Articles by John Rowe

We have included some useful information from the Dept. of Labour, especially applicable to employers over the Christmas and New Year Period.

You will find links to relevant guidelines and legislation below. So, what are the rules for the Christmas and New Year public holidays this year?

This year Christmas Day and New Year’s Day fall on a Friday, and Boxing Day and 2 January fall on a Saturday.

There are no special rules for Christmas Day or New Year’s Day this year; these public holidays are observed on the days they fall. Special rules will apply to Boxing Day and 2 January because they fall on a Saturday.

For employees who normally work on a Saturday, Boxing Day and 2 January are observed on that day. For employees who normally do not work on a Saturday, Boxing Day and 2 January are transferred to the following Monday (28 December 2009 and 4 January 2010), if Monday would be a normal working day for the employee.

Use the DOL's Holidays Online Tool to work out entitlements for public holidays.

View more information on public holiday at the following links

For information on annual leave visit www.ers.dol.govt.nz/holidaysor contact GRA.

Merry Xmas

John Rowe
Director Business Accounting Services

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.  GRA are accountants who provide expert accountant advice both in NZ and offshore.

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At last some good news out of Inland Revenue. 

Fringe Benefit Tax (FBT)

The FBT rate for low-interest loans will fall from 8.05% to 6.41% from 1 July 2009.

This has come about due to the continuing effort to try and align the rate with the variable first mortgage housing rate.  Bluntly it was not fair to have the FBT rate above that being charged by the Banks. 

Use of Money Interest (UOMI)

Use-of-money interest rates charged by the Inland Revenue on unpaid tax have been lowered from 9.73% to 8.91%.  The interest rate paid on overpayments of tax paid reduce from 4.23% to 1.82%.   Regretfully, there still remains a large gap between the two.

Please contact us if you would like help to understand how these changes affect you personally and your business - if applicable.

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As in sport, we improve our performance by competing against others. If you run by yourself you will never know if you will win a race.

The same applies to business. For example, suppose you operate a Paint and Panel shop. You might think your business is doing well by achieving a gross profit percentage of 30 percent, but what if similar businesses in the industry are achieving a gross profit of 45 percent? That would suggest there is significant room for improvement.   Benchmarking gives you the goals to aspire to.

Benchmarking is an important component for business development because it allows you to understand what it takes to be the best in your field, and what it means to be a leader in your industry.

Benchmarking allows you to:

PricewaterhouseCoopers “Trendsetter Barometer Survey” noted that “fast growth companies who used benchmarking information to measure business performance against their peers achieved 69% faster growth and 45% greater productivity over those who did not.”
 
Planning / Analysis

This element of business management is poorly understood, largely neglected but can generate huge rewards. Without over-simplifying it, analysis allows you to identify what strategy will generate the largest return, and then quantify the impact of your decisions on cash and profitability prior to implementation.

Top managers systematically review and analyse financial results, key performance indicators and benchmarks prior to making strategic / key discussions.  Good analysis allows you to:

While analysis is very rewarding it can be very complex and is best left to specialists.

Please contact us if you would like help to learn more above Benchmarking and understanding what's going on in your business.

John Rowe
Director Business Accounting Services

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.  GRA are accountants who provide expert accountant advice both in NZ and offshore.

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The Compulsory Employer Contribution maximum has changed from 4% to 2%.

The maximum employee contribution rate has changed from 4% to 2% of the employees gross pay

The Default employee contribution rate at sign up time is now 2% (previously 4%)

The $40 annual subsidy fee ceases

Voluntary employer contributions will be liable for employer superannuation contribution tax.

Please contact us if you would like help to understand how these changes affect you personally and your business - if applicable.

John Rowe
Director Business Accounting Services

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.  GRA are accountants who provide expert accountant advice both in NZ and offshore.

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Inland Revenue has recently advised the new mileage rate for motor vehicles is 70 cents per kilometre.

This rate applies to self employed taxpayers with up to a maximum of 5,000 kilometres of work-related travel each year. This applies to all motor vehicles (except motor cycles) irrespective of their engine sizes or whether powered by petrol or diesel and applies from the 2008-2009 income year.

The rate may be used by employers reimbursing employees for the business use of an employee's motor vehicle. This entitlement extends to shareholder- employees as well. 

However, there are other options may be used to establish a fair and reasonable rate for claims or reimbursements (for example, AA rates).

If you would like to discuss how these measures may affect you, please contact us.

John Rowe
Director Business Accounting Services

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In these tougher times we have noticed Vendors asking for early release of deposits before actual settlement has taken place.  If you have purchased a property and paid a deposit on the unconditional date, we would recommend you think twice  before agreeing (and don’t) to any request to release your deposit before settlement.

When a deposit is paid, the real estate agent is required to hold it for 10 days.  Vendors often ask agents to release the deposit early to use it as a deposit on another house or to clear some debts etc.  The agent can do this provided the purchaser consents.

Be very wary of agreeing to the release because the transaction may not settle (especially in today’s environment!).  If the transaction does not settle and the vendor has already spent the deposit, you will have no security and your deposit may be gone forever.

Ensuring that the deposit is held by the Real Estate Agent until settlement is the wise thing to do; especially where there is a mortgage on the title.  If there is a mortgage, be aware that the deposit might be needed to settle the Vendor’s mortgage debt, and if released early and spent in other ways, the Vendor might not be able to discharge the mortgage.

Always be very wary of any request to release a deposit early.

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.  GRA are accountants who provide expert accountant advice both in NZ and offshore.

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Last week, Bill English delivered the first budget of the National Government.  In it, he confirmed the deferral of the planned personal tax cuts in 2010 and 2011. This came as no surprise to many.

We have outlined a very brief summary below of the main budget items which will have tax implications for many New Zealanders.

