How Does Tax Law Apply to Your Situation?
What's In The Forecast?
The IRD is introducing a new service from 1st October 2019 for customers to help them clarify on how tax law applies to their situations.
The new service is a good opportunity for individuals and businesses with an annual gross income up to $20 million to get a binding ruling from the IRD in a faster and cheaper manner than the existing (original) binding rulings service.
When a Beneficiary can Become a Settlor
When we set out on a fishing trip or hike, we always check the weather forecast. It’s no different in business. The forecast tells us if there’s bad weather (poor cashflow) in store based on the direction we’re heading. Your forecast will tell you:
The Accounting Income Method – An Alternative Way to Paying Provisional Tax.
The Inland Revenue have issued a policy document to clarify the position of undrawn beneficiary accounts in trusts. From 1 April 2020 a beneficiary of a trust whose current account balance at the end of the income year is not greater than $25,000 do not become settlors.
How does this impact your trust? If a beneficiary has a balance of more than $25,000 they may become a settlor of the trust which might have unforeseen consequences.
When to Withhold RWT and NRWT
The accounting income method (AIM) is a way to calculate provisional tax if you use accounting software such as MYOB, Reckon or Xero and have turnover of less than $5 million. Under this method, your provisional tax payments will be based on your accounting profit for a period of time (usually in-line with your GST filing due date). The accounting software easily and accurately prepares a statement of activity which details your payments and as a result puts payments more in line with the profit you make.
What sets AIM apart from other methods is that you only pay when you make a profit.
Get It Right Before You Windup Your Company
Resident withholding tax (“RWT”) and non-resident withholding tax (“NRWT”) are a withholding tax on income that is passive in nature.
• RWT applies to resident passive income
• NRWT applies to non-resident passive income
Tax Deductions For the Good Times
There comes a time when circumstances change and it is decided to close your company. You may have sold your business or a property and made a capital gain, or you may have another reason for wanting to close the company.
Tips When Using Xero
A quick summary of the deductibility of entertainment cost including fully deductible expenses, 50% deductible entertainment expenses and gifts to clients.
Tax Payments – When Are These Received In Time?
As a majority of our clients are using the Xero accounting system, we would like to take this opportunity to highlight some common issues that we come across:
Employment Legislation Changes 2019
Inland Revenue (IR) has recently updated its policy for when tax payments are accepted as having been made in time.
With the influence of technology there has been a significant shift in practice to use digital methods for making tax payments. IR encourages customers to use direct banking facilities when they make tax payments (or when refunds are issued).
Loss Ring Fencing
The Employment Relations Amendment Bill 2018 has passed in Parliament and employers can expect to feel some deja vu as many of the changes roll back legislation passed by the National Government between 2008 - 2017.
A number of employment law changes are coming into effect this year.
Research & Development Tax Incentive
If enacted, the new loss ring-fencing rules will come into play from 1 April 2019 for negatively geared rental properties. This has been introduced in order to close the perceived ‘loopholes’ that allows highly geared investors to offset their rental loss against their other income.
Switching to Payday Filing
From 1 April 2019 a change is proposed to Research and Development Tax incentives. The current cash out of tax losses approach is effectively a loan of 28% of Research & Development tax losses which is repaid when the business makes a profit. The new regime proposes a tax credit for 15% of eligible Research & Development expenditure. There would be a limited form of refundable tax credits.
GST Net Expanded to Catch Online Small Goods
From 1 April 2019 it will be mandatory for employers to submit payroll information and employee information to Inland Revenue every payday rather than once a month, so if you haven’t already, you need to start thinking about how this will affect your business and the PAYE returns filing processes you already have in place.
Inaugural 2019 New Zealand NFP Salary Report
A new Bill called the “GST Offshore Supplier Registration and Remedial Matters” bill is set to introduce new rules to capture GST from goods worth less than $1,001. This will be done by obliging overseas companies which sell goods online that have sales of more than $60,000 (the normal GST threshold) to register for GST and charge GST on any goods less than $1,000 that are sold (including shipping and insurance).
The Cost to You at the Pump
Walker Wayland Auckland has partnered with Enterprise Care in the 2019 New Zealand Not for Profit Salary Survey and Report. Enterprise Care has operated within the NfP sector for over 30 years; and in January released the Inaugural New Zealand not for Profit Salary Report.
Automatic Tax Refunds
For those of us who are interested in where our taxes go when paying for fuel at the local gas station the below outlines the breakdown to this question.
As of writing this article the price of petrol per litre was $2.42. Based on AA New Zealand’s website the following shows taxes paid per litre at the pump:
Anti-Money Laundering legislation - Accountant's responsibilities
The Inland Revenue Department are introducing “Automatic Tax Refunds” from April 2019.
This will apply for individuals who are not required to file an actual tax return.
Holidays Act Review
Many of you will be aware of recent changes to New Zealand’s Anti-Money Laundering legislation. In order to help put a stop to money laundering and financing of terrorism in New Zealand, businesses are required to put preventative measures in place. From 1 October 2018, accountants need to run ‘customer due diligence’ (CDD).
Tax Remedial Matters
The Holidays Act Taskforce appointed by the Government has released an Issues Paper outlining potential changes to the Holidays Act 2003. The review was initiated following significant non-compliance with the Act, mainly relating to employees on non-standard hours, or variable incomes, having entitlements calculated incorrectly.
The Taxation (Annual Rates for 2018-19 Modernising Tax Administration and Remedial Matters) Bill contains a number of proposed changes to modernise and improve the administration of tax.