgotten). Unlike New Zealand Australia does have a capital gains tax.   Read More...

Lets keep an eye on the Government's wish-list of tax policies over the next three years and see how effective they’ve been getting their policies adopted. I will be reviewing their wish-list on a six monthly basis.Given no one policy is common across the three parties it will come down to negotiations as to what polices get to see the light of day.  The tax policy wish-list of the new Government includes:LabourReverse National's tax cuts that were to take effect from 1 A...  Read More...

Sneezing colleaguesModern workplaces are increasingly open plan, so sneezing colleagues are hard to miss during the flu and hay fever seasons. Many would be able to name one or two people with particularly loud or interesting sounding sneezes, but funnily enough research has found that the sounds made when people sneeze are all for show.The usual ‘achoo’ sound so many of us make when sneezing is specific to English speakers. The Japanese sneeze is a “hakashun”, with Filip...  Read More...

Traddies have been under the watchful eye of Inland Revenue (IRD) for the last few years since being identified as a cash-dominated industry in 2012. A media campaign has recently been launched to warn tradespeople that doing ‘cash jobs’ may comprise tax evasion, and that every cash job leaves a trail (or lack of a trail) that can be tracked by IRD.  Tradespeople risk substantial financial consequences if they are caught understating taxable income in their tax returns.   Read More...

Business owners and managers are often focused on a company’s financial performance, return on investment and other monetary indicators of business success. Intangible investment in human capital can commonly be overlooked as it can be difficult to measure improvements, or any direct increase in outputs. However, employee effectiveness is critical to the performance of all business processes. There are numerous approaches that can be used to increase the effectiveness of employees, of...  Read More...

In today’s fast changing commercial environment, it is common for employers to provide board or accommodation to employees, and move staff to new locations based on the needs of the business. This can occur when permanently moving an employee to a new location, or when temporarily seconding an employee to a different location. The value of board or accommodation provided to an employee generally comprises income of the employee and is subject to PAYE. However, in relocation scenarios,...  Read More...

The condition of New Zealand’s housing stock was hotly debated during the lead up to the election. Houses that were acceptable in the 1970’s are now considered outdated and low quality for 21st century living. With the introduction of a new Government we are waiting to see what changes will be implemented for landlords, for example, will a housing Warrant of Fitness be introduced? Landlords may need to incur significant improvement costs to bring properties up to the required st...  Read More...

Hmm. Cars. Wonderful things. But when the dog has run out of seat belts to chew, when the kids have thrown up over every inch of the interior, when the engine drips more oil than an Italian playboy in summer and when it whines in first gear louder than a Lada, there isn't a better time to drop it off at the wreckers and buy a new one.Buying a new car for a business is more interesting than one just for the family.   Read More...

It was one of those days at the office. You know what it’s like: the electricity bill had just arrived showing I owed the gross national product of a small African country; the computer had sucked up a bad dose of bytes and was coughing and dying on me; the staff were bitching again for chocolate biscuits at morning tea and it had been raining for most of the winter; my head ached, it always ached. I was in a bad way and I knew it could only get worse.   Read More...

We are now well into this financial year and chances are you have only received your accounts back recently from your accountant, if at all. How relevant are they considering they’ve usually only been prepared for tax purposes. Historical information compared with what’s happening now, maybe? Do you just look at the page that states how much tax we are to pay or do you look at the big picture and  take an interest in how the business is doing? Ask most business people ...  Read More...

A  little shot across the bowsIf you’re a building contractor of retirement age and are considering winding down but not completely stop working and not filing an end of year tax return, then be aware that there are community compliance officers from Inland Revenue that are ever present.The IRD's mileage rate increases for the 2017 income yearThe IRD's mileage rates for the 2017 income year for vehicles with business travel of 5,000km or less in an income year have been set as...  Read More...

If you are a contractor, or engage the services of a contractor, are you up to speed with the changes to the withholding tax rules?From 1 April 2017, contractors can elect their own withholding tax rate.  This means they no longer have to have tax deducted from their payments in line with their flat rate under the withholding tax rules (otherwise known as the Schedular Payment rules).Schedular payments apply to contractors across a broad spectrum of industries; from cleaners, farmworkers an...  Read More...

