- Client Due Diligence Update
- 31 March 2019
- Postdated Cheques
- GST & Provisional Tax
- Christmas Closure 2018
- Phone Issues - 05 November 2018
- Tax Notices
- Invoice and Statements via Email
- Tax Payments Online
- IRD Cheque Payment Changes
- Banklink Access Violation
- Tax Return Disclaimers, Financial Accounts, Company and Trust Minutes
- Taxing Lump Sums & Bonuses
- Christmas Functions & Gifts – Tax Deductibility
- Tax Refunds - Bank Accounts Required
- Kiwisaver Employer Contribution
- Accounting Software
- Accommodation Provided to Employees
- Minimum Wage
- Donation Rebates
- Vehicles and Tax
- Foreign Investments
- Up and Coming Changes - Online Sharing
- Labour Day
Client Due Diligence Update
From 1 October 2018 Accountants have been required to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). To comply with the Act we are required to do customer due diligence on our clients.
This means we need to have on file verification of your identity and proof of your residential address. A JP, Solicitor or Chartered Accountant needs to sight and certify the following:
A passport that is not expired and has been signed OR a current drivers licence paired with either a birth certificate / EFTPOS card that is not expired, has been signed on the back and has your name printed on the card (not 'cardholder').
A utility bill or bank statement that has been issued in the last 3 months and is not in a Company or Trust name.
If you could please return these certified documents via email to email@example.com or bring into the office, if you have not done so already. We do not need the originals.
31 March 2019
The last day of March is fast approaching and we are getting ready to roll into our next financial year. Our team is working hard for the last push of financials and ensuring everyone has all assets covered.
All outstanding requests are being worked towards, and any other queries please don't hesitate to send them through to our reception team can try our best to provide what is required.
07 873 4079
From the 1st of February 2019, post-dated cheques will not be accepted by the IRD. IRD will present cheques at the time they are received but they may return them to clients.
If you wish to continue to pay by cheque, we recommend you date your cheque the day you are completing it. Cheques forwarded to us will, as usual, be held in the office and then couriered to the IRD two days prior to the due date to ensure successful courier postage and that they are received on time.
The IRD encourage you to make electronic payments. Electronic payments can be scheduled in advance to make the payment on the due date. How to pay Tax online is listed below:
If you have any queries, please don't hesitate to call our team at the office.
GST & Provisional Tax
Due 15 January 2019
If we process your GST and you are going away on holiday in January, please make sure we have your GST records for the period ended 30th November 2018 before the 10th December. If you won’t have access to emails during that time please also include a cheque so that you are not surprised by a penalty when you get back.
Provisional tax installments for March balance dates are due on the 15th January 2019. Tax notices will be sent out in early December to those with tax due. If you wish to pay by cheque please ensure we have the cheque at our offices before the 20th of December so we can post to IRD on time.
We do encourage you to make your tax payments online.
Christmas Closure 2018
The end of the year is near and as usual, our team will be escaping for a period of three weeks over the Christmas and New Year period to enjoy the festiveness in the sun (hopefully).
Our office will be closed from 1pm Friday 21st December 2018, reopening at 8.30am Monday 14th January 2019.
Voicemails will be cleared during this time.
Phone Issues - 05 November 2018
Degradation of Voice Services - Update
You may have noticed some interruption with the phones today and the inability to get through to our reception team. Unfortunately this is yet to be resolved. Voyage are working on the issue, but while they are, your phone calls in to us will be unreliable.
We apologize for the inconvenience as this is out of our hands, we expect the issue will resolve soon.
In the mean time, feel free to email firstname.lastname@example.org for any queries.
Tax notices are automatically sent out via email direct from email@example.com.
Please, if you change your email address have our staff at reception update your details to ensure you will be receiving you notice on time.
If you have any queries, please phone Antoinette Johnson, Monday - Thursday.
Invoice and Statements via Email
We recently collected data for clients who wanted to make the change to receive invoices and statements electronically. We had a large number take the change to a cleaner step within our environment.
If you will like to consider transferring your paper correspondence to electronic, please let us know at firstname.lastname@example.org.
Provisional Tax Notices are automatically sent via email.
Tax Payments Online
For convenience of tax payments to the IRD, this can be done via online banking right up until the date tax is due. The "pay tax" function is provided by most New Zealand Banks. How to transfer infomation from your tax notice is shown in the image below.
To proceed with online payment, refer to your tax notice and include the following:
- IRD Number - Purple example below. If you are making multiple payments i.e. for both individuals in a partnership, or for an individual and company tax, these will need to be paid separately and ensure that you use the correct IRD number.
- Tax Type - Red example below. Use either INC (Income or Provisional Tax) or GST or DED (Employer Deductions). Do not use the GAP code (GST & Provisional) unless you are making both a GST and a provisional tax payment.
- Tax Period - Green example below. Use either Income Tax (Regardless of your balance date the period will be 31 March followed by year which is stated on your tax notice) or GST and Employer Deductions (Use the period 30 June 2018)
IRD Cheque Payment Changes
Our office will still accept and forward cheques for the payment of income tax and other taxes. We will courier these to IRD ahead of the due date. If you are unsure of when to have your cheque in by, give our team a call.
