Your payment options have changed

Do you pay Inland Revenue by cheque or make payments at Westpac?  If so, you need to be aware of recent changes to our payment services.

Limited services at Westpac

Westpac will continue to accept cash or eftpos payments over the counter after 1 October 2014 but they'll no longer accept any cheque payments, returns or other documents. 

Posted cheques must be received on time

From 1 October 2014, cheque payments and returns must be received at Inland Revenue on or before the due date to avoid late payment penalties and interest.

There's never been a better time to go online

Although payment by cheque is one of many payment options available to you, have you considered going online?  Electronic channels are secure, easy to use and accessible 24/7.  Last year, over 70% of payments to us were made online.

We recommend internet banking.  Just go to your bank's website, log in and use their tax payment service.  Your payment will show up on your bank statement straightaway. You can make your payments right up to and including the due date.

 

Clients with employees

From 1 April 2013 the following payroll changes apply:

1, School children will be taxed at source. Gone is the tax free salary up to $2,340. Download an IR330 form from the IRD.
2, Kiwisaver employee/employer contribution increases to the minimum of 3%. They must complete a new KiwiSaver deduction (KS2) form if employees wish to reduce their contribution from the higher 4% or 8%
3, The removal of Tax codes ML and ML SL and replace with M and M SL. Unless the employee gives you a new tax code using an IR330, you can change this code.

Contact me if you want to discuss these changes and how they might impact on you.

Look through company

Introduced on 1 April 2011 a look through company (LTC) restricts the loss a tax payer can attribute to themselves.

The treatment of Income Tax is the only taxation difference compared to any other company.

LTC's dont pay income tax, shareholders do based on their ownership share. How it works
- You can have upto 5 shareholders (spouses are treated as one) and must be natural persons
- All shareholders must agree on the LTC election
- All gains and losses (income and expenses) of the LTC are passed to the shareholders based on their ownership percentage (subject to the loss limitation rules*)
- gains from selling share will be treated as income therefore subject to income tax (note there is a $50,000 threshold)
* shareholders are attributed real economic losses only. This equates to the adjusted book value (Owners Basis) of their investment

Owners Basis = I - D + Y - W - WA I- Investment or funds introduced
D- Distribution (excludes salary)
Y- Share of operating/capital Income (includes past years)
W- Deductions (prior year)
WA- Disallowed amounts (introduced funds within 60 days of balance date exceeding $10k) If you would like to talk more about LTC's call me.

What good is a family trust?

The cost of $1,000 a year to run a trust means it's not for everyone.

Who should consider putting their assets into a family trust? Anyone who: - Owns their own home - Been successful business - Concerned about the future for the beneficiaries of their wealth

A trust can help protect your assets through business and relationship meltdowns. They can also secure assets to be divided amongst those intended to benefit from the trust. How? Trusts make you accountable for how money is spent as the Trustees must agree in writing.

Contact me if you think a Trust might be right for you.

Are your records up to date?

How good are your internal systems to ensure you have meet your requirements required under the Companies Act? - Have you signed all the documents you legally are required to do? (minutes and financial statements)
- Do you know what documents you need to prepare?
- Have you declared the required entries in the interest register?

Contact me if I can help you with your company administration.

Mixed use assets

IRD have introduced new rules that cover the deductibility of holiday homes, and boats.

In summary, expenditure can be apportioned and expensed based on the following formula:

total expenditure X Income earning days / (income earning days + private use days).

Two key items to keep in mind

1, total expenditure must not solely relate to either party and
2, private use covers the holder of the asset and any persons associated to them even if the associated person pays market rent or if the rent paid is less than market rent.

If you are planning on renting out the likes of your home or boat over the holidays call me.

 

Disclaimer

DISCLAIMER: The opinions expressed in this newsletter are intended for general information and may not specifically relate to your situation. I accept no liability for any loss caused, either directly or indirectly, through use of the information contained in my newsletter. This article must be read in accordance with my letter of engagement.