Over the past month or two I have had many inquiries from people wanting to either develop their Kiwi quarter acre or buy a rundown property and do it up for sale. A word of caution here should be heeded. After talking to the excited and energetic punter in most cases after going through the scenarios with them we find there is little or no money in the deal and in some cases they can also lose money.  The new brightline test is having a devastating effect on budding property deve...  Read More...

For most taxpayers, 31 March represents the end of the financial year. In the lead up to ‘year end’ there are a number of actions that business owners may want to take to avoid missing the boat on simple tax planning opportunities.Trading stock: stock can be valued at the lower of cost and market selling value (“MSV”), and generally it will be beneficial to use a lower MSV where possible. But to use MSV you must have evidence that this represents the market value of the s...  Read More...

What you need to knowLike any small business, if you rent a home you have customers — your tenants — and  there are laws you need to understand. You have to be aware of the property, the people, the paperwork and the processes, and as with any business, things keep changing, eg:smoke alarms are now compulsory in your rental home and you must fit the right type in the right places.all your new tenancy agreements must now include an insulation statement disclosing if there is insulation,...  Read More...

Have you given your business a health check lately?Looking for ways to improve anything in your business from cash flow to your free time?If you do your own tax, chances are you know how your business is doing. You know how long your cash flow cycle is, productivity, EBIT and GROSS profits are. However, there are many people out there who don’t do their own returns, or worse yet, do their own returns but don’t even know what a cash flow is.A Doctor knows when you have Tonsillitis, ev...  Read More...

Business PlanningWe  often hear the famous quote by Benjamin Franklin “if you fail to plan, you are planning to fail”. Oh, this is so very true. Often I see clients that have no idea what their charge-out rate should be.   Read More...

The new insulation requirements apply to social housing from 1 July 2016 and all other rentals from 1 July 2019. Landlords must include in all tenancy agreements from 1 July 2016 a declaration of the level of insulation underfloor, in walls and in the ceiling, and all insulation installed from 1 July 2016 must be to the latest 2008 standards.The question of whether a cost is deductible maintenance or a non-deductible  capital improvement is often a grey area. The tax department's typic...  Read More...

We all know that bad service is one of the biggest reasons people stop doing business.We recently encountered some poor service ourselves and despite a number of attempts to have the situation rectified we are left hanging. Rather then allow other people in our wonderful community (recent crimes aside) to suffer too, we thought it prudent to give you a story that may just save your business.Just the facts: Back in November 2015 we were approached by our then mobile phone service provider and adv...  Read More...

Are you prepared for the new Health & Safety Changes? The Health and Safety at Work Act 2015 came into force on 4th April.  Here's what you need to know to ensure your business is compliant with the new Act.   Read More...

Many businesses operate via a company and then are unsure what to do with it once the business is sold or ceases to trade. Often companies are kept just in case they can be used again at a later date. These days it is so quick and easy to form a new company.   Read More...

Consider this: Do you have savings, investments, or a  business Own assets(I.e. a house and a rental property) Or if you have children I'll put the scenario to you, you and your wife have children, own your own home with some debt attached to it,    Your ultimate aim is to provide for your children now and as they grow up. Unfortunately you suffer from a terminal illness and you pass away, leaving your wife and children to carry on without you.   Read More...

These changes are unprecedented in NZ history; the government have set a goal to reduce workplace injuries and deaths by 25% by 2020. The Government are committed and they mean business. The existing health and safety laws are being thrown out and a new law based on Australian health and safety model is planned to be introduced  on 4 April 2016 Why have the changes been made?   Read More...

Business tips for your business Something to think about to start off the new year If there’s a universal principle to remember when getting into business, that one rule might be ‘know what you want to achieve in business.’ Business can be a complex (and at times frustrating) affair, but having clear commercial objectives can be the difference between success and failure. We have some tips to keep your business in tip-top shape. Planning for success Return of Investment: Before undertaking any c...  Read More...

Don’t Run The Risk (From the Archives But Still Valid) It was one of those days at the office. You know what it’s like: the electricity bill had just arrived showing I owed the gross national product of a small African country; the computer had sucked up a bad dose of bytes and was coughing and dying on me; the staff were bitching again for chocolate biscuits at morning tea and it had been raining for most of the summer; my head ached, it always ached. I was in a bad way and I knew it could only...  Read More...

