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GRL February 2016 Newsletter
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We’re not merely accountants

We’re here to make a real difference to our clients. Delivering a high-quality, efficient compliance service is just part of that. Helping our clients to develop, improve and grow their business is the next natural step. Our Business Development offerings are practical and tangible services that create long term value for clients. These services include;

  • A complimentary client review meeting
  • Financial awareness coaching
  • Quarterly coaching
  • Trust review
  • Core values development
  • Business planning
  • An organisational review
  • Life organiser
  • Proactive accounting meeting
  • KPI improvement coaching

Setting the record straight

Inland Revenue have signalled they will be looking at businesses’ record keeping systems. Key targets will be that all jobs and all income are being recorded and that GST is being handled properly. Recent prosecutions indicate that PAYE records are another hot topic, along with the corresponding employment records. If sketchy records are a quick way to set off the IRD alarm bells, this could be a great time to do a sense check on your records and systems.

As a business owner you’re required by law to keep certain records. Poor record keeping lets you down just in terms of the penalties that apply for record keeping failures (up to $12,000). Inadequate systems also make it harder for you to keep track of what you owe, how much you have already paid, to whom and what for and who owes what to you. You lose track of things, miss key deadlines and your costs increase in proportion to how much of a nightmare it is to straighten it out.

With the advances in online systems of recent years, many businesses have overhauled their systems and are in good shape to pull out regular management reports that detail their position clearly. However, there may still be areas where things fall through the cracks.

Risk and Reward

Targeting the cash economy - Inland Revenue’s crackdown on ‘cashies’ continues with their focus on undeclared cash in the construction and hospitality sectors. Last year, the Auckland region saw the most activity. Inland Revenue are now widening their reach. They’ve been trying to change attitudes among tradies and subcontracting businesses and their efforts seem to be getting results.

Tax Insurance

We offer a cost effective cover for accounting and legal costs for all tax investigations. The cost of cover depends on the size of your business. This is underwritten by Audit Shield (Vero).

For more information please refer to our website www.grl.co.nz or contact Chantal Westman on 06 835 3385

Timely Reminders

GST Return and payment 29 March(due to 28th falling on Easter Monday)
30 May (due to 28th falling on a weekend)
FBT Quarterly return and payment (if you pay it quarterly) 31 May
  Return and payment (if you pay it on an income year basis under the close company option) and you have a: Return & Payment
  Balance date between 1 March and 30 September 7 April
  annual return and payment (if you pay it annually) 31 May

Provisional and Terminal Tax

I pay provisional tax... And my balance is... So my provisional tax is due next...
4 monthly (3 times a year) February , June or October
March, July or November
April, August or December
February , June or October
March, July or November
April, August or December
6 monthly (twice a year) February or August
March or September
April or October
29 March (due to 28th falling on Easter Monday)
9 May (due to 7th falling on a weekend)
30 May (due to 28th falling on a weekend)
Terminal tax Between 1 March and 30 September Terminal tax payment due 7 April

Paid parental leave

From 1 April 2016, there are further changes to paid parental leave. The amount of paid parental leave that eligible people can take will be extended from 16 weeks to 18 weeks.

Parental leave payments will also apply to more workers. Eligibility will be extended to people in less-regular jobs, in particular to people who have recently changed jobs, seasonal and casual workers, and workers with more than one employer. ‘Home for Life’ caregivers and people with similar permanent care arrangements will also be eligible.

Mileage rates

If you’re self-employed you can use the Inland Revenue mileage rate to calculate the cost of using your motor vehicle for business purposes.

Last year the commissioner reviewed the mileage rate for the 2015 tax year and decreased it from 77 to 74 cents per kilometre.

No more residual levies

From April, employers, earners, and motor vehicle owners no longer have to pay residual ACC levies. However it won’t mean reductions across the board.

The residual levy rate calculation was based on old injury rates which have become out-dated, going back 10 years or more. The residual levies themselves were a kind of catch up to make sure there were enough funds set aside to pay for ongoing claims predating 1999.

