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New Property Tax for 2016

Friday, April 22, 2016

Property Sale Information 2016

The Inland Revenue has released a new Property Sale Information Form (IR833) to be completed and filed with your 2016 tax return) if taxable income results from a property sale.

 

Property sales may result in taxable income if:

-          The property was acquired with the purpose or intention to sell it at a profit;

-          You’re in or associated with the property industry (builder, land trader or developer);

-          You have a history of buying and selling property; or

-          You have owned the property for less than two years (bright-line test).

 

The new bright line test for property acquired on or after 1 October 2015 and held for less than two years, gives rise to taxable income regardless of your intention when acquiring the property.  This means that residential property sold or disposed of within two years of purchase will need to be accounted for in your tax return.  There are some exclusions to the bright-line test (such as personal homes), that the team at All Accounted For are happy to advise on.

 

The IRD has some tools to help determine if a property sale is taxable or not, what the net profit or loss might be and therefore what profit or loss to show in your tax return.  The Inland Revenue has produced a decision tree, that’s assists with determining the appropriate answer around taxation (search on the Inland Revenue website for “Property Tax Decision Tree”).

 

If you have any questions around the taxation of property or for more information on the above, contact the team at All Accounted For.


Written by Gracie Miles 


Health & Safety at Work Act Regulations

Friday, April 15, 2016

On the 4th April 2016 the new Health and Safety at Work Act came into effect.

 

The regulations, supported with information and guidance from WorkSafe New Zealand, are intended to support businesses in understanding what they need to do to ensure they are working safely.  The new Health and Safety at Work Act 2015 has a wider scope as it deals with PCBU’s.

 

 

What is a PCBU?

 

PCBU stands for a Person Conducting a Business or Undertaking; this also includes workers and employees of that PCBU.  PCBU’s have duties to ensure that the workplace is without risks to the health and safety of any person.

 

These duties include:

-      Providing and maintaining a work environment, accommodation and systems of work that are without risks to health and safety;

-      Ensuring the safe use, handling and storage of plant, structures and substances;

-      Providing adequate facilities for the welfare at work of workers in carrying out work for the business, including access to those facilities;

-      Providing any information, training, instruction, or supervision that is necessary to protect all persons from risks; and

-      Monitoring the health of workers and the conditions at the workplace for the purpose of preventing injury or illness of workers arising from the conduct of the business.

 

For failing to comply with these duties through reckless conduct that exposes an individual to a risk of serious injury, illness or death for a PCBU the maximum fine is $3 million.

  

The new law was written to include employees as well as contractors, sub-contractors, volunteer workers, apprentices and trainees.

 

Practical examples of how workers can ensure they are working safely:

-      Adhering to all safe working procedures in accordance with the PCBU's instructions;

-      Taking reasonable care of themselves and others who may be affected by the worker's actions;

-      Notifying the PCBU's health and safety officer and management of any possible health and safety breaches by others in the organisation.  All organisations, regardless of size are required to have a designated health and safety officer under the act;

-      Participating fully in all health and safety policy development, implementation and compliance;

-      Complying with all accident and near-miss reporting policies; and

-      Ensuring all personal protective equipment is worn correctly at all times.

 

If a worker is an officer (director, principal or owner) of a PCBU then the maximum penalty for a breach of the new act is a fine of up to $600,000 and up to five years imprisonment. 

 

If the worker is not an officer then the maximum penalty is a fine of up to $300,000 and up to five years imprisonment.

 

If you haven’t done so already it may be a good idea to check out www.business.govt.nz/worksafe or contact our Human Resources Expert, Gerard Stack (gerard.stack@clear.net.nz or 021-199-8881).

2015 Financial Year End

Friday, February 12, 2016

The last day for the filing of 2015 tax returns is fast approaching. We urgently require all outstanding financial information e.g. loan statements, home office expenses etc.  If you have any of this information outstanding please contact us as soon as possible.  Any tax returns that are not filed by the 31st March 2016 will trigger late filing penalties with IRD.  Late filing penalties of up to $250 will be applied to outstanding returns after this date.  Interest and penalties can also apply on any resulting terminal tax liabilities not paid by 7th April 2016.

If you need any help collating the information, give us a call and we can help you out. Online banking can be a great tool these days in locating bank and loan account transactions with search functions available, and the ability to download transactions as an excel file being incredibly helpful.

