Winter 2014
New Director
Many of you will know Carmen Wilson, she
has been with us for the last three years in the
Taupo office.
As of 1 July 2014 Carmen will become a
director in Altitude Chartered Accountants and
over time will step into Sue’s shoes as they
swap roles within the firm.
Ensuring Minimum Wage to Employees
The dairy industry has come under recent scrutiny after a Stratford farmer was prosecuted for under paying an
employee, and a Ministry of Business, Innovation and Employment (MBIE) survey found a third of Southland
dairy employees were potentially being underpaid.
The rural sector is no different to other businesses. In fact very similar when you consider the hospitality
industry which is also 7 days, experiences busy periods and has various shifts through the day.
EMPLOYMENT CONTRACT
All employees are required to have an employment contract. If yours don’t then you need to contact us. We can
prepare or assist with these.
We see many cases of no employment contracts. When you are paying casuals an hourly rate and there is no
employment contract there are real questions as to whether the hourly rate is inclusive or exclusive of holiday
pay. If you don’t have an employment contract to clarify the terms of the employment then you are in a weak
position if a dispute arises.
Kelly Taylor is the newest addition to the Taupo office and
has replaced Val Burns. We were very sorry to see Val leave
and many of our clients have echoed these sentiments.
We wish Val the best for the next chapter in her working life.
50 is a nice
number!
What you do matters, not what you think or say or plan.
From Rework, by Jason Fried & David Heinemeier Hansson.
TAX TALK
ACC and rental income
Do you have income from rental? You may be wondering about why ACC
collects levies from rental income. It comes down to whether your rental
income is classified as 'active' or 'passive'. ACC levies active rental income
but not passive rental income.
The difference? Rental income is classified as active when you put in some
effort for it. For example, that might be mental and/or physical work
collecting rents, inspecting the property, arranging for maintenance, finding
tenants and so on. Where there's not this degree of effort - for instance,
where you have a property manager in place - the income is classified as
passive.
If you're running the rental property through a company, and distribute the
income as shareholder salary, this would also be levied as active income.
Where income from 'passive' rental has been distributed to the shareholder
as dividends, these are not subjected to ACC levies.
If you have income from rental properties but you're unsure whether it's
considered active or passive, please contact us and we can look at your
situation.
XERO
GST
There has been so much publicity about this company and its
meteoric rise on the NZ Stock Exchange that most people will have
heard of it. Its promoters say it is ‘beautiful software’ and we wonder
if its next achievement will be ‘world peace’.
The “up to 25%” business use claim on vehicles
concession does not apply to GST. Taxpayers
who wish to claim a portion of the vehicle’s
purchase and running costs must keep a log
book. A log book must be kept if GST is to be
claimed.
There is no question that Cloud accounting is now a major change in
how we do things. In fact so much is now in the ‘cloud’ that it is a
wonder that there is room to fly. Perhaps there isn’t – ask Malaysian
Airlines.
Dean Roe and Carmen Wilson recently attended Xero’s primary
sector presentation in Napier, and our firm is continually visited by
our Xero liaison contact Larissa.
If you are on Xero and have any queries please give us a call or send
us an email and we can usually put things right pretty quickly. And if
you are considering a new software package talk to us about the
options.
The initial GST claim on a vehicle purchase must
correspond with the log book or the vehicle’s
intended for business use. Where actual
business use differs from that previously claimed,
subsequent GST adjustments may be required.
If the difference between actual use and the
business used claimed is less than 10%, or the
value of the adjustment is less than $1,000, then
no adjustment is required. The maximum
number of adjustments required is based on the
value of the vehicle.
Mixed use asset rules now apply to boats and planes
From the 1 April 2014 the mixed use assets rules apply to boats and aircraft. This means you now need to keep
similar records as for holiday homes.
If you use the asset for private use and for earning income, if it’s also unused for 62 days, if it had a cost or market
value of $50,000 or more when you bought it, you need to record:
•
•
•
The amount of time it was used and who used it (number of days, flying or cruising hours)
The amounts received
Expenses related to making it available for hire as well as expenses in generally maintaining it
If you make a loss and if your gross income from the asset is less than 2% of its value, you may not be able to claim
the loss straightaway. Instead, you’ll have to ‘quarantine’ the excess expenditure and carry it forward to a future tax
year to offset against future profits from the asset.
