Keep up-to-date with us and what's happening in the business world |
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- What Will a National-Led Government Mean for Your Taxes?
- Planning for the Trustee Tax Rate Increase - Xero Roadshow: Early Office Closure - 14 November 2023 - Xero Tip of the Month: Using the Demo Company Feature - Tax Question of the Month: Deductibility of Travel Expenses between 2 places of Work
- Welcome to the Team: Jody & Sunil
- Important IRD Tax Notices - IRD Upcoming Tax Payment Dates |
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We don’t yet know exactly how the new National-led coalition government will be formed. But we do know that National pledged to make some major changes to tax if it came into power. Here are some of the changes that could affect you:
Tweaks to tax brackets National has proposed changes to tax brackets, designed to adjust for inflation and boost incomes: |
Restored interest deductibility on rentals and a two-year bright line test:
On investment properties, National has said it will gradually reinstate 100% interest deductibility. This will happen in increments over the next three years. The bright line test, which is currently set at 10 years, would be reduced to two years.
FamilyBoost and Working for Families
FamilyBoost is a new initiative that would provide a rebate for childcare costs of up to $150 a fortnight, reducing for higher incomes. National has also proposed an increase to the existing Working for Families in-work tax credit. Together with the new tax brackets, National says a couple with young children, with a household income of $120,000, would have up to $250 a fortnight more in hand.
No more clean car discounts
National says the clean car rebate and feebate system will be scrapped at the end of 2023. Instead, the party plans to support the transition to EVs by expanding the public charger network, adding 10,000 extra charging stations by 2030. You can read more about National’s tax plan here. ACT and NZ First may yet have their say on taxes
ACT has its own tax plan which includes a two-bracket income tax system, and the party will have an influence on the final decisions regarding tax brackets and rates. It's not yet clear whether National and ACT will need to strike a deal with New Zealand First, but if they do it may mean further negotiations on tax changes.
We’ll keep you posted on the changes that will impact you
We will be watching closely as the new Government makes decisions on taxes – and we’ll keep you updated. If you have questions about what new taxes could mean for you, your trust, or your business, we’re here to help. Drop us a note or give us a call, we’d love to hear from you. |
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PLANNING FOR THE TRUSTEE TAX RATE INCREASE: COMPANIES WITH A TRUST PAYING DIVIDENDS |
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As announced in the 2023 Budget, the Government is set to raise the trustee tax rate from 33% to 39%, with the change taking effect on April 1, 2024.
From the perspective of companies operating under a trust structure, this adjustment in the trustee tax rate will result in an additional 6% in taxes when distributing dividends to shareholders.
This is a substantial shift that will undoubtedly influence how businesses structured with trusts manage their earnings and financial strategies moving forward. |
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This bill is still before Parliament (which means it has not yet been passed); we are however expecting the new Government to push it through. While this might change as part of the coalition agreements, we want to flag that there are some potentially significant impacts.
Should this new rate comes into effect, and you have a trust that is a shareholder in your company, we strongly recommend that you contact us in the new year. This discussion will provide an opportunity to explore the best course of action and discuss options regarding potential dividends that can be declared prior to March 31, 2024. Keep an eye out for further details in our future General Ledger newsletters. |
XERO ROADSHOW: EARLY OFFICE CLOSURE 14 NOVEMBER 2023 |
Today, November 14 2023, our office will be closing at 12:00 pm so our team can attend the 2023 Xero Roadshow at the Tākina Wellington Convention and Exhibition Centre in Wellington.
For those who may not be aware, the Xero Roadshow is an annual event designed for Xero Accounting Partners. It serves as a platform that brings together industry leaders, innovators, and like-minded professionals from across New Zealand, providing a valuable opportunity for learning and fostering connections.
As we take pride in our knowledge of Xero, we believe that the most effective way to sustain and enhance this knowledge is through active participation in seminars and events. These events offer us valuable insights into the latest updates and forthcoming developments, helping us to continue delivering the highest level of service to our valued clients.
Stay tuned for upcoming updates on our experience at the Roadshow.
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XERO TIP OF THE MONTH: USING THE DEMO COMPANY FEATURE |
Have you ever wondered how a transaction would affect your accounts or how it would show in the reports, but you didn’t want to risk messing up your financials? Xero's demo company lets you experiment with usable test data. Hopefully she will come back full of ideas and will share any exciting news that Xero have to share with you.