The home office expense claim is often the last piece of information we are waiting on. This gives business owners working from home the opportunity to claim for a portion of their home expenses against their income. These expenses can include mortgage interest or rent, insurance, repairs, power, gas, phone, internet and rates. A spreadsheet to assist with this can be found on our website.

As soon as you have provided your 2015 info, you can get a head start on providing us with your 2016 info.  This will help ensure your extension of time is retained for another year, and we can get your tax returns done efficiently.


Written by Hayden Ring

Targets and Focus

Ben DuflouFriday, February 12, 2016

Many of us may have made New Year’s resolutions recently, or at least thought of it.  It is the time of year where we look at our lives, decide what areas we’d like to improve and then put goals in place to make these changes.

The same principle should apply to businesses, and the beginning of the financial year is the best time to do this (if not more often).  Business owners and wider management should be looking at setting goals for the year ahead based on the direction they would like to see the business take.   Goals or targets should be focusing on the most important issues currently within the business.  Without goals or targets, it is unlikely the business’s path will change - it will just continue as it is.

With the targets established, we can then identify Key Performance Indicators (KPIs) which we can measure and track to gauge the business’s performance in these areas.  KPIs can be both financial i.e. sales $ per month or non-financial i.e. number of website visits.  Regular tracking of these KPIs will help to achieve the goals or targets you have set.

Budgets are also a good way of planning the monetary direction of the financial year ahead.  With a budget in place, we can compare your income and expenses to this budget to assess how on track the business is.  Budgets are a key tool to improving business performance.

If you would like some advice on budgets or goal-setting, please get in touch with the AAF team and we can help you get started.

New Zealand Tax Resident

Friday, January 15, 2016

Who is, or who is not considered to be a New Zealand tax resident is once again at the forefront of recent tax legislative issues.  Mainly due to the recent case considered through the Tax Review Authority, High Court and the New Zealand Court of Appeal re the Diamond v Commissioner of Inland Revenue (2014) 26 NZTC 21, 093 case.

The case hinged on whether owning residential rental property in New Zealand could constitute a permanent place of abode.  Put simply a permanent place of abode is a dwelling that the taxpayer could reside in as their primary dwelling upon their return to New Zealand.  The Tax Review Authority originally ruled owing rental property in New Zealand could constitute a permanent place of abode.  The High Court on appeal, rule that view was incorrect.  The Inland Revenue then appealed to the Court of Appeal.

The Court of Appeal determined that residential rental property owned by an individual not present in New Zealand does not automatically constitute a permanent place of abode.  If it can be determined that no rental properties have been used as a home in the past and there is no intention to use them as a home in the future, then they cannot be a permanent place of abode.

Had the Inland Revenue proved the tax payer had a permanent place of abode in New Zealand, the taxpayer would have been liability for a significant amount of tax on overseas income earned, plus interest and penalties.

There are two main residency tests to determine if an Individual is tax resident in New Zealand one is a day-count test. The other is whether or not the individual has a permanent place of abode here in New Zealand.

It must be noted that a “permanent place of abode” is not expressly defined in New Zealand tax legislation.  A permanent place of abode is currently being determined by case law.  Therefore New Zealand tax residency status needs to be determined on a case by case basis; it’s not as simple as saying “I’m not living in New Zealand, therefore I’m not tax resident”.

This particular area has wide ranging implications across a large number of New Zealanders.  If you have any questions or you have any concerns surrounding your tax residency status or are planning to head overseas, then please contact the All Accounted For team.


Written by Blake Chamberlain

All Accounted For - Public Holiday Office Closure

Tuesday, December 22, 2015

Our office in All Accounted For Limited will be closed at 5pm on Tuesday 22 December 2015 due to the Christmas holiday break.

We will re-open for business as usual on Monday 11th January 2016 at 8.30am.  We will respond to any email and voice mail messages left during our office closure.

For urgent queries, please email Ben via aafl.nz or 021-915-233.

Have a good Christmas and a prosperous New Year.


From the All Accounted For Team

Christmas Cash-flow Crunch

Monday, December 21, 2015

Christmas is here and for many people that mean’s Christmas parties, shopping and holidays. But for business owners there is also an important question:

Do I have enough cash to make creditor and loan payments that fall due over the holidays?  If not, can you chase customers with outstanding amounts and get those paid? Or do you need to arrange an overdraft from the bank or increase the limit of your current overdraft?

It is advisable to organise this as soon as possible as your bank manager may not be available through the festive season.

And don’t forget about tax.