We cannot accept liability for any late payment penalties or interest due to postal delays.
Please note that more and more clients are using online banking to pay their tax so look out for the online payment instructions on our tax notices and above in our news updates and give it a try!
Banklink Access Violation
There has been a recent error making Banklink inaccessible. This is an Access Violation Error and background data needs to be edited.
Please phone our office to speak to Barbara between 9am – 4.30pm, where she can take you through the steps to fix the problem.
Tax Return Disclaimers, Financial Accounts, Company and Trust Minutes
A reminder to please sign and return all documents required in a timely manner. Please double check over signing to ensure all pages where indicated are completed with the mandatory signatures. This ensures prompt filing of your tax returns with IRD, and holding of correct records for you and your business.
Documents that require signatures are:
- Tax Return Disclaimers – Your return can not be filed until we have these signed and returned
- Trust Financial Statements – Both the pages Balance Sheet and Trust Minutes require signing
- Company Financial Statements – The pages Annual Report, Balance Sheet, Directors Resolutions and Shareholders Resolutions require signing
- IRD Authority to Act – As a new Individual, Partnership, Company, Trust or Estate we cannot operate or progress your accounts until we have written Authority
- Engagement Letter – Your contract within our firm, and understanding between us and you
- Banklink – Authority to access Banklink Account
Taxing Lump Sums & Bonuses
Over the holiday season you may give your employees a bonus or lump sum payment. Lump sum payments can include annual or special bonuses, cashed in annual leave, back pay and retiring or redundancy payments. Overtime or any regular payments are not lump sum payments.
Follow these steps to find out what tax rate to use for a lump sum payment:
- Work out what your employee has earned (before tax) over the past four weeks.
- Multiply this figure by 13.
- Add the lump sum payment to the figure in step 2.
- Use the table below to work out what income bracket your employee is in.
- Tax the lump sum payment at the tax rate shown in the right-hand column for that income bracket.
$14,000 or less
From $14,001 to $48,000
From $48,001 to $70,000
Greater than $70,000, but less than the 34.39%
CC earner’s levy maximum threshold of $120,070 (for the 2016 tax year)
You can also apply PAYE at 34.45 cents in the dollar if the employee asks you to use this rate.
Christmas Functions & Gifts – Tax Deductibility
You may be able to claim tax deductions for your Christmas function or work gifts if they’re for people who are part of running your business, such as employees, clients, suppliers or prospective clients and suppliers.
Generally, you can claim 50% of your Christmas party expenses as an expense in your GST and income tax returns. Your expenses can include things like venue hire, food, drink and entertainment.
If you subsidise the cost of your Christmas function you can claim 50% of the amount you contribute as an expense.
You can generally claim 100% of the cost of gifts, such as food, wine, or event tickets, as an expense. If you give your employees a gift or voucher (excluding cash gifts), then you may need to pay FBT (fringe benefit tax) on this.
No FBT will be payable if the gift or voucher is less than $300 per employee per quarter and the total for all employees is less than $22,500 per annum. For example, if you buy each of your 10 employees a $200 fuel voucher as a Christmas gift and that is the only gift you have given them during the year, then you will be able to claim 100% of the expense.
No FBT will be payable as it falls below the threshold of $300 per employee per quarter and the total is less than $22,500 per annum.
If have any questions regarding the tax treatment of Christmas functions or gifts please give us a call to discuss.
Tax Refunds - Bank Accounts Required
For timely receipt of any tax refunds owing to you or you business, we need to provide IRD with your bank account number when filing your tax returns so they can direct credit your refund to you rather than posting cheques. If no individual bank account is on hand we will generally deposit all refunds into your business bank account.
If we have no bank account on hand for you one of our team members will contact you for the details.
Kiwisaver Employer Contribution
Employers are required to contribute the equivalent of 3% of their employee's gross pay from 1 April 2013.
It is important to remember that for the purposes of calculating Kiwisaver employer contributions, gross pay means total salary or wages, including:
• extra salary gratuity
• overtime, and
• any other remuneration of any kind before tax e.g ACC or Paid Parental leave (PPL) payments
• redundancy payments
• the value of providing: board or lodging, or use of a house or part of a house, or the payment of an allowance instead of the provision of the benefit. • expenditure or allowances for accommodation and living costs overseas
• payments under a Voluntary Bonding scheme funded by the Ministry for Primary Industries, the Ministry of Health or the Ministry of Education.
This is particularly relevant for our farming clients who have employees who are provided with accommodation on the farm and have the value of that accommodation added to their gross income every pay period for PAYE purposes. It is important to note that the employer contribution is calculated on the gross income excluding the accommodation amount.
For example, farm worker Sam is paid $700.00 in gross wages for his pay week and he is provided with a house on the farm to a value of $100.00 per week which is added to his gross wages for PAYE purposes:
|Total Gross Income||$800.00|
The 3% Employer Contribution for Sam is calculated on the $700.00 gross wages only (excluding the value of accommodation) to total $21.00.
