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.