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. For us, we generally try to get our clients to give us a bank download of the transactions, this makes life so much easier as there is no possibility of missing the bank statement that holds up the processing time, costing you money and then not receiving your accounts for months while we wait for you to bring in the missing information.
Are you left wondering, when you finally do get your accounts what the size of the bill is going to be? it seems to get bigger every year and you have no control over it. In this day and age with the software available and the various accounting systems your accountant, who has generally done your work before, should be able to agree on a price before the work starts. Why don't you ask them for a fixed price agreement and if they're not willing to commit perhaps it's time to shop around.
The new thin capitalisation rules coming into effect at the beginning of the 2015/2016 financial year are intended to ensure that non-resident investors cannot artificially load debt into their New Zealand investments which would limit their tax exposure. Essentially these rules would limit interest deductions in New Zealand for foreign-owned entities. Think of a situation where a Kiwi has a rental property in a company or trust and then moves offshore as a non New Zealand tax resident.
As a matter of interest for those of you who have a family trust, the law commission is currently conducting a review of family trusts in New Zealand. From that review there are likely to be a number of recommendations. From what I understand, the following will mean that your family trust will no longer stand up to scrutiny in court if a creditor or beneficiaries mounts a challenge:
- If you are the sole settlor, trustee and beneficiary..
- If the trust has no bank account to record transactions of the trust.
- If the trust lacks documentation for decisions made.
- If this settlor/trustee uses the assets of the trust without regard for the beneficiaries.
Family Trusts still have their place in structuring your affairs and protecting assets. Tax should not be the sole reason why you are forming a trust. If, however there is a tax benefit as a result of good planning thats OK.
I recently had a chance to visit Trentham Military Camp in my capacity as a Rotarian on a club visit, We had the good fortune to be the guests of the New Zealand Cadet Corp. We met with the young cadets and were enlighten by the results they were achieving and their commitment to the corp. Having spoken to a number of them, I was impressed with the fact they all had goals they wanted to reach. I also have the deepest respect for Captain Lynn Hills and squadron leader Rob Foley for the time and effort they spend with their young recruits.
By Dennis O’Grady
Posted on Sun, 1 March 2015
by Dennis O’Grady