GST for the 30 November period is due for payment on 15 January 2016.  If we prepare your GST returns we will be advising you of the amount due for payment before Christmas.

15th January 2016 is also the due date for the second instalment of 2016 provisional tax.  Again if you are a provisional taxpayer on our agency list, you will have received a notice from us confirming the amount due.

There are options around financing tax payments as well, at interest rates much lower than bank overdraft rates.

If you take some time to plan your cash flow now you will be able to look forward to the holidays too!

If you need any assistance with this please contact us now. 


Written by Allison Henderson

Declaring Income within the Construction Sector

Monday, December 21, 2015

Increasingly we are seeing IRD targeting certain industries in an attempt to curb tax evasion. Recently we have seen them spend more time, money and resources into catching people who are evading tax.

One of the industries that the IRD are currently targeting is the construction sector. An increased volume of business within the construction industry (Auckland & Christchurch in particular) has increased the IRD focus around tax compliance. Clients in the construction sector may hear from IRD soon (if not already) regarding their obligation to declare all their income, including cash jobs – no matter how big or small – when they file their upcoming GST return and/or income tax returns.

As Chartered Accountants and an IRD approved tax agent, we have an important role to play in ensuring our clients are not committing tax crimes. The consequences of being caught can include tax penalties or criminal convictions that could even lead to imprisonment, which would have considerable impacts on one’s business and personal circumstances.

Some basic reminders for effective record keeping are; keeping receipts for all transactions, keeping records for 7 years, backing up electronic records (Xero is perfect for this), using separate bank accounts for personal and business transactions and recording wages/PAYE correctly (Smartpayroll is ideal for this).

If you are contacted by the IRD directly or require any advice with the above, please contact us as immediately.


Written by Hayden Ring

New Information Compliance in the Property Investment Sector

Friday, November 27, 2015

Additional information disclosure requirements came into effect on the 1st of October 2015 regarding the transfer of land/buildings and property investment as amendments to the Tax Administration Act and Land Transfer Act.

These changes require additional information disclosure to Land Information New Zealand (LINZ) upon the transfer of land and buildings, other than that of your main home that you reside in. Most commonly this will relate to anybody selling their rental properties.

The additional information gathered by LINZ will then be passed onto the Inland Revenue (IRD) which will enable the IRD to access this information on a real time basis.

The purpose behind the changes, is to make it easier for the IRD to ensure compliance with the new tax rules around disposing of property within the first two years of ownership.

The additional information required to be disclosed upon sale of properties are:

  • Bank Account Number (If residing offshore, you need to setup a bank account in order to obtain an IRD number);
  • IRD Number or tax identification number.

A Land Transfer Tax Statement will also need to be completed and provided to LINZ as part of the transfer documentation (usually complete with your lawyer).

For your convenience, you will find the statement by clicking on this link - Land Transfer Tax Statement.

Although we have provided a summary of changes which have taken effect on the 1st of October 2015, there are still a number of complexities as a result of the amendments to both the acts outlined above.

If you have any questions please feel free to get in contact with the All Accounted For team, whom can talk you through your specific scenario.


Written by Blake Chamberlain

Xero Invoice Reminders

Friday, November 13, 2015

Xero has just released a function for Xero users who invoice through Xero to automatically remind customers when their invoice remains outstanding.  This is a great little addition from Xero and is a simple way for organisations to stay on top of their receivables.  It is sure to improve cash-flow for organisations that choose to use this function.

Enabling the Invoice Reminders is simple – in the awaiting payment tab in sales, there is an ‘Invoice reminders off’ tab to click.  From here you can turn on the reminders function, edit the stages you wish for customers to receive the reminders or stick with the default intervals of 7 days, 14 days and 21 days overdue.  Customers who have overdue invoices at these intervals will then receive a friendly reminder email automatically.  You can use the default wording for these reminders or edit these to add your own flavour to the messages.  There is an option to exclude specific customers from these reminders.

One caution for those who intend to use this – make sure you stay on top of your reconciling of your bank transactions so that all deposits received have been matched off against the appropriate invoice.  This would save your customers from receiving an unnecessary reminder from you when they had in fact paid you. We recommend reconciling your transactions daily. 

The Invoice Reminders will be a simple and effective debtors management tool which will improve your cash-flow and save you time from having to individually remind late payers. 

If you would like any help with this or debtors management in general, please give the team a call.


Written by Dylan Guitry

Chartered Accountants Smart Payroll Xero Certified Advisor