Miller Johnson – March 2020 Newsletter
It’s March already – the last month of the financial year!
This month’s newsletter holds some practical information about COVID-19, the new coronavirus, as it starts to impact life in NZ.
We have also included some end of year tips and thoughts. If you haven’t completed your affairs for the 2019 year, or are concerned about upcoming tax payments, let us know….and if you want to discuss anything, or need any clarification, you have our number!
Coronavirus – what will it mean for me?
Experts have been warning us for years that the economic bubble is about to burst. While most have been concerned how this may come about due to share prices, property values, bond and currency issues, it looks as if the real threat has come in the form of a health threat from a virus with the outbreak of COVID-19. As we go to print, COVID-19 is starting to spread wide and far.
A small number of clients have businesses that have already been affected by the virus. If you are likely to fall into difficulty with Inland Revenue as a result of the impact of the virus on your business, we urge you to contact us, or IRD direct. We have made one approach to IRD so far for a client who was directly affected, and their response has been very helpful.
Regardless of industry, we recommend businesses develop a policy and a plan for dealing with COVID-19. Think not only of direct sales, but also potential supply chain difficulties, infrastructure losses, and what can be done to mitigate the impact (e.g. remote working, alternative supply sources). The simplest way to set up a plan is to think of each activity in your business, how it might be impacted, and what you can do to work around or through it.
This all may sound familiar to those who were in business at the time of the bird flu threat, but like natural disasters, we never know when or how big it’s going to be.
Some useful information:
Employers – for more detail we offer an excellent article written by Sylvia Wood of Knowhow Limited
General and practical information – we particularly like this information from the US CDC (Centres for Disease Control and Prevention)
Employment New Zealand have also issued some general guidelines
See also the Ministry of Business, Innovation and Employment website
Wage Increase on 1 April 2020:
As of 1 April 2020, the minimum wage will increase to $18.90 per hour– an increase of $1.20 per hour. The starting-out and training minimum wage rate will increase from $14.16 to $15.12. This rate remains at 80% of the adult minimum.
IRD no longer accepting cheques:
As previously mentioned, IRD are no longer accepting payment by cheque from Sunday March 1. If this will present real difficulty for you, and you have not yet been able to find a solution, please contact your usual accountant at our office.
Xero subscription price increase:
For those clients who are on a Business Edition subscription with Xero, we note that the price will increase as per below effective March:
Business Editions Plans:
Starter – was $27.50 + GST and will increase to $30.00 + GST
Standard – was $60.00 + GST and will increase to $62.00 + GST
Premium – was $75.00 + GST and will increase to $77.00 + GST
If you pay Xero direct, your direct debit will increase. Those clients who receive their Business Edition Xero bill from us will note a slight increase from next month.
For a number of years now, we have offered the Audit Shield insurance service to our clients. Its purpose is to cover the cost of addressing inquiries from IRD, ranging from phone calls requesting information, to full-on investigative work. While IRD activity has fallen off in the last year or so as they brought their new system in to place, we expect them to become more active in this area, as they have additional resources now with the new system.
A few points to note:
- This insurance covers taxes – so it excludes Working for Families but includes Customs audits
- If IRD call you direct, and ask for information, if you have them call us, then your Audit Shield Policy will cover our time
- We understand that IRD are especially interested in cash businesses and rental costs at present
- Sometimes a client will say, “If my return is right, I have nothing to worry about”. This is true, but IRD still have the right to look in to your affairs and ask questions – which takes time and work!
Keep an eye out – Audit Shield Insurance policy letters will be emailed out this week for their new policy starting on 1 April 2020. If you prefer not to be contacted, please let our office know. And if you have any questions about its suitability for you, again, contact us.
AND ANOTHER COMMENT ON IRD
We are finding the new system for the most part to be a big improvement over the previous software. However, one issue which keeps coming up is the way IRD show “overdue” revenues – with red numbers and CAPITAL LETTERS. This is often a source of distress to clients who are checking MyIR – do always contact us with any concerns.
It’s tax time again!
Soon we will be sending out reminders for taxes payable by 7 April, and very soon after that, for 7 May payments.
Two ways we are able to assist are:
- We offer the Tax Traders intermediary service if you need to manage payments of tax
- If your 2019-20 profits are significantly different from the 2018-19 year, we can look at estimating the current tax payment (applies to the May payment)
End of year tax planning:
For businesses looking at the looming end of the tax year, there are a number of things to do to tidy up your records.
Our top 3 are:
- Go carefully through your accounts receivable and write off any bad debts before 31 March. You can still chase them for payment, it’s just that they must be written off your ledger before balance date if you don’t want to pay tax on them.
- If your business carries stock, check for any stock which you won’t be able to sell for full price. This may be revalued; ask your usual contact at our office for details.
- Go carefully through your last fixed asset schedule (contact us for a copy if it’s easier) and check that all assets listed are still owned and used in the business. Any items which have been scrapped may be written off, and a deduction claimed for their tax book value.
And for a comprehensive list of legitimate tax planning actions to take in March, click https://www.millerjohnson.co.nz/free-resources/noticeboard/
That’s it from us for now….. you’ll be hearing from us again soon when end of year questionnaires are ready.
In the meantime, you are welcome to contact us with any questions, suggestions, or comments.
Kind regards from the Team at Miller Johnson Chartered Accountants