Articles by John Rowe

John Rowe
Director Business Accounting Services

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

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

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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.

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.

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.

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

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

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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.