Newsletter December 2020

Office Xmas Hours: Our office will close on Wednesday December 23rd and reopen on Monday January 11th.

Staff News: Keith Rea is retiring in March. He has worked at Candy Gillespie since he left school 52 years ago. Keith has certainly earned his retirement and we know he has a lot to look forward to with Jane, his children and grandchildren. We at Candy Gillespie deeply appreciate Keith's many years of loyal service and we know all our clients do too. We are currently working through the process of transitioning Keith's clients to other accountants within the firm. We'll be in touch soon with more details.

We'd also like to welcome Rachael Coveny who has joined our firm recently. Rachael is a Chartered Accountant who brings a wealth of experience to our team.  

Asset Purchases : Business assets purchased for up to $5,000 between 17 March 2020 and 16 March 2021 can be claimed as a tax deductible expense in the year they're bought rather than depreciating the cost over the life of the asset. You only have a few months left to make use of this one-off opportunity to get a full tax deduction for small assets e.g. computer, chainsaw, heat pump for a rental property. The amount will reduce to $1,000 on 17 March 2021.

Land Purchase Price Allocation: If you are selling or buying property or a business it is very important that asset values are included in the agreement.  If they aren't, there is the potential for an unfavourable tax outcome.  The enclosed Trial Balance newsletter has more information relating to this. Make sure to talk to us before signing a Sale & Purchase agreement.

Trust Act 2019: A new Trust Act comes into force in January 2021.  This brings increased administration and record keeping requirements for Trusts.  The attached Trial Balance newsletter has an in-depth summary of these changes.  If you have a Family Trust you should have heard from us or your solicitor by now about this. These are significant changes and do require your consideration. We have begun a review of all Trusts that we act as Professional Independent Trustees for. Due to the increased administration requirements we will begin charging an annual fee of $300 (plus GST) to Trusts for which we act as Professional Trustees.

Bright Line Property Sales: IRD are currently very active in this space.   All property purchase and sales information is collected and sent to IRD and they use this information to make sure tax is paid on bright line profits. If you purchase a residential property that is not your main home and it is sold within 5 years, any gain is taxable.  You can only have one main home, so your beach house is subject to these bright line rules.  If in doubt, discuss with us.

IRD Update: The Labour Party is bringing in their new 39% personal tax rate for income over $180,000. This will come into force from 1 April 2021 and will apply for the 2021/22 tax year. This will not impact most clients who use companies or Trusts as it is currently intended as a tax on personal income only.

Scam IRD Emails: We see a lot of scam emails pretending to be from the IRD and stating you've got a tax bill or refund. They ask you to click on a link and have your credit card ready. These are scams. Delete them. There are some giveaway signs that the email is fake. Check the email address that the email is coming from. Often it shows a strange email address that is definitely not Inland Revenue. The fake emails often state an NZD amount. If in doubt, check with us. If you do have a tax bill or a refund, we'll know about it.

ACC Quad Bike Crush Protection Rebate: ACC are offering a $180 rebate on certain Crush Protection Devices for quad bikes. It won't cover much of the cost, but if you are interested, Google "ACC Cashback Crush" to find out how to get the cash-back offer.

Christmas Parties & Gifts: Entertainment costs for Xmas Functions are 50% deductible. This is because the IRD states that food & drink are 50% private (non-deductible). The same 50% deductibility rule applies to gifts of food & drink given to staff, customers and suppliers. However, gifts that don't include food & drink are 100% deductible. Fringe Benefit Tax (FBT) rules apply to staff gifts.

Staff Bonuses: Any cash bonuses are taxable and need to go through the PAYE system. Non-cash bonuses (e.g. gift cards, meat) are exempt from tax provided the total value per staff member is below $300 per quarter and total value for the employer per year is below $22,500.

Public Holidays: At this time of year, public holidays come in quick succession. If an employee works on a public holiday which would otherwise be a work day they are entitled to receive time & a half plus a day in lieu. To save costs, many of our farming clients give full-time staff a paid day off on public holidays rather than pay them time & a half.

If you do need your salaried staff to work on a public holiday, as long as they don't work more than two-thirds of a normal day, then a top up for time & a half is not required (e.g. if they just milk on Xmas Day and do no other farm work). That's because working two-thirds of a day at time & a half is equivalent to one full day's pay. So they would just receive their normal day's pay. They would still be entitled to receive the extra day in lieu.

Other staffing advice: Reminders for the Christmas period:

·         Employees may request to cash up one week of annual leave per year but make sure they're taking some time off if you think they need it.

·         If you're employing relief milkers, make sure they fill out an IR330.  If they don't show you an exemption certificate and you don't withhold any tax from them, any payment you make to them is non-deductible for you.

·         If we process your PAYE, please let us know about any staffing changes.

·         We are members of Federated Farmers, so if you would like one of their contracts at member's prices, please let us know.

·         Remember to keep all your time-sheets up to date. If your children work for you over the holidays, they need to keep a time sheet too.

·         Contact Jo Storey or Latasha Tappin at our office if you have questions about wages.

Our Predictions: We only got about half of last year's predictions right. Not one of us predicted a Global Pandemic shutting down the whole world. We'll try to do better for 2021.

-      Interest Rate watcher Alan Candy  - Keep an eye out for good short term fixed rates

-      Political Editor Keith Earl                 - Cindy will be as effective this term as she was in

                                                            the previous three years.

-      Family Matters Craig Taylor            - Succession planning to be a cause of headaches

-      Weather forecaster Sonia Hart       - A wet summer ahead

-      Golfer John Gillespie                       - Getting close to shooting his age

-      Living the Dream Keith Rea            - Electric Bike will be clocking up record distances

-      Covid watcher Heath Tapper          - Another year without needing a passport.

-      Dairy forecaster Michael Candy      - $7 payout here we come!

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