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CG Update - March 2017

People News

At March 31st we say farewell and thanks to Kim Hancock.  We look forward to continuing to provide accounting services for his clients who are now in the capable hands of our Directors and senior associates.


Congratulations to clients Phillip Van Heuven, Adrianus Van T Klooster, and Carlos & Bernice Delos Santos who have all won Farmer awards in recent competitions.


End of Financial Year

Over the next few months most clients will reach their annual financial balance date. This is an important day in your business life and you should take a moment to recognise its significance in determining your financial results for the year.


If we are to accurately calculate your financial performance for the year, then a snapshot of your position on balance date is a vital component of the data required. When preparing your accounts we spend a considerable amount of time and effort in determining what you own and what you owe on balance date.


End of year livestock and trading stock are vital pieces of information. 

Bad Debts – Bad debts are deductible only in the year that they are written off.  Bad debts must be written off before balance date.


All of the above is to encourage you to fill in the green questionnaire form when you have assembled all the information, sign it and send it in to the office.



We Kiwis are extremely generous when it comes to giving help to others in terms of time, energy, expertise and with cold hard cash. The Government recognises that contribution by providing a 33% rebate on cash contributions to registered charities in the education, religious and philanthropic fields.

Send donation receipts in with annual records for us to process your rebate claim.


Wages & Payroll

Be aware of an increase of 50 cents to $15.75 per hour in the adult minimum wage rate applying from  April 1st. Other "starting out" and "training rates" have also changed.


Employers need to ensure that the rate of pay for salaried employees does not fall below the minimum rate on a weekly basis for the hours worked 


If you are paying Contractors or receiving income as one, then new rules exist to allow taxpayers to nominate their own rate of withholding tax (minimum 10%).  Check with us if you need further information.



Interest Rates

Competition in the banking industry remains strong and therefore interest rates have not moved to any great extent. Markets do react to world events but, in the absence of such an occurrence, we see the current situation continuing.

The OCR remains steady at 1.75% with indications from the Reserve Bank that no change is foreseen in the short term.


Budget for the next farming season.

As the current season winds down, if you have not already done so, it is time to think about a budget and cash flow forecast for the coming year. A few points to remember:

-       Incomes were down in 2016, many have experienced a tax holiday over this last year. It is probable  that 2017 taxable incomes will be up on the previous year. You need to budget for  terminal tax April 2018.

-       As your dairy payout prediction is likely to exceed the Fonterra loan repayment trigger point then factor in repayments of the 2016 dairy support loan.

We can help you with producing the budget but you need to give serious thought to the big budget items; employment, feed, fertiliser, any one off item of a repair or capital nature and, most importantly, your personal living requirements.


 Mixed Use Assets

If you have a mixed use business asset then you need to provide us with usage details. Using the beach house as a classic example, in order to calculate the correct percentage of claimable expenses, we need to know:

1.             The number of days rented on a commercial basis.

2.             The number of days used by family members plus days rented to others at less than 80% of market.

Could you please note those details on your questionnaire. If your rental income is less than $4k per annum then you may be able to opt out of returning any income in your returns. Of course that means there is no loss to claim either.


Review your will, memorandum of wishes and other important documents.

A long standing client died recently and despite periodic reminders from the accountant the current will was dated in the 1980's.  One of the nominated executors was also deceased making the issue of probate somewhat delayed.


 In another recent instance, a review of the constitution of an incorporated society revealed that in the event of the society winding up, the charity or organisation that is the nominated beneficiary of any residual assets or surplus funds technically no longer exists.


Another timely but gentle reminder that circumstances and thinking change over time and the need to keep your important legal documents current.



Still a great idea for all of us not of the retirement age. If your Kiwisaver account is lying dormant in terms of annual contributions then you should make a voluntary payment of $1,040 before June 30th to entitle the account to receive the $520 government tax credit.

Trial Balance - March 2017

The latest Trial Balance newsletter has been released. Check it out here

In this issue
  • Maximising your property investment
  • Directors' key responsibilities
  • Minimum wage increase
  • Tax calendar
  • Motor vehicle expenditure of close companies
  • Retrospective adjustment to salaries
  • Beware the debt collector
  • Shareholders' and partners' agreements
  • Deducting tax from payments to a contractor
  • Cross boarder finance
  • Overseas student loan interest exemption
  • Foreign income - reminder
  • Big changes to PAYE on the way
  • Save data even with cloud accounting
  • The worth of a business
  • Valuing trading stock

CG Update - December 2016

Office News

Our office will close on Friday December 23rd and reopen on Monday January 9th. For urgent enquiries, we will be checking emails and the office answer phone on a regular basis so please leave a message.

Two new babies to enlighten the lives of Karyn Walters and Anna Davey were the only interruptions to the committed workload of the great team here at the office.

