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CG Update - May 2018

Newsletters, Candy Gillespie Ltd, Matamata Newsletter March 2010
End of Financial Year

Enclosed is your annual questionnaire for your 31 May 2018 balance date.

Please fill in the green questionnaire form and when you have assembled all the information, sign it and send it in to the office.

 

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 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 out 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.

 

Wages & Payroll

For those of you employing staff, make sure you have all your wages and payroll issues sorted. Labour inspectors now have the ability to fine on the spot for non-compliance including the lack of timesheets and contracts.

 

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. New employees must sign an IR330.

·         All employees should have an employment agreement, including casual employees.

·         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. ( Minimum wage is now $16.50)

·         If you provide any taxable allowance (free board or house) then its value must be included in your wage/PAYE tax calculation. Market value of rents should apply.

·         Self-employed contractors receiving schedular payments must produce a Withholding Tax exemption certificate, otherwise tax must be deducted. (This doesn't apply if the contractor trades as a company)

 

We have excellent knowledge in the office so please contact us if you are wanting help with wages calculations for new employees or final pays for those that are moving on.

 

Cloud Computer Packages

There is a lot of noise at the moment about cloud computer packages such as Xero, MYOB and Cash Manager Rural. If you are going down that track:

1) PLEASE TALK TO US FIRST so that we can make sure you are getting the right package for you.

2) make sure we help you SET IT UP PROPERLY from the outset

3) INVEST IN SOME TRAINING so that you are getting it right and utilising all the features

 

Budgets

Now is a good time for you to be putting together a budget for the 2018/19 season. If you would like us to help you with this please let us know as we have all you financial information and history. We also recommend you load your budget into your system so that you can compare actual vs budget figures during the year. The bankers love it if you are doing this.

 

Dairybase

If you want to benchmark your farm against the dairybase benchmark figures, please let us know and we can load your financial information for you or alternatively we can send your accounts directly to dairybase who load your data for a $100 fee.

 

IRD visits & communication

The IRD have been very active lately trying to promote their new initiatives such as AIM provisional tax and filing PAYE returns on line. Please discuss this with us first to make sure that what they are recommending is right for you. Tax simplification is not always as easy as it seems.

 

If you get a letter from the IRD with regards to outstanding taxes or taxes due, don't ignore the letter but please check with us first before paying it.

 

Also be mindful of scam emails from people pretending to be from the IRD and offering you a refund!

 

IRD Livestock Values

The IRD have recently released their Herd Scheme values for the 2018 year.

 

For those not on the herd scheme, there may be opportunities to get on the herd scheme. It will be interesting to observe what might happen with livestock values with the impact of Mycoplasma Bovis.

CG Update - March 2018

Newsletters, Candy Gillespie Ltd, Matamata Newsletter March 2010
 

People News

A year with no new team members but with returnees from parental obligations and two new future team members in Nate Blackett and Freya Candy which brings us to the highlight of the year of Alan Candy achieving grandparent status.

 

End of Financial Year

Year end balance date is upon us requiring serious study, diligent completion plus return of the end of year green questionnaire form. 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.

 

End of year livestock and trading stock are vital pieces of information. Considerable staff time can often be spent reconciling end of year livestock numbers. Farmers quite often trade livestock around balance date such as culls or selling excess stock not required for following year. Sale dates, Invoices and Invoice dates determine ownership and can be more important than the date of the receipt of the proceeds.

 

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


Donations

A 33% rebate is available for cash contributions to registered charities in the education, religious and philanthropic fields.

You can complete your rebate application online to IRD, however that donation rebate claim will not be processed until IRD have evidence that you are in receipt of income to cover the rebate which often means the filing of your tax return.

You can send donation receipts in with annual records for us to process your rebate claim.

 

Wages & Payroll

Be aware of an increase of 75 cents to $16.50 per hour in the adult minimum wage rate applying from April 1st. Other "starting out" and "training rates" have also changed.

 

If you are arranging new staff for next season, make sure all the boxes are ticked in terms of contracts, timesheets, kiwi saver and any family related payments. Wage compliance is still a major issue.

 

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

 

AIM

Inland Revenue have been approaching business and farm owners over the last month about a new way of paying income tax called the Accounting Income Method (AIM).  Whilst this new method is in the name of tax simplification, we suspect it may actually increase tax compliance cost.

As a starter, you must be using MYOB, Reckon or Xero online accounting systems.  It does have a benefit if you experience strong seasonality with your cash flow, but there are downsides to applying AIM. 

We do still have other options available to us to spread your tax payments and avoid late payment penalties using "Tax Pooling Solutions" or Tax Management New Zealand".  If you want to talk through if AIM is a viable option for you to implement, please give us a call and we would be happy to discuss options with you!!