Now, all businesses will have their levies calculated on the most recent data around injuries and the likelihood of injury in their particular industries. Hence, while most will pay less, some will pay more. The removal of residual levies alone would have seen decreases in their ACC contributions for around 53 per cent of Kiwi businesses, while 47 per cent would be paying more.

However, with other levy reductions (see above), the number of businesses paying more may come down to around 21 per cent. We’ll keep you updated.

Requesting ACC Adjustments

Do you receive PAYE or Shareholder Remuneration that exceeds the maximum earnings liable for ACC; or are your earnings sourced from one or more companies? If so, we can request that ACC reassess your liability and make a Multiple Employer Adjustment. This may affect how much you pay in ACC levies.

ACC cannot identify eligible customers from the information Inland Revenue provides, so levies are charged on all income. ACC rely on customers and tax agents advising that they need to reassess your liability so that you do not overpay. They then complete a Multiple Employer Adjustment.

Let us know if you think this applies to you and we can contact ACC on your behalf.

Assistance for farmers affected by the dairy price downturn

We recognise the dairy price downturn may cause financial issues for dairy farmers and will materially affect some farmers financial position’s for the 2015-16 income tax year.

Approval to use Inland Revenue’s income equalisation scheme discretions has been granted.

Because the price downturn was evident very early in the 2015-16 tax year the use of the general discretion for late deposits is unnecessary. However, dairy farmers’materially affected by the dairy price downturn can still make individual application for late deposits.

Those dairy farmers materially affected by the dairy price downturn and therefore suffering financial hardship are permitted to make early withdrawals in their 2015-16 or 2016-17 tax years.

Find out if your clients qualify for an early withdrawal from an income equalisation deposit at www.ird.govt.nz (search keywords: income equalisation).

If you have been affected and are struggling to deal with your tax affairs, contact us sooner rather than later so we can help.

Meeting tax payments on 7 April

Payments for end of year income tax, student loans and overpaid working for families tax credits for the 2015 tax year are due for all clients with an extension of time.

If you can’t make the payment in full, you can make an instalment arrangement proposal at www.ird.govt.nz (search keyword: proposal). In most cases the IRD will accept regular manageable amounts.

Calculating PAYE on Holiday Pay

The IRD have released an operational position effective from 1 April 2016. It clarifies the appropriate treatment of holiday pay when calculating PAYE deductions, as there has been uncertainty in this area.

The operational position explains:

  • When a payment of holiday pay should be treated as “salary or wages” to calculate PAYE deductions under section RD 5 of the Income Tax Act 2007
  • When a payment of holiday pay should be treated as an “extra pay” under section RD 7 of the Income Tax Act 2007.

It sets out the appropriate treatment of holiday pay when paid under different circumstances.

You can read the full operational position at www.ird.govt.nz (search keywords: op position holiday).

New rates announced

Inland Revenue Orders in Council signed on 23 November 2015 set the following new rates.

New rate for calculating FBT on low-interest loans

The prescribed interest rate used to calculate fringe benefit tax on low-interest loans provided by employers to their employees is 5.99% for the quarter beginning 1 October 2015 and subsequent quarters.

For more information go to www.ird.govt.nz (search keywords: low interest loans).

Minimum family tax credit increase for 2016 - 2017 tax year

Low-income working families eligible for the minimum family tax credit (MFTC) will receive an increase for the 2016-2017 tax year. The MFTC currently guarantees recipients an after-tax income of $23,036 a uear ($443 a week). This will increase to $23,764 a year ($457 a week) for the 2016-2017 tax year, starting on 1 April 2016.

For more information on MFTC go to www.ird.govt.nz (search keywords: minimum family).

Are you using Xero?

If you want your business to work smarter and faster, cloud accounting software is a wise investment. Working in the cloud will give you a better overview of your finances, and improve collaboration with your team.

Gardiner Reaney Ltd is a Xero Certified Partner. Call Talia today to talk about Xero for your business (06) 835 3385.

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