What’s all the noise about property So you are asking why has property investing become the preferred choice over the  more traditional form of savings, let’s look at the illustration below. Bear in mind property investing should be regarded as long term investing. The assumptions used I’ve got from Q V, Interest.co.nz and Tenancy Services.   Read More...

The Taxman may come knocking A large percentage of audit targets used to be selected randomly. Time has certainly moved on and Inland Revenue (IR) now has much more sophisticated methods of targeting non compliers through methods such as ‘data mining’. For example the Land Information New Zealand (LINZ) database could be searched for entities that transferred more than a certain number of properties.   Read More...

May’s Tax Talk   Changes to Director requirements to take effect from 1 May 2015 Unlike many other countries (e.g. Australia), there has historically not been a requirement for a New Zealand company to have a New Zealand resident director.This has made it fairly easy for non-residents to set a company up in New Zealand and not have to engage a person in New Zealand to act as director for the company.Some time ago proposals were raised that would significantly change the director requirement...  Read More...

Family trusts I have been called upon on two occasions since Christmas where the Ministry of Social Development has called for a full set of financial statements for a family trust, where one of the settlors has applied for a Residential Care subsidy.  This once again highlights that family trusts are increasingly coming under the microscope.  If you want to use your trust correctly, then it's important that all documentation be correctly completed, along with the financial statements ...  Read More...

Isn't that great we’ve been enjoying a better summer than usual, and now we can look forward to a new financial year. With this in mind you need to think about what's important to your accountant when you are providing them with your end of year books.  Apart from the usual things like debtors, creditors and work in progress, clients seem to forget to sign their end of year questionnaires and ensure all the bank statements have been provided if you still work on a manual system.   Read More...

I look back over the last 20 years and see that our clients are becoming more aware that, regardless of what type of business they are running, that being in a successful business is not just about selling a product or service and getting paid for it. Now it's essential that they have a business plan, develop the markets, test the products or services to meet the market expectations, then measure and plan for growth.  Ultimately they need to plan to sell either  because they see the bu...  Read More...

In the beginning the work involved was very much tax compliance but over the years that focus has shifted slightly to planning, structuring, education and support as we see compliance becoming more a by product of what we do. Over the past twenty years, I can boast a very good staff turn over record, having employed seven support staff in this period: Two of them have gone on to become qualified Accountants in their own right, one works for me remotely, another is now employed by my wife, and no...  Read More...

On 19 December this year I will have operated from my current location   for exactly 20 years. At the time I was looking at setting up my practice the choices were either Naenae or Stokes Valley, I guess my loyalties lay within the Valley, at the time the building had recently been vacated by a video hire business the interior resembled The dark hole of Calcutta with the interior being painted black and what was left of the floor coverings were meant to be green and black thread bear t...  Read More...

“I Wanna Buy a Business” It appears the economy is picking up because I’ve been getting a number of inquiries about people wanting to buy a business. Lets look at Jack Reecher who visited me recently, he’s ex military been bumming around for the last ten years getting himself into all sorts of trouble, as a result his health is not good, he's managed to acquire a house that he can use as security, but has no savings. Jack’s found a business that appeals, he’s had a chat with the owner that tells...  Read More...

For many years it was acceptable to put the payment along with the form in the mail at 5pm the day it was due. However, IR are making it increasingly difficult to run your business without online banking and the internet. Inland Revenue (IR) has made this clear to tax agents.   Read More...

A few years back a Trust owed IRD a substantial amount of money. The trustees of said trust skipped New Zealand and moved to Australia. Rather than deal with international debt chasing, IRD took an Auckland lawyer to court and held that as the “Professional Trustee” he was just as responsible for the debt.   Read More...

By now your accountant should have your work. Is it done yet? Did you find a good accountant and work with them to get the information to them in the best possible way?   Read More...

With another year gone it’s time to start the new financial year. Have you set your new financial year resolutions yet? Perhaps it is to have more money in the bank, break into new markets or maybe make your accountant smile and clean up the accounts.   Read More...