 

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 p.a 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.

 

Bright-line Test

Several client queries have arisen over the application of the bright-line test as it affects property transactions plus enquiry as to when the extension from two to five years will be implemented.

 

The bright-line test came into force on 1 October 2015. If you owned land before that date or had entered into an agreement to purchase before that date then the bright-line test does not apply to that property.

 

However the two year period starts when the title is registered in your name and can be triggered by entering in an agreement to sell within the two year period.

There are a number of situations when land is acquired that do not follow the standard land sale process. In those situations, separate rules apply for when the bright-line period starts.

The extension to five years although not yet enacted we believe will come into force on April 1st this year.

 

Kiwisaver

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.

CG Update - December 2017

Newsletters, Candy Gillespie Ltd, Matamata Newsletter December 2007

Office News

Our office will close on Friday December 22nd and reopen on Monday January 8th. For urgent enquiries, we will be checking emails and the office answer phone on a regular basis so please leave a message.

From a staff perspective there were few changes to the team. Karyn Walters and Anna Davey have returned after maternity leave. Ben Blackett now has Nate to keep him awake and Michael Candy, true to his 2016 prediction is to become a dad in January.

The CGGC (Candy Gillespie Grandparent Club) is looking forward to welcoming Alan Candy as the 8th member.

 

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.

·         If you're employing relief staff 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.

·         Timesheets – we are now getting used to this as being good practice. For those who have employees with a work visa, timesheets are now often requested by Immigration NZ to ensure compliance.

-       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

If you are paying IRD by cheque, allow plenty of time for delivery (say 5 days) before due date to avoid additional interest and penalties. Internet banking is the safest and best option and we encourage clients to use this method of meeting IRD obligations.

 

-       Brightline Test

If you are selling residential property you have owned for a short period then be careful that the transaction does not become subject to the potential of any profit becoming taxable through a breach of the Brightline Test. You should note:

 

  • The 2 years starts from the date the solicitor lodged the title – not the date that settlement occurred.  This could add up to 2 weeks onto the time frame.
  • When looking at selling, the contract (Sale and Purchase agreement) cannot be dated before the 2 years is up.  It does not depend on the settlement but when the initial negotiations occurred.
  • The family home is exempt from these rules.

 

Dairy Farmer Clients

In 2017 May balance date clients received around $5.52 per kg/ms with a variance due to the previous year's production and capacity adjustments. In 2018, on current estimate the payout, subject to the same variables, will be $6.42 which is a +16% increase.

 

Minimum Wage

The minimum wage will increase to $16.50 per hour from 1 April 2018.

 

New Government and 2018

By now you should be aware that there is a new government in place and 2018 is almost upon us. In no particular order, here are a few of the government initiatives that will face us in the coming years.

 

  • Family Assistance Package - significant changes to the family assistance package starting July 2018 plus cash payments for new parents.
  • Tax Working Group - an investigation into the fairness of the tax system. There is a generous time frame for reporting back and a commitment to public consultation so we expect no significant changes to the tax system for three to four years. The two standout issues are the question of capital gains and the taxing of NZ made profits by offshore companies.
  • Gold Card Clients – the introduction of a Winter Energy Payment of $450 single and $700 per couple for those on main benefits (including NZ Super).
  • The Brightline Test will be extended from two to five years and tax rental losses ring fenced against future profits.
  • The repeal of the tax cuts announced by the previous government which were to take effect on 1 April 2018.
  • Increase Paid Maternity Leave from 1 July 2018.
  • Free fees for first year of post-secondary education from 1 January 2018.
  • Increase in Student Allowances by $50 per week.
  • Minimum standards for warm and dry rental homes. The Healthy Homes Guarantee Act 2017 has been passed by parliament.
  • Will introduce a ban on overseas property speculators from buying existing houses.
  • Will tighten the criteria for overseas investors in rural land.
  • Will stop Housing NZ selling state houses and will establish the Kiwibuild program.
  • Will resume contributions to the NZ Superannuation Fund.
  • An Independent Climate Commission will be setup. A process will be established for setting net zero carbon emission goals.

 

Skill Shortage

Because of our buoyant economy and relatively low unemployment rate, nearly every business type suffers from a skill shortage. Every employer should have a plan that answers these questions.

-       How do I train my staff better and faster?

-       How do I retain better staff longer?

 

Trusts

As client's individual circumstances change, so does the need or desire to protect assets through Trust ownership. New rules are being introduced around trust compliance. We will advise of the implications of these as they become law.

 

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

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