The demo company allows you to test out transactions and features completely separate from your schools’ data. Utilising the demo company, therefore, won’t affect anything you already have set up, nor will anyone else be able to see data you enter or import into the demo company.
To access the demo company feature: - Click the list icon to the left of your school name on any page, and select My Xero
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At the bottom of the next screen, you’ll see a link to Try the Demo Company (NZ). You can reset the data anytime. But be aware that any data you enter or import will automatically expire and reset after 28 days.
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TAX QUESTION OF THE MONTH: |
QUESTION: Florence is a highly qualified nurse specialising in oncology. Her prime employment is with a hospital but after her usual working day she works at a private oncology surgeon’s clinic. This involves travel from her hospital job to the private clinic.
Given that home-work travel is not deductible, is the travel between the 2 workplaces deductible? Does the fact that the hours worked in the private clinic is well after normal work hours make any difference? ANSWER: If the nurse is an employee and not a contractor, any travel expenditure will not be deductible. This is a result of the employment limitation in s DA 2(4) of the Income Tax Act 2007. Even if Florence is not an employee, the private limitation will likely apply in this situation.
Travel made to commence work (earning income) is considered to be private in nature and not deductible. For travel expenditure to be deductible, the travel needs to be in the course of performing work (ie, earning income).
In Technical Decision Summary (TDS 22/18), a farmer sought to deduct the cost of his travel between his farm (on which he worked) and an unrelated contracting activity. The Tax Counsel Office decided that the taxpayer's travel expenses were not deductible because: -
the travel occurred in the intervals between the 2 unrelated income producing activities, being the taxpayer’s farming activities in their home city and their work as an independent contractor in the other city — not while the taxpayer was engaged in either activity
- the costs arose from the taxpayer’s need to be in a position to start tasks from which assessable income would be derived
- the costs were for travel “to one’s work” and “from one’s work”, as opposed to “on work” for either activity.
In this situation, Florence is travelling from one job to start another unrelated job. The travel expenditure is likely to be considered private and not deductible. |
WELCOME TO THE TEAM: JODY & SUNIL |
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Originally from sunny California, Jody has made Wellington her home for the past twelve years. With an extensive background in various accounting and finance roles, she brings a wealth of experience to the team.
Recently, Jody completed a Master in Professional Accounting at Victoria University of Wellington and plans to continue her professional studies to become a Chartered Accountant.
As our new Business Services Accountant, Jody is looking forward to preparing and providing you with crucial financial and accounting services while supporting your business. Her primary goal is to assist clients in maximising their financial potential while reducing the stress of compliance. Outside of work, she enjoys reading, spending time with her children and friends, and exploring the great outdoors. |
| Born and raised in India, Sunil moved to New Zealand just over a year ago to pursue new opportunities in Accounting and Finance-related roles.
After initially settling in Hamilton, he recently completed a Master in Professional Accounting at the University of Waikato before making the move to Wellington. Bringing over 5 years of experience in accounting and finance across various industries, from smaller startups to medium-sized companies, Sunil joins us as our new Business Services Accountant.
Sunil is looking forward to providing essential financial and accounting services while offering insightful strategic advice to support and nurture the growth of your business.
In his spare time, Sunil enjoys tending to his garden, exploring culinary endeavors, and staying active through a game of badminton. |
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IMPORTANT IRD TAX NOTICES |
IRD Tax Instalment Arrangements:
The Inland Revenue has increased its efforts to address and actively pursue overdue payments, leaving no room for leniency. It is absolutely crucial that any payment arrangements you enter into are strictly adhered to; failing to do so may lead to the IRD declining further instalment arrangements and instead requesting immediate full payment.
Remember, we're always here to offer support and address any questions you may have regarding your tax payments. Please feel free to reach out to us whenever you need assistance on 04-970-1182. IRD Tax Payments: A request for separate transactions
When making payments for both GST and Income Tax, due at the same time, we would greatly appreciate it if you could submit two separate transactions instead of one. This small adjustment would save us a significant amount of time, as we would otherwise need to contact the IRD to request the relocation of a payment to the correct tax account and period. Unfortunately, the Inland Revenue systems cannot allocate lump sum payments to distinct tax accounts. If you'd like to discuss this further or have any questions, please do not hesitate to give us a call at 04-970-1182. |
UPCOMING TAX PAYMENT DATES |
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