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Business Continuity Planning

This service may be fully funded by the regional business partners network. If your business qualifies, you can get our COVID-19 specific business support services (up to $2500 per service). The funding will not last forever, so let us know that you are interested, and we will connect you with our Growth Advisor so that it is fast-tracked.To help speed up the process make sure you register with the Regional Business Partners Network – this only takes 5 minutes: Register your bus...

Cashflow Forecasting

This service may be fully funded by the regional business partners network. If your business qualifies, you can get our COVID-19 specific business support services (up to $2500 per service). The funding will not last forever, so let us know that you are interested, and we will connect you with our Growth Advisor so that it is fast-tracked.To help speed up the process make sure you register with the Regional Business Partners Network – this only takes 5 minutes: Register your bus...

Update on Finance Applications

We are experiencing a record low interest rate environment, currently below 2.55% pa. This makes borrowing money cheap and attractive for capital expansion such as a new rental property, capital equipment, buying a new business, funding growth, or consolidating debt.However, banks are being more restrictive for new lending and looking at each application in depth. We noticed this trend from the banks last year when interest rates dropped below 3%. Since Covid-19 the banks have tightened their le...

COVID-19 Proposed Tax Changes

The government has announced a $12bn economic stimulus package to assist with Coronavirus. Here are some of the key tax proposals These changes are yet to be passed through law and some of the specific information is yet to be finalised. Most changes are proposed to have an effective date of 1 April 2020. We will continue to provide more information as it becomes available.If you would like to discuss how these may affect you, please don’t hesitate to contact us. Inland Revenue has the discret...

Upcoming Tax payments due: 7 April 2020 and 7 May 2020

2019 terminal tax payments are due on 7 April 2020. All our clients will now have received notification via email or phone if you have a payment due.If you are currently experiencing cash flow difficulties to meet these payment (related or unrelated to Coronavirus) please let us know as soon as possible. There are options available as outlined below.2019 Terminal Tax Payments due 7 April 2020 – Options AvailablePayment arrangement with IRDThis allows you to pay off the tax over time in regular...

GST Zero Rated Property Transactions

We regularly review land transactions where either the purchaser or vendor are GST registered, but the other party is not. This inconsistent nature of each parties GST status may result in some uncertainty over the price of the land and have potential significant consequences.This article outlines the GST status of contracts based on different circumstancesWe normally experience these types of transactions when:purchasing or selling lifestyle blockspurchasing new properties from GST registered d...

Back to back loans & interest deductibility

When a business borrows money to earn taxable income, the interest cost will be tax deductible. The key test is the “use” of the borrowed money, rather than the purpose of borrowing. There must be a clear nexus between the interest incurred and the production of taxable income.In determining the use of the borrowed money, the “flow” of money is traced. SecurityThe security provided for the borrowing does not determine tax deductibility. For example, if a business borrows money to bu...

Companies with Losses Carried Forward

Companies may have losses carried forward from a prior year. Losses may have resulted from losing money in a previous business venture, one-off signature expenditure (e.g., significant repairs and maintenance on a property), or during the start-up phase of a new business.This article will explain what losses carried forward are, how they can be utilised, and in some situations how it may be appropriate to utilise the losses over more than one year. What are tax losses carried forward?If a c...

Proactive ways to manage your tax

Benjamin Franklin said there were only two things certain in life: death and taxes.What if there was a better way to manage paying tax on your terms that suit you?Tax Pooling is a system, that allows taxpayers to pay provisional tax when it suits, while ensuring that Inland Revenue (IRD) receives the tax it’s owed on time.Taxpayers can customise payment arrangements so they can pay tax when they have cash, or delay payments if they have temporary cash-flow shortfalls.Tax pooling prev...

Differences Between Cash and Profit

Cash is king! Do you make a profit, have tax to pay but wonder where your cash is going?There has been increasing discussions about the economy potentially slowing down. Experience shows that those in a strong cash position have opportunities available in a downturn; normally due to others bad fortunes or over-extending themselves. Those struggling to meet payroll, pay supplier invoices or stuck with old stock they cannot move have more risk.This article uses several real-life examples to explai...

Helping Your Child Into Their First Home

We have recently had several conversations about helping children into their first homes. Some parents have an inter-generational view of wealth and like to pay it forward by providing an early inheritance.There is no one size fits all approach for this process, or any family succession strategy. Individual specific advice is recommended.This article explores options available to help your children into their first home and outlines some risks to considers.If the child has a partner and they int...

Combined Business & Personal Travel

Business travel often provides a great opportunity to add a few extra days to explore a new location or rest and relax and enjoy some time away from home. This article outlines the tax-deductibility for business travel that includes a personal element. ...

Comprehensive Guide to PayDay Filing

Payday FilingFrom 1 April 2019 payday filing is mandatory. This means that each payday employers will be required to file employees earning details to IRD.Summary of PayDay filingEmployers must file employment information every payday instead of monthly PAYE returns.  Payments to IRD remain the same, due by 20th of the following month.PayDay filing provides IRD with new and departing employee contact details such as address, including date of birth....