• Personal tax cuts that came into effect from 1 April 2009 remain unchanged.

• Revenue Minister, Peter Dunne announced that the KiwiSaver mortgage diversion facility is to be closed to new applicants from 1 June 2009.

• Automatic contributions to the New Zealand Superannuation Fund (NZSF) have been suspended.  A contribution of $250 million will be made to the NZSF in 2009/10.

• $323 million allocated to fit homes with insulation and clean heating devices.  More than 180,000 homes will be eligible for grants of up to $1,800.

• Total of $3 billion allocated to improving health access and services between 2008/09 and 2012/13;

• $1.3 billion in operating spending for education and $340 million in capital spending between 2008/09 and 2012/13.

• $701 million in operating funding and $256 million in capital funding over the next four years across the justice sector.  This includes, Government spending to put 600 new police onto the streets by 2011 and to construct nearly 1,000 extra prison beds.

• $1 billion over the next three years to be spent on roading.  Total spending is estimated at $10.7 billion over the next decade.

• $258 million of new rail funding;

• Up to $1.5 billion allocated to accelerate the roll-out of ultra-fast broadband; and

• $114 million in operating spending and $17 million in capital spending for research, science and technology.

 So what does this mean to you?

If you would like to discuss how these measures may affect you and your financial situation, please contact us.

John Rowe
Director Business Accounting Services

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.  GRA are accountants who provide expert accountant advice both in NZ and offshore.

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Dear Client,

There are significant changes that the government has introduced that will affect nearly everyone, especially those who are individual taxpayers, part of Kiwisaver, or business owners.

Read below to find out more.

Changes Affecting Individual Taxpayers:

1. The 33c in the dollar personal tax rate threshold rises from $40,000 to $48,000.

2. The rate of tax paid in the top personal income bracket, which starts at $70,000, has reduced from     39c in the dollar to 38c.

3. A new Independent Earner Tax Credit (IETC) will return $10 a week to people earning between $24,000 and $44,000 who do not receive a benefit, Working for Families tax credits, or New Zealand

4. The IETC will be abated at 13c for every dollar earned over $44,000.

Changes to KiwiSaver:

1. The minimum level of employee contributions has dropped from 4 percent of gross salaries to 2 percent.

2.  The member fee subsidy of $40 a year has ceased.

3. The minimum level of employer contributions will stay at 2 percent. The tax-free threshold will also stay at this level.

4. The employer tax credit will cease.

Changes Affecting Businesses:

1. Significant changes have been made to provisional tax – see separate article.

2. The threshold for qualifying for the GST payments basis has increased to $2 million in annual revenue from $1.3 million.

3. The GST registration threshold has increased to $60,000 from $40,000.

4. The GST six-monthly return filing threshold has been raised from $250,000 to $500,000.

5. Businesses with $10,000 or less of annual business-related legal expenditure can now deduct the amount regardless of whether it related to capital expenditure (for example conveyancing fees).

6. The PAYE once-a-month filing and payment threshold has be raised to $500,000 in employer PAYE deductions from $100,000.

7. The Fringe Benefit Tax annual filing threshold has been raised to $500,000 in PAYE deductions from $100,000.

8. The value of minor fringe benefits that can be provided to employees without attracting FBT has increased to $300 a quarter per employee from $200, and $22,500 a year per employer from $15,000.

Please contact us if you would like help to understand how these changes affect you personally and your business - if applicable.

John Rowe
Director Business Accounting Services

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.  GRA are accountants who provide expert accountant advice both in NZ and offshore.

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Dear Client and property investor,

A special tax code allows your employer to deduct PAYE at a lower amount, effectively paying you your tax refund during the year in each pay you receive.

1. Are you receiving a salary or wage?

2. Do you have investment property that generates tax losses?

3. Do you want more cash in your pocket now?

4. Are you expecting a tax refund next year?

5. Do you have to wait to file your tax return before getting a refund?

6. Want to maximise your cashflow during the year?

If you answered YES to the above you should consider applying for a special tax code through GRA.

With a special tax code, you:

1. Get better cashflow throughout the year

2. Pay less interest on your mortgage (by applying the surplus to lines of credit)

3. Don’t have to stress to get your tax return filed quickly

4. Don’t have to wait to get your tax refund
   
   

Gilligan Rowe + Associates are experts at helping property investors to reach their money goals faster.  Go ahead and Request an Interview NOW.  We'll explain how a special tax code and the correct management of your investment affairs, can work for you. It's free to take the first step.

John Rowe
Director Business Accounting Services

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.

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Do you struggle to organise your financial and tax records during the year?  Is your accountant constantly asking for additional information? Does your record keeping resemble a shoe-box?

Getting your financial records organised is important, but many of our clients don't have the time or the patience for complicated or time-consuming systems.  That's why we provide an easy solution...

GRA’s Folder Tabs is a simple records organisation system that helps you collate the information needed to prepare your financial statements and keep track of your records in case of an IRD audit.

GRA’s Folder Tabs are perfect for clients who have year end taxation obligations and need to keep track of invoices, receipts and any other relevant records. It’s also ideal for owner-operated small businesses who struggle with record keeping or just want an easy straight forward system.

Using GRA’s Folder Tabs improves record quality, speeds up turnaround of your financial statements, frees up your time and can reduce your fees.

Folder Tabs are only $25 each but can save you hundreds of dollars in lost time and headache– please contact us to find out more and place an order.

John Rowe
Director Business Accounting Services

Learn More about John
Contact John at jr@gra.co.nz or call +64 9 522 7955

P.S. Did you like this article? Go ahead and sign up to our free newsletter and receive tips, updates and useful information to help you protect your assets and grow your net worth.  GRA are accountants who provide expert accountant advice both in NZ and offshore.

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