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Best Start tax credit, 03 July 2018

The Best Start tax credit (BSTC) is a new component of Working for Families Tax Credits (WIFTC). It is a payment to help families with the costs in a child’s first three years. It is available for all qualifying families with children due or born on or after 1 July 2018.

The BSTC replaces the Parental Tax Credit (PTC). If a child is born before 1 July 2018 but had an expected due date after this, a person qualifies for BSTC. However, if a person also qualifies for PTC, they need to choose which payment is best for their family — they cannot receive both.

A person cannot get BSTC and paid parental leave (PPL) for the same child, at the same time. The BSTC will start once the PPL has finished.

Paid parental leave is extending from 18 weeks to 22 weeks from 1 July 2018 for babies born or expected to be born on or after 1 July 2018. This also means the number of keeping-in-touch hours has increased from 40 hours to 52 hours, Keeping-in-touch hours allow an employee who is on parental leave to stay connected with their employer and perform work from time to time, such as attending a team day.

A person can also get BSTC while they receive any of the following for children in their care:

• Orphan’s Benefit

• Unsupported Child’s Benefit, or

• Foster care allowance.

The amount of BSTC is up to $60 a week ($3,120 a year) per child for babies born on or after 1 July 2018. All eligible families will receive this payment until the child turns one, regardless of their household income. Households whose income is less than $79,000 will continue to receive $60 per week until the child turns three. Those earning above $79,000 may continue to receive payments at a reduced amount. The upper threshold is $93,858 (for one child) when payments stop.

More information is available at the Inland Revenue website: www.ird.govt.nz.

We have until August to get our overseas accounts in to line

If you have an account with an offshore financial institution, including accounts maintained with certain offshore trusts, information about your overseas investments will soon be shared with Inland Revenue. Click here for the Ministry of Business, Innovation and Employment summary of what you need to know.

Important Tax Changes

Whether you’re a sole trader, contractor or employer, there are a number of important tax changes you need to know about. Click here to read detail about changes to Payday filing, my IR, Global Tax evasion and the introduction of Accounting Income Method (AIM) Provisional Tax. While we don’t recommend AIM for most people, you are welcome to contact the team to discuss AIM in further detail free of charge.

IRD Investigations

IRD are shutting off access to their system for 5 days from today 12 April, to “improve” their system. This NZ Herald article (click link) is a reminder to us that, should IRD investigate one’s business or financial affairs, we need the right to ask them on what basis. Case Study Several years ago, one of our clients was investigated on the basis of what proved to be a wrong assumption by the Revenue. Based on the type of business these clients were in, the Revenue expected a certain percentage of their earnings to be received in cash, rather than by electronic payments. Because this business banked lower amounts of cash, Inland Revenue audited them on the assumption that they were hiding some $50,000 per annum, a not insignificant amount for a family run business. (more…)

How to check if you are due a tax refund?

The time of year to check for tax refunds is approaching. This New Zealand herald article shows a step by step guide on how to check if you are due a refund. (more…)

Laws that changed in 2017

The Ministry of Business, Innovation and Employment have summarised key law changes for 2017. Click here to find out about Minimum Wage Rise, Tax for Contractors, ACC levies, Parental leave payments and more.

IRD Online Services Outage

There will be a complete outage of IRD Online Services as below:
  • On Saturday 12 August 2017 services will be unavailable from 1.00pm and the estimated time for the services to be back up is Saturday 12 August at midnight.
  • On Saturday 19 August 2017 services will be unavailable from 1.00pm and the estimated time for the services to be back up is Saturday 19 August at midnight.

Inland Revenue lifting the veil

At present, if you do business with a company, and it has significant tax debt, which weakens its cash position, you have no way of knowing about this liability. Effective 29 June 2017, Inland Revenue will be able to disclose information about companies which have tax debt over $150,000, to approved credit reporting agencies. While we will not be able to obtain this information directly, a request through one of the credit agencies will reveal a significant tax debt. (more…)

Do you have a student loan?

NZ’s Inland Revenue have announced a new student loan calculator. It says: You can use it to find out:
  • how long it will take to get loan-free
  • how extra repayments can get you loan-free faster, and
  • if you’re an overseas-based borrower – how to save on interest. Click here
For more information on personal accounting take a look at our services page.

Compulsory direct crediting of GST refunds

A change made to tax rules will provide businesses with faster access to GST refunds from February next year, says Revenue Minister Michael Woodhouse.

The Tax Administration (Direct Credit of GST Refunds) Order 2016 will make it compulsory for Inland Revenue to provide GST refunds by direct credit to a taxpayer’s identified account, resulting in much faster GST refunds. “Under the current process, a cheque from Inland Revenue takes an average of 10 days until the funds become available to the taxpayer. Direct credit means the funds will be available to the taxpayer in just two days,” Mr Woodhouse says. “This change is the result of extensive public consultation in November 2015, which sought feedback on how digital technology might be used to provide more streamlined PAYE and GST processes for taxpayers. “It is just one of a number of changes that will be introduced next year as part of Inland Revenue’s modernisation programme to make it easier and faster for New Zealanders to manage their tax affairs.” From 7 February 2017 GST refunds will only be made by cheque if Inland Revenue does not have a customer’s bank details or if there are extenuating circumstances, such as hardship. For more information on taxation services check our personal accounting services page.
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