We have team members who are skilled in the use of most accounting cashbook systems. We have particular experience in the use of Banklink, Cash Manager and Xero. If you are considering using or changing a cashbook system please don’t hesitate to contact us to discuss your requirements.
Accident Compensation Levies are a significant cost for most businesses and it is therefore important that you have the right classification for the business you are in. Please talk to us if you are concerned about your ACC liabilities.
Accommodation Provided to Employees
If you employ staff and provide staff with accommodation, you are required to add the market value of the rent/benefit being provided to their gross income and deduct PAYE tax from this. The rent amount is then deducted from net pay before physically paying the staff member.
John & Sally employ James to work on their Otorohanga dairy farm and as part of his employment they provide him with a house to live in. James is to be paid an annual salary of $52,000 and the market rent for their house is $150 per week. James is not a Kiwisaver member. The calculation for James’ weekly net pay would be as follows:
Gross Income- $1,000.00
Add Rent - $150.00
Total Gross - $1,150.00
Less PAYE - $227.44
Less Rent - $-150.00
NET PAYMENT - $ 772.56
This requirement does not include houses provided to sharemilkers as they are contractors. However, if you are a sharemilker operating through a company structure, it is the company that is providing the accommodation benefit to the shareholder employee and the company will be required to account for tax on the accommodation provided.
The Government recently announced an increase in the minimum wage from $13.75 to $14.25 an hour. The new minimum wage rate came into effect on 1 April 2014.
On a related note, be aware the Government is currently working with the dairy farm sector to ensure all workers on lower salaries get the minimum wage for the hours worked, highlighting the importance of timesheets and wage records. Their concerns are around the springtime when some low paid staff work longer hours, and therefore the effective hourly rate may be below the minimum wage.
We are aware that Labour Department inspectors began visiting dairy farms in August 2013 as part of a long-term operation to identify breaches of employment law. Their focus is on raising awareness of a practice involving seasonal averaging of salaries and the failure to keep accurate time and wage records. For more information about this visit the Dairy NZ website: www.dairynz.co.nz/page/pageid/2145863930/Managing_Staff
In order to prepare and file a donation rebate we need copies of all donation receipts to support each claim.
Please remember to send these in with your annual paperwork and signed questionnaire so we can make a claim for you.
Vehicles and Tax
The treatment of vehicles within your business depends on the business structure you operate under. As a company is a separate legal entity, vehicle usage is completely different from a partnership or sole trader.
Partnership or Sole Trader – Sometimes vehicles are used partly for private purposes and partly for business purposes. In those cases clients need to maintain a log book to justify the percentage for each. That log book needs to be kept for 3 months and the percentage can then be applied for the following 3 years. Once the correct business percentage is known, this can then determine the amount of GST on purchase and running costs that can be claimed.
Companies – As a company is a separate legal entity the availability of company vehicles for private use can create a Fringe Benefit Tax obligation. Some clients have vehicles which are 100% business, and never used (or available) for private use. Others have staff/shareholders with signwritten work related vehicles (eg. utes) which staff are allowed to store at home. Those clients claim 100% of the vehicle’s costs with no private adjustments.
However, for some clients who do use the vehicle privately, we have the option of them owning the vehicle privately and having actual business related costs reimbursed from the company; owning the vehicle privately and being reimbursed based on the approved mileage rates; or the company owning the vehicle and having us complete a “shareholder contribution” adjustment. This adjustment is income to the company, and partly offsets the depreciation and running costs claimed for the vehicle. In effect it treats the first amount of cost (being 20% of vehicle cost price) as private, and the amounts over and above that are claimed as a tax deduction.
Foreign investments include shares in foreign companies, units in foreign unit trusts, life insurance policies not offered or entered into in New Zealand and foreign superannuation schemes.
If you hold offshore investments it is very important that you provide us with the investment details when completing your annual tax returns as you may be taxed differently depending on the type, amount and location of your foreign investment, as determined by the Foreign Investment Fund (FIF) rules.
- If the cost of your total offshore investments exceed NZ $50,000 at any time during the income year all your offshore interests fall within the FIF rules and income calculated accordingly. If the total cost of all offshore investments is below NZ $50,000 you will continue to pay tax only on dividends received and will not be required to calculate income under the FIF rules.
- There are some exemptions from FIF rules for certain Australian interests, for example shares in Australian-resident companies listed on an approved ASX index. Generally you would only be taxed on dividends received from such investments. These rules are highly complex and we need all investment details to ensure your foreign investment income is calculated and taxed correctly.
Up and Coming Changes - Online Sharing
We are excited to announce we will soon be offering electronic sharing and signing of documents through our secure system of iFirm.
This allows you as a client, to operate through an Online Portal (similar to an Online Cloud). iFirm securely permits you to download documents which have been uploaded from our office, and for you to do the same in returning documents back to us. You will also be able set up an electronic signature and sign documents online.
So keep an eye out! We look forward to this step up in technology and will be opening this up to everyone very soon.
Just a friendly reminder the office will be closed on Monday the 22nd of October for the public holiday.