If you read last months article you should have found a good accountant or realised the devil you know is better than the one you don't. If you missed it you can always catch up by visiting our website (www.taxman.co.nz). Now that tax time is upon us it is time to make sure you drop off all the right information.   Read More...

Every business has them, the car yards refer to us as tyre kickers. As a shopper you are “just browsing”. What ever the term, we all need to look around to see what is out there and judge the market for ourselves.   Read More...

What is often described as a tax is not a tax.  It is a limitation on the deductibility of expenditure for taxation purposes and at this time of year the rule bites into the festive joy. So as you prepare for Christmas fare you should be aware that certain expenditure on ‘entertainment’ will only qualify for a deduction of 50%. To even get a deduction for 50% you must first pass a test which is that any entertainment must be in relation to the running of your business.  The rule does n...  Read More...

Over the last six months there has been a marked increase in the number of business sale transactions taking place, as the overall business landscape and confidence continues to improve. As part of this process it will often require a due diligence to be undertaken. So what is due diligence and what's involved?   Read More...

As accountants, we come across many business owners who haven’t given a lot of thought to what their longer term plans are.  Often they are continually bogged down in the daily routine and don’t take the time out to plan for the future. When we ask the question ‘what do you want to be doing in 5 to 10 year time’ often the answer is that they want to have exited their business, or at least be in the process of exiting.   Read More...

Succession planning in action: Dennis O’Grady is bringing his son Shawn into his accountancy business. Stokes Valley Accountant Dennis O’Grady is a firm believer in succession planning. In fact he has written articles about it in the Stokes Valley Times.   Read More...

With the property market continuing to rise to pre-2007 levels we are seeing a number of Property investment "guru's" come back to their old jobs. Unfortunately, some of the gurus are still giving the same advice they did back in 2007. I don't know what they do when there not selling the idea of investment property to people.   Read More...

Who needs to talk to their accountant and solicitor, they only ever send you a bill. With the market looking up we are seeing the banks start to talk to their clients and offer great deals to ease the pain of making payments or offering mortgage top ups. The latest property sales information shows some areas ofAuckland have gone up 12% compared to last year.   Read More...

Cash Flow problems are one of the biggest reasons why businesses in the New Zealand fail. We have all heard of the expression "cash is king" but it really can make the difference on whether a business succeeds or fails. Businesses generally over- focus on profit and turnover rather than their cash needs.   Read More...

To Protect Important Assets: Assets can be put at risk in a number of different ways. These can include business failure, legal action or a relationship breakdown. We also do not know what the future holds.   Read More...

A recurrent issue faced by many taxpayers is whether expenditure that they incur on “repairs and maintenance” is deductible, or whether the expenditure must be capitalised. The answer to this is often not clear cut. The IRD has recently released an Interpretation Statement IS 12/03 entitled Income Tax – deductibility of repairs and maintenance expenditure – general principles, which seeks to clarify the position for taxpayers.   Read More...

Good old Kiwi ingenuity has seen many businesses “tack on” and “patch up” their accounting software systems to enable them to keep operating without having to go through the expense of an upgrade. But at what expense? For the past few years many businesses have "put off" investing in their accounting system in favour of improving other areas such as sales and production efficiency i.e.   Read More...

Question Our client, a company owns a residential property in the Bay of Islands. The property is rented out usually on a short-term basis to holiday makers. Occasionally family members use the rental property.   Read More...

In 1987 when a business and a customer interacted it was either face to face, via a land line telephone, via the postal system or occasionally via fax. When a letter was sent, it generally spent about three days in transit and if a reply was received within a week that was considered quite efficient. Jump forward 25 years and the range of communication options has vastly expanded, with email, cell phones (voice and text) and the internet leading the charge.   Read More...

ACC Levies on Rental Income An ACC representative has recently visited my office recently. He mentioned that if a rental property was managed by a third party then the rental income can be classed as passive. If the owners were managing the property themselves the rental income should be classed as active for ACC purposes.   Read More...

There are many small but legal ways of ensuring the tax system is working for your business and not against it. Effective strategies for managing and minimising tax are important. We have all heard the statistics, at least 50% of new businesses failing in the five years.   Read More...

