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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.

Ho Ho Ho! Knowing what’s deductible

When you’re entertaining clients or colleagues, some entertainment expenses are tax deductible while others aren’t. It can be tricky working out what’s deductible as a business expense and what isn’t.

The basic idea is that an expense is business-related if you spend the money to help your business earn income. Most business-related expenses are fully deductible. If the expense doesn’t help your business earn gross income, it’s private and you can’t claim it as a tax deduction. It becomes a little trickier when there’s an element of private enjoyment. You might think that the firm’s Christmas party for clients is a business related expense and should be fully deductible because it’s promoting your business, products or services. However:
  • if your clients or employees have a greater opportunity to enjoy the entertainment than the general public, you can only deduct 50% of the costs
  • if anyone associated with the business has a greater opportunity to enjoy the entertainment than the general public, you can only deduct 50% of the costs
Generally speaking, if there’s an element of private enjoyment, the expenses (in addition to the food and drink) associated with events where you entertain clients and/or staff will only be 50% deductible. For instance, this would include the hire of crockery, glasses, waiting staff and music. There are exceptions. Entertainment supplied for charity is 100% deductible. For instance if you throw a Christmas party for the children’s ward at the local hospital, this is fully deductible. Entertainment enjoyed outside New Zealand is 100% deductible. If you take the team to the Gold Coast for Christmas (lucky them) it will be fully deductible. However, if they contribute towards the cost of their airfares (or anything else), you will need to reduce your expense claim by the amount of the contribution. Some entertainment expenses are fully deductible but some are not. Take a look at our small business accounting services page for a greater insight into the services we offer. You can also use these examples as a guide. 50% deductible
  • Christmas drinks for team members or clients in the office
  • Christmas drinks for team members or clients in the pub
  • Hire of a launch to entertain clients
  • Restaurants providing food and drinks to team members at a social function in their restaurant
  • Staff Christmas party on or off the business premises
  • Function hosted in a marquee at the races (or in a corporate box at the rugby). Inclused the cost of tickets and any food and drink provided
  • A weekend away for the team at holiday accomoodation in New Zealand. Includes any fod and drink provided
  100% deductible
  • Donating food to a Christmas party in a children’s hospital
  • Providing morning and afternoon tea for your team
  • Providing entertainment, including food and drink at your promotional stand for the Cracker Christmas Festival
  • Holding the Christmas party in Fiji (woo-hoo!)
  0% deductible
  • Taking your family (who don’t work with you in your business) out for dinner to thank them for being patient while you worked long hours and paying for this using the business credit car
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