Articles by John Rowe

THE REAL YEAR END

 

We have just started a new calendar year but are running rapidly towards the end of the financial year.  What we all want is to reduce tax and stress so here are a few tips to get you started:

 

Bad Debts:

In order to claim a tax deduction for a bad debt, the debt must be written out of your debtors’ ledger prior to 31 March.  You must have undertaken all reasonable steps to collect the outstanding sum.  Remember, writing a bad debt off does not mean you can not continue to pursue it. 

 

Subvention Payments:

If you have been advised to make a subvention payment between your profit and loss making companies the payment must be made prior to 31 March.  Occasionally we hear of clients attempting to do cheque swaps and having difficulties with their bank.  If you are experiencing difficulties with your bank manager not understanding what you are attempting to do let us know.  We will talk to them or alternatively find you someone further up the food chain.

 

Stock Take / Work in Progress:

If your business has stock or work in progress (WIP) you must complete a stock take or value your WIP (including its labour portion) at 31 March.  There are exceptions for some tax payers whose turnover does not exceed $1.3m for the year.  These people are permitted to use the value of opening stock as the value of closing stock provided that they reasonably estimate that the true value of closing stock is less than $5,000.

 

Holiday pay / Bonuses:

Holiday pay and bonuses paid within 63 days of balance date are deductible in the 2010/11 year as long as they relate to the 2010/11 financial year.

 

Banklink:

If you want to take advantage of our Banklink service to potentially reduce your accounting fees for the 2011/12 year you need to urgently complete and return the forms to us.

 

Fixed Assets:

Review the fixed asset register and perform a stock take to ensure the assets exist and to identify assets that are no longer used in order to claim a deduction for the remaining adjusted tax value of the asset.

 

Assets can be written off if they are no longer used but have not been disposed of.  Remember Assets costing $500 or less qualify for an immediate write-off provided.

 

Prepaid Expenditure:

 Certain prepayments can be claimed as a tax deduction even if they span financials years.  This includes payments like insurance which may relate to both the 2011 and 2012 years.  There are thresholds and other requirements to meet so please contact us if you would like further details.

 

RWT on Dividends:

The RWT rate on dividends remains at 33%. This means that any dividends with imputation credits attached at 30% will require a top-up of 3% RWT. This RWT is payable by the 20th of the month following the date of the dividend.

If you still haven’t filed your 2010 accounts please get in touch with us asap so we can help you get up-to-date and try to avoid any extra fees from IRD.  In the mean time if you are preparing for the end of the current financial year and still need help please contact us or your Senior Account Manager so we can make sure things go smoothly and on time.

For those of you who don’t have an accountant and don’t want the hassle of filing year end accounts, contact us for a free no obligation quote.

 

 

 

 

 

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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Be careful and watch out, there are two new email phishing scams that have been reported by the IRD do not reply to them, see below for more details.

First Scam Email:

"We are pleased to inform you that upon review of your fiscal activity we have determined that you are eligible to receive a tax refund of NZD 54.90 under section 501 (c) (3) of the Internal Revenue Code.

Please submit the tax refund request and allow us 3-6 days in order to process it."

The link directs you to a fake Inland Revenue webpage.   The objective is to encourage visitors to enter their information. Anyone entering these details can have their personal banking identity stolen.

Second Email Scam:

"After the last annual calculations of your fiscal activity, we have determined that you are eligible to receive a tax refund of 1288.50 NZ Dollars. Please submit the tax refund request and allow us 2-5 days in order to process it.

Click Here to submit your tax refund request

We wish you a Merry Christmas"

This email also links to a fake Inland Revenue website that aims to steal your' personal information.

What To Do:

If you receive any of these email do not follow the link or enter any personal information onto the site. You should forward the emails to phishing@ird.govt.nz and then delete them.

 

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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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

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. Trackbacks (0) | Permalink
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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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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,

On 1 April 2009 the Government introduced a new tax credit - the independent earner tax credit or IETC.

The IETC will, from 1 April 2009, deliver $10 per week to individuals who earn between $24,000 and $44,000 and who do not receive a benefit, Working for Families tax credits or New Zealand superannuation.

The IETC will be abated at 13 cents for every dollar of income earned over $44,000. The amount of the IETC will increase to $15 per week from 1 April 2010.

If you're eligible, you can choose to receive the IETC through your pay or as a lump sum at the end of the year. If you work for a salary or wage, you can receive the IETC through your pay.