Ring Fencing of Rental Losses

IRD recently released draft legislation for ring-fencing of rental property losses.Currently, if a rental property makes a loss, that loss is offset against other employment income and normally results in a tax refund. From 1 April 2019, IRD have drafted legislation that this will no longer occur. Instead the loss will be ‘ring-fenced’ and only able to be off-set against future rental profits.Currently, this legislation is only in draft and can be viewed here.The key points are:Start da...

Holiday Pay Guide

If you’re unsure what days and amounts (i.e., time and half and a day in lieu etc) you need to pay your employees over the holiday period, our holiday pay guide may helpThis year Christmas day and New Year’s Day fall on a Tuesday, and Boxing Day and the 2nd of January fall on a Wednesday. There are no special rules for these public holidays this year. For holiday pay purposes, the public holidays are observed on the days they fall on.What to pay your employee if they don’t work the public ...

AirBnb & GST

A short-term holiday rental, Airbnb, Book-a-Bach (etc) activity, is considered a taxable activity for GST purposes. Therefore, the ordinary GST rules apply. GST registration is compulsory if your annual turnover (total rental income) exceeds $60,000. You can also voluntarily register for GST.The GST rules for short-term holiday rentals is different from a residential rental property which is GST exempt.In the examples below, we refer to GST being repaid on sale. This does depend on the GST statu...

Are repairs & maintenance tax deductible after the tenancy agreement has ceased?

It is common for a rental tenancy agreement to end, and then the owner may decide to sell the property or move into the property themselves. If the property has been rented for some duration, some repairs and maintenance may be required.There is normally no doubt that the specific wear and tear occurred during the period the property was rented. Logistically, after the tenant moves out, this presents a great opportunity for the owner to arrange for the repairs and maintenance without the hassle ...

End of Year Financial Checklist

31 March - End of Year Financial Checklist With year-end a few days away have a read of our checklist below to ensure you are prepared. Contact us with any questions you may have.Income:Did you make more money than last year? Let us know so we can review your provisional tax payments and update any forecasts. If you’re a GST client or farmer client we monitor these throughout the year.Expenses and Deductions:    1. Bad DebtsWrite off bad debts in your accounts receivable ledger befor...

Tax on Mining Cryptocurrency

This article applies to mining cryptocurrencies. My previous article ‘Are bitcoin and cryptocurrency gains taxable income’ provides a general overview for those purchasing crypto. The process of mining crypto currencies normally involves using capital assets (specialised computer hardware), to solve algorithms, and cryptocurrency is received as a reward (income). The miner is providing a service (solving an algorithm) and in return being paid in cryptocurrency. The miner will pay tax on...

Are bitcoin and cryptocurrency gains taxable income?

With increased investment activity in bitcoin (btc) and cryptocurrency, it’s important to consider any tax consequences that may arise.  Outlined below are the tax consequences for probably the most common situation we see; btc purchased for long term growth.  If you acquire btc for the purpose of disposal, IRD default position is that any gain or loss will be taxable income. This is their default starting position because btc is normally acquire for the dominant purpose of disp...

How to pay 0% interest on debt

This is a strategy available to save money on interest, or provide cash (interest free) for investment opportunities.The below strategy outlines exactly how to save up to $4k pa in interest OR earn a $2,600 return by using a balance transfer method.This material has been prepared for informational purposes only, and should not be relied on for tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction...

Tax exemption available for gifts to employees

This applies to:Employees of companies only, includes shareholder employees, but not LTC shareholders unless they are paid a PAYE salary (if you’re unsure, ask us) Background information:Normally, if a company provides a benefit to an employee (such as a gift), it is subject to Fringe Benefit Tax (FBT). This means that the value of the benefit provided to the employee is taxed (at the FBT rate of 42 - 49%). A FBT return must be filed and the FBT tax must be paid to the IRD. However:There ...

Government Policy Changes for Small Businesses

Following our recent article about the tax changes of the new government, we’ve outlined some further policy changes that will effect small businesses and property owners:Minimum wage increases to $16.50 from 1 April 2018This is an increase of $0.75 per hour from the current $15.75 per hour, and Labour plans to increase this further to $20 an hour by 2021.Small businesses will likely be hurt as the minimum wage gradually increases. There is also the potential for consumer prices to increase (a...

New Government - New Taxes

Below we outline some of the tax changes that the new government is likely to phase in. These have not been passed into law yet and will keep you updated when they do.No new tax cuts from 1 April 2018 (that National previously announced).We mentioned in our June 2017 Newsletter about Nationals tax cuts that were being introduced on 1 April 2018. These were going to result in the average New Zealander earning $52k pa to be $20 per week better off.These tax cuts are not likely to happen ...

A New Way to Pay Tax

New Provisional Tax Method - Accounting Income Method (AIM) From April 2018, there is a new provisional tax calculation method called the Accounting Income Method(AIM). AIM allows for businesses with sales of less than $5m to meet their provisional tax obligations as the year progresses and minimise any use of money interest costs. Currently provisional tax is calculated on prior year tax liability and Inland Revenue's (IR) thinking is to make it easier to pay your&...