GST input tax deductions are calculated in a similar way to how you calculate expenses allowed as a deduction. If
you sell the asset partway through the year, the calculations relating to income, expenditure, apportionment and
quarantining can change.
If you would like a rundown on how this applies in your case, or some tips on easy ways to keep track of it all, please
Contact us.
Changes to Inland Revenue Payment Services at
Westpac
From 1 October 2014 taxpayers will no longer be able to make cheque
payments or drop off returns or forms at a Westpac branch. You will
however be able to continue making cash and eftpos payments at
Westpac.
Taxpayers can still post cheque payments, returns and forms directly to
Inland Revenue. Likewise you can continue to make payments using
online banking, credit and debit cards and international money transfers.
We have written to Inland Revenue expressing our views on this. We
would have thought that the IRD would want to make paying tax as easy
as possible but alas not. Seems a bit dumb from our perspective.
Paying on time
From 1 October 2014, payments posted to Inland Revenue need to be
received by Inland Revenue on or before the due date to avoid payment
penalties and interest. This means cheque payments can no longer be
posted on the due date.
Paying Electronically
Paying Electronically
If you make payments on the
internet please ensure you use the
correct IRD number, tax type and
period. It is very time consuming
for us to try and find payments
made by clients using wrong
references.
Over time Meal Allowances
Tax free overtime meal
allowances can be paid to
employees if they work more than
two hours overtime on a
particular day. For our farming
clients, this regularly happens
during calving, docking, weaning,
shearing and haymaking. For the
allowance to be tax free, the
employment contract (or
employer’s normal policy) must
specify the paying of the
allowance, and the allowance
must reflect actual or reasonably
expected costs. This could be
based on the price of a typical
meal at the local pub.
Email addresses:
We are moving to an email process for
our client newsletter.
If you do not have an email address
please advise and we will keep you on
our postal list.
The Australian economy and the general lack of enthusiasm for that Governments last budget contrast
quite markedly with our own country. It appears New Zealanders have better understanding. But for
those who don’t this may help explain matters more clearly:
Sometime this year, we taxpayers may again receive another ‘Economic Stimulus’ payment. This is indeed a
very exciting program, and I’ll explain it by using a Q & A format:
Q.
What is an ‘Economic Stimulus’ payment?
A.
It is money that the federal government will send to taxpayers.
Q.
Where will the government get this money?
A.
From taxpayers.
Q.
So the government is giving back my own money?
A.
Only a smidgen of it.
Q.
What is the purpose of this payment?
A.
The plan is for you to use the money to purchase a High-definition TV set, thus stimulating the
economy.
Q.
But isn’t that stimulating the economy of China?
A.
???.
Below is some helpful advice on how to best help the Australian Economy by spending your Stimulus cheque
wisely:
•
•
•
•
•
•
•
If you spend the stimulus money at K – Mart, Big W, Target or the host of $2 shops we have, the
money will go to China, Vietnam or Sri Lanka.
If you spend it on gasoline, your money will go to the Arabs.
If you purchase a computer, it will go to India, Taiwan or China…
If you purchase fruit and vegetables, it will go to China, India, Peru ….
If you buy an efficient car, it will go to Japan or Korea.
If you purchase useless stuff, it will go to Taiwan.
If you pay your credit cards off, or buy stock, it will go to management bonuses and they will hide it
offshore.
Instead, keep the money in Australia by:
1. Spending it at garage sales, or
2. Going to footy games, or
3. Spending it on prostitutes, or
4. Beer or
5. Tattoos.
Disclaimer
This publication has been carefully prepared, but it has been
written in general terms only. The publication should not be
relied upon to provide specific information without also
obtaining appropriate professional advice after detailed
examination of your particular situation.
Suite 20, Suncourt Plaza
19 Tamamutu Street
PO Box 749
Taupo 3351
Ph + 64 7 378 7150
Fax + 64 378 0110
53 Hautapu Street
PO Box 186
Taihape 4742
Ph + 64 6 388 0860