What To Do

To do this you'll need to choose a new tax code: either ME or ME SL (if you have a student loan).You'll need to let your employer know by completing a new Tax code declaration form. You can only use this new tax code for your main job or source of income.

If you do not notify your employer of a new tax code you'll need to request a personal tax summary at year end and IRD will calculate your entitlement. However, you would then have to wait until at least July 2010, at the earliest, to get your money.

If this sounds a bit confusing, you can contact us for assistance and advice on completing your Tax Code Declaration Form from the IRD.

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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What is Banklink?

BankLink provides a service where they electronically capture banking transactions from nearly all financial institutions that offer a banking service and they provide us with that data within a few days of the end of any month.

By subscribing to BankLink, many of your transactions can be coded once and memorised so that when recurring transactions occur they can be coded automatically. There will always be adhoc receipts and payments which will require coding at month end but these are generally minimal.

If you subscribe to our Banklink service, within 4 to 5 days after the end of the month we send you an email advising you that uncoded receipts and payments for the prior month have been uploaded to your service section on our website. All you have to do is to write a code or note next to each item and return this list to us. We then prepare cashflow reports and GST returns as requirlled.

The Benefits of Banklink

1. Here are just some of the benefits to be gained by using Banklink with GRA:

• There is no additional data entry charges processing bank statements for the periods you are on Banklink.

• It greatly speeds up the processing of your financial statements and taxation returns.

• Using the BankLink system dramatically reduces spent by you on your accounting.

• GRA prioritise the preparation of your financial information.

To take the advantage of our priority processing service you need to complete your questionnaires and forward it together with all supporting documentation to us as soon as possible. If you require help please contact us.

Who Should Use BankLink?

This service would suit anybody who is using a manual or computer cashbook system. Banklink is also our preferred method for receiving your bank records.

If you find the process of compliance difficult, either through a lack of knowledge or just time, then this service can remove the risk and is certainly an easy and cost effective way of producing GST information and managing the accounts for your business. It also puts you in touch with us – enabling us to fully support you with your decision making.

To find out more about Banklink, including pricing and how it could help you, please contact us.  We are here to help.

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,

To assist taxpayers through the recession, the Government has moved to provide some cash flow relief by reducing provisional tax uplift provisions and its use of money interest charges. The changes are available for the 2009 and 2010 income years and are effective from 1 April 2009. For the 2011 and subsequent years’ provisional tax, the old uplift rules will apply again. The new uplifts are as follows:

Note:  RIT or residual income tax is the tax you have to pay after any rebates and tax credits are deducted. i.e. it is essentially your year end tax.

Individuals

Provisional tax instalments have been amended to take into account the changes in the tax rates.

2009 Provisional tax	2010 Provisional tax
Uplift based on 2007 year is 2007 RIT minus $730 plus 5%	Uplift based on 2009 year is 2009 RIT minus $730
Uplift based on 2008 year is 2008 RIT minus $730	Uplift based on 2008 year is 2008 RIT minus $1,460 plus 5%

Companies

The new rates take into account the reduction in the corporate tax rate to 30 per cent from 1 April 2008 (the 2009 tax year for the majority of taxpayers).

2009 Provisional tax	2010 Provisional tax
Uplift based on 2008 RIT is 90% of 2008 RIT	Uplift based on 2009 year is 100% of 2009 RIT
Uplift based on 2007 year is 95% of 2007 RIT	Uplift based on 2008 year is 95% of 2008 RIT

Trusts (other than specific Unit Trusts)

2009 Provisional tax	2010 Provisional tax
Uplift based on 2008 RIT is 100%	Uplift based on 2009 RIT is 100%
Uplift based on 2007 RIT is 105%	Uplift based on 2008 RIT is 105%

Use of Money Interest Rates (from 1 March 2009)

Previous	Current
Underpayment 14.24%	Underpayment 9.73%
Overpayment 6.66%	Overpayment 4.23%

Note: for the 2010 income year the "safe harbour" for the application of use of money interest for individuals has been moved from less than $35,000 RIT (approximately $114,000 of untaxed income) to less than $50,000 RIT (approximately $152,000 of untaxed income).

Estimation and ratio options

Remember you may also base provisional tax on an estimation of your income. Also the ratio option will apply to certain clients.

Need help?

Meeting your taxation obligation should be easy. Unfortunately, the provisional tax regime has become complicated by recent changes and it is very easy to incorrectly calculate your tax payments resulting in unnecessary interest and penalties. Remember to talk to GRA if you require any assistance or are unsure, 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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