Kim Hancock has given notice that he will resign from his position with the firm at the end of March next year. We wish Kim well and assure his clients that our team of qualified and capable accountants are ready and keen to continue the excellent service that he provides.


Office Essentials


-       Wages

Reminders for the Christmas period

·         Employees may request to cash up one week of annual leave per year after the entitlement has arisen. The net payment will not be the same as a normal week, the PAYE will need to be calculated at lump sum rates and house rental (if any) is not deducted.

·         Be aware that even if your staff are rostered off on Christmas Day or New Years Day, these public holidays transfer to the Tuesday. Normal statutory holiday entitlements will apply if they work on the Tuesday instead of the Sunday. 

·         If you're employing relief milkers over the Christmas period make sure they fill out an IR330 and if we process your PAYE, please let us know about any staffing changes.

·         Contracts – ignore having these for employees at your peril, this can be an expensive lesson if you don't have one or the right bases covered. We are members of the Federated Farmers so if you are not and would like one of their contracts, please let us know.

·         Timesheets – we are now getting used to this as being good practice.

-       ACC

While you are checking your ACC bill, make sure that you are on the correct industry classification. If you are on the wrong classification, you could be paying too much. If ACC don't know what industry you are in, they default to industries with high levy rates. Making sure this is correct could save you money. If you are unsure, we can review this for you.

-       IRD due dates and payments

Trying to get IRD cheque payments to the right place by the right date is a continual stress point. Internet banking is the safest and best option and we encourage clients to use this method of meeting IRD obligations.  


-       IRD Numbers

If you need to give your IRD number out to anyone because you are about to receive an income stream (i.e. wages, super, interest) then please make sure you give out the correct number for the type of income. Personal income such as wages or national super require your personal IRD number, not that of your partnership or trust or company. Trying to get the data changed over to the correct number at IRD is a nightmare.

If you are unsure then give us a call, the information is literally at our fingertips.






Dairy Farmer Clients

In 1992 Queen Elizabeth described that particularly bad year as Annus Horribilis which is an apt description for the 2016 dairy season. Students of Latin will know that Annus Mirabilis means wonderful year and while it is unlikely that the farmers will yet see the current season payout in those terms, things are moving in the right direction.


Low income years give us the opportunity for tax planning options such as livestock valuation and fertiliser cost deferral to take advantage of the differential tax rates.



Economic Review – Where did the year go?

The mid year of the electoral cycle can often be described as "steady as you go" with no major economic changes to impact on business decisions. There were legislative changes put in place to reduce the hype in the property market and to a certain extent they have achieved the desired effect.


The often predicted interest rate rise did not happen and the cut to OCR softened rates further. The currency exchange rate with our major trading partners also did not move as far or as quickly as some had forecast.


In the last 12 months we have lost two great NZ captains McCaw and Key. In the case of McCaw there was an end of year blip and a settling in period, but as is common with us Kiwis, the next person stepped up to the plate and we carry on. I trust the same will happen in the political field.


However, on the global scene there have been enough happenings to maintain a degree of uncertainty and volatility in economic markets. The existing world order of politics and economics is under scrutiny and possible threat from a number of sources :

-       The war(s) in the Middle East leading to a substantial refugee outflow has brought a number of pressures to European countries.

-       The Brexit vote was a huge misread of the British sentiment in rural England by Cameron and the establishment.

-       The USA has just played its biggest trump card. While the big cities overwhelmingly voted for the status quo the "make America great again" obviously struck a chord with middle America. There are a significant number of overseas countries who are watching as to how the new administration attempts to convert that promise into reality with some trepidation and consternation.


Our Predictions for 2017

Our last year's predictions were appallingly bad, only Alan Candy's call on falling interest rates and Craig Taylors obvious flag choice bore any resemblance to reality. We can only improve.

-      Rate watcher Alan Candy               - Interest rates will not rise until after the election.

-      Tennis watcher Keith Earl              - Roger has one more grand slam left in him.

-      Weather watcher Craig Taylor       - The weatherman still has no idea.

-      Political watcher Sonia Hart           - Crusher Collins will have a big year

-      Cricket lover John Gillespie           - Kane will win the toss and bat.

-      Rugby Head Keith Rea                    - AB,s 2 Lions 1

-      Cocky upstart Ben Blackett             - I will be the firms best golfer by March

-      Staff watcher Brenda Hull               - Ben Blackett will be fired late February

-      Fashion watcher Heath Tapper        - Beards will be out (same as last year) eventually.

-      Newly wed Michael Candy              - Fatherhood is just around the corner

We wish all our loyal clients a Merry Christmas and a Happy New Year.

