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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

GST and Gifts to Clients

The rule of thumb with gifts is that if they consist of food or drink, you can only claim 50% of the expense as a tax deduction. If you are giving out gift baskets or hampers and some of the contents are food or drink, but not all, the food or drink items are 50% deductible but the other gift items are 100% deductible. When you come to claim the tax deduction, you will need to apportion the expense between the 100% deductible items and the 50% deductible items.

 If your Christmas giving includes gifts to clients, remember that some gifts will be fully deductible while others will be only 50% deductible. Use these examples as a guide.

50% deductible

  • Bottle of wine or six pack of beer
  • Meal Voucher
  • Basket of gourmet food
  • Box of chocolates/biscuits
  • Christmas ham
 

100% deductible

  • Calendar
  • Book or gift voucher
  • Tickets to a rugby game (but not corporate box entertaining)
  • Movie tickets
  • Presents (not food or drink)

Filling Employment Gaps Over Summer

With the holidays coming up, you may have started to think about whether to employ some extra people over the holidays. If you do, think carefully about the kind of help you need and broadly what kind of employment contract is best suited to the situation. It’s important to make sure you comply with current employment law and have it right from the start.

Casuals

Casual employees might be right for your business, for instance if you are covering unexpected absences. But remember that, no matter what you call the employment, if you treat casual staff as if they are permanent — for instance, give them regular hours or work over a sustained period — their employment may be regarded as permanent, with all that that entails. Points to note:
  • Casual work is intermittent or irregular, and casual employees don’t have to accept every offer of work you make so it may not fit the situation you have in mind
  • Just like other employees, people who work casually for you need an employment agreement
  • You can offer casual employees annual holiday pay on a ‘paid as you earn’ basis. You need to discuss this with the people you propose to employ as casuals. If they agree, this must be stated in their employment agreements, and payment must be recorded separately in wage records at a rate of at least 8%.
 

Fixed-term Employees

It might suit your needs better to employ someone on a fixed-term agreement, particularly if working hours are going to be regular and predictable. But the law is very strict about the form of such agreements, and if that is not complied with, you may find yourself with a permanent employee, i.e. someone whose agreement is of indefinite duration.Because a fixed-term agreement is intended to be for a limited time, the agreement must state the means of ending the employment relationship. For instance, this might be a specific date or event (like the last day of the Boxing Day Sales or the final performance of the Christmas pantomime). Or it might be when a specific project is completed, for instance roofing the new hay barn or installing a new cooling system.As an employer you must have genuine reasons for the employment period to be fixed-term and you must advise your prospective employee of when and how the employment term will end and the reasons for it ending in that way. Make sure the employment agreement backs this up clearly.Be aware of the rules around entitlement to holiday pay. Like casual employees, employees on a fixed-term agreement of less than one year can agree that they will receive 8% added to their gross weekly earnings (paid-as-you-earn) instead of taking annual holidays or getting paid out all of the 8% at the end of their term. Again, you must state this clearly in the employment agreement, it can’t be less than 8% of the hourly rate, and it must be shown as a separate item in the employee’s pay slip and in wage and time records.If you would like more information about how to cover these situations in your employment agreements or your wage and time records, please let us know.

Seasonal Workers 

Many businesses are looking for seasonal workers. The hospitality industry want people for their high season. The summerfruit and wine sectors are moving into high gear.If you are keen to employ seasonal workers over the summer and can’t find New Zealand citizens or residents to do the job, it could be an option to employ overseas workers. If you are considering this, make sure you take these simple steps:
  • When advertising, state that applicants must be entitled to work here
  • When applicants contact you, ask for evidence they are entitled to work here
  • Keep this evidence on file
  • Check their visa and passport details on Immigration NZ’s online tool VisaView
And remember – like other workers, seasonal workers have rights as employees and are able to seek protection from workplace bullying or exploitation. Make sure you observe their entitlements to holiday pay and breaks, that you pay them at least minimum wage and have written employment agreements with them.

RSE Scheme 

If you are an employer in the horticulture or viticulture industry, and your need for seasonal workers comes up annually, you might consider becoming a Recognised Seasonal Employer (RSE).This scheme can help you recruit overseas workers when there aren’t enough New Zealanders to plant, maintain, harvest and pack your crops. You need to apply for RSE status and it needs to be renewed regularly. Talk to us if you would like to pursue this.

Revamp to 60 year old Trust Law

Finally some developments in the long-promised overhaul of our sixty-year old trust law. The below information from Beehive courtesy of CCH who keep us updated!

Keep an eye open for updates here.

Do you own rental properties?

If you gain income from rentals, be aware you need to comply with new rules. On 1 October 2016 changes to the Residential Tenancies Regulations came into force to reflect new standards on insulation. Standards New Zealand’s ‘Energy efficiency – Installing bulk thermal insulation in residential buildings’ provide extended guidelines for insulation installers and building owners.This follows up on changes which took effect on 1 July 2016 requiring all rental properties to have ceiling and underfloor insulation by 1 July 2019. Landlords must now provide a statement in the tenancy agreement for any new tenancy commencing on or after 1 July 2016 about the location, type and condition of insulation in the rental home. (more…)
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