The main types of business structures for owning and operating a business activity in New Zealand are; Sole trader (direct investment) This refers to a person carrying on business by themselves under their own name or under an unregistered trading name. All profits generated are taxed in the hands of the person who owns the business. There is no legal separation between the person and their business, therefore the owner is personally liable for all debts of their business.   Read More...

Motor Vehicle Allowance Question We have a client who is going to pay an employee a car allowance, instead of providing them with a vehicle. How is this treated for PAYE/GST/FBT purposes? Answer Travel allowances are tax free to the employee, i.e.   Read More...

It is clear that in the current economic environment local businesses are feeling the pinch. These are certainly difficult times, but how can businesses not only manage their profitability, but also seize new opportunities? Here are our top four tips to flourish in the recession.   Read More...

Some SMEs are looking to sell, and there are plenty of buyers out there looking for good quality businesses. They are looking to bulk up and get greater critical mass than organic growth can bring. The first part of the year will be a busy time for this.   Read More...

Tax Credits Are you missing out on your donation tax credit or deduction? Over the past couple of years there have been significant changes to the treatment of donations for individuals and companies: the cap on the donation tax credit claims have been increased, access to donation tax credit claims have been accelerated through the payroll giving system and close companies can claim deductions for donations made. For the most part it appears many people are unaware of the lifting of the cap on ...  Read More...

Managing Growth Turnover and profitability of many businesses go backwards in recent times and people are nowstarting to look at how they can move things forward again. The important thing to realise when dealing with a growing business is that growth generally requirescash. If we use a typical importer / distributor business as an example, in order to sell more stockto its customers it first needs to purchase more stock from its suppliers and this will require funding.Once this additional stock...  Read More...

There's a joke doing the rounds at the moment. It goes something like this: Labour's latest tax policy It always gets a laugh. Mind you, National has had some funny one-liners too.   Read More...

With the current economic market there are a lot of excuses why your business is not making more money than this time last year, HOWEVER, there is no good reason. We are now over halfway through this financial year and chances are you have only received your accounts back recently from your accountant, if at all. How relevant are they considering they’ve usually only been prepared for tax purposes.   Read More...

Many of you reading this article will know of recent business failures, some of which will have had a direct impact on your own business. Sadly, many of these failed businesses may well have been profitable and failed simply because they ran out of cash. The importance of cash to a business can easily be compared to the importance of air to a human – cut off the supply and the end is imminent.   Read More...

The Facts about the abolition of gifting If you have a family trust and are currently on a gifting programme then you need to read this article carefully! Traditionally, the annual gifting programme has provided an opportunity for clients to turn their mind to the administration of their trust on a fairly regular basis. With the new proposed new rules, the need for vigilance in keeping track of assets settled upon the trust and noting of advances or debts that have been advanced or repaid will b...  Read More...

We all know just how fun it is to receive a call from our accountant only to learn that you have to find $15,000 for terminal tax, so why not pay your slaves. Many of you are probably thinking since when does your accountant tell you to give your money away and who has slaves? Often all we think about is our jobs and letting the accountant sort out how much tax we should pay at the end of the year.   Read More...

From 1st April, 2011, where the Vendor and Purchaser in a Land transaction are GST registered and the purchaser uses the land for a taxable activity, then the transaction is deemed to be zero rated for GST purposes. What is the significance, you may ask? Well, if you are a property trader or property developer, it is very significant.   Read More...

The other day I was attending a personal appointment and overheard someone mention they were going to find a new accountant. I smiled to myself and was about to chime in and sell my services. However, before I knew it they were discussing why they were changing.   Read More...

Your Accountant should be proactive, up to date with Tax Laws, willing to listen to you, the client. Recommend a good approach to your problem. Work for you, not the taxman, within the laws provided.   Read More...

With all the media hype you could be forgiven that Property Investors are well and truly in the crosshairs:- But just let’s reflect for a moment we have: No capital gains tax No ring fencing of tax losses No land tax No deemed rate of return tax No stamp duty No death duty And now, the removal of gift duty.  So, aren’t we the still the lucky country? The only thing that has happened is the removal of depreciation and that was an absolute slap with a wet bus ticket! Depreciation was always s...  Read More...