Trial Balance - September 2016

The latest Trial Balance newsletter has been released. Check it out here

In this issue

  • She did what? #oops
  • Read every word of insurance policies
  • Keeping an eye on your team's morale?
  • Key person cover – is your business vulnerable
  • Fraud
  • Being a trustee carries responsibilities
  • Tax calendar
  • Shareholder/employees
  • Debt forgiveness
  • Maximising your property investment

CG Update - May 2016

End of Financial Year
The annual questionnaire for your 31 May 2016 balance date has been sent out. Here are a few tips to help you accurately record your livestock numbers.

  • It is a lot easier if it's done on or near to balance date. 
  • Don't separate Jerseys, Friesians, or any other breed. Dairy cows are dairy cows.
  • Don't include heifers coming into the herd in the cow numbers, these are R2 heifers.
  • Don't forget to add in carry over cows and stock out grazing or leased that you own.
  • Calves born after last year's balance date and before this year's balance date are categorised as rising 1 even if they were born on the last day of the financial year. There can be confusion for winter milk herds calving from February.

All of the above is to encourage you to fill in the green questionnaire form. When you have assembled all the information, sign it and send it in to the office.

IRD Livestock Values
The IRD had not released their Herd Scheme values for the 2016 year at date of writing this newsletter, but we expect the values to come down.

Provisional tax – last instalment
For provisional tax payers, you are about to receive your last instalment notice for your 2016 provisional tax commitment. This instalment is due on the 28th June 2016. Using IRD's standard calculation method, this tax payment is based upon your 2015 income plus an uplift of 5%.

An opportunity may exist to re-estimate your 2016 provisional tax downwards to reflect the lower income.

Wages & Payroll
Hardly a day goes by without a client ringing with an employment or wage calculation issue and we are happy to help. We have seen big improvements in compliance and record keeping over the last few years with respect to time records.

We would trust that by now paying staff "under the table" is a thing of the past. There are too many risks, too many prying eyes and the costs and penalties of non compliance are not worth it.

There are a few "golden rules" in calculating wage payments for those who work in your business.

  • You should not pay anyone without an IRD number. Without it the non declaration rate of 46.39% must apply. New employees must sign an IR330.
  • All employees should have an employment agreement
  • Everyone is entitled to an 8% holiday pay component of their pay and that must be shown separately for casual staff if it is to be included in the period's pay. This must also be agreed on in the employment agreement.
  • Each pay period must meet the minimum wage rate requirement with respect to hours worked.
  • If you provide any taxable allowance (free board or house) then its value must be included in your tax calculation.  
  • Self employed contractors must produce a withholding tax exemption certificate, otherwise tax must be deducted.

Payroll is a sensitive issue and good communication with employees on wage issues is essential. There is a bigger picture to consider. Many staff have non job related issues that are affected by their gross wage such as child support and family assistance.       

Latasha Tappin and Alicia Collins are currently looking after our PAYE and payroll calculations. Give them a call on any payroll issues.

Budgets & Cash Forecast
We can assist you in preparing your 2016/17 budget and cash flow. NOW is a good time to get onto that task. We are also able to import those figures into your accounting file and produce actual vs budget comparatives as we go through the season processing your GST returns.

For comparison with other farmers Dairy Base provides good statistical data. We can assist you with the input information required for you to participate.

Disruptive Technologies – Food for Thought!
These are new tech developments that are going to materially affect economies in the future. These are predictions that have validity due to changing cost criteria such as.

  1. All energy will be renewable solar/wind/water by 2030. Solar power is benefitting from a 99% drop in the cost of solar photovoltaic (PV) cells since 1976. The cost of power storage is also dropping dramatically through improved and cheaper batteries. A US company launching a Powerwall residential battery had $US800 million in orders and reservations in the first week. There are still a few challenges left in terms of safety and battery fade. By 2020 (thats four years) in many countries solar power will have achieved grid parity pricing.

  2. All new vehicles will be electric by 2030. An ICE (internal combustion engine) has over 2000 moving parts. The electric vehicle (EV) has 8. EV's are 5 times more energy efficient than ICE vehicles and 10 times cheaper to fill up/charge. The Tesla Model 3 at a cost of $US35k attracted 253,000 new orders in the first 36 hours following launch and has faster acceleration than the BMW 3 series. EV's currently represent less than 1% of global vehicle sales but has achieved growth of 1000% in the last 4 years.

  3. All new vehicles will be driverless by 2030. 90% of vehicle accidents involve human error and 40% of those also involve alcohol or drugs. Computers don't drink. Road deaths in the USA total 34,000 per year and in China 275,000. The key technology is lidar (light radar) sensors which cost $70k per vehicle in 2012, will drop to $350 per vehicle this year, and will eventually cost $90.On average the human race spends 20% of their working time behind the wheel, think of the other things you could be doing. There is an interesting race going on between Car companies who are adding computers to wheels and the likes of Google who are adding wheels to computers.

The reason why the above are referred to as disruptive technologies are the possible effects these new developments are going to have on significant existing industries, such as oil, car parts, power generation. The economies of whole countries will be affected, what about agriculture?

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