ADO Newsletter

March 18 Newsletter

Superhero name change!

We have recently undergone a restructure and are now known as Affleck O’Meara.

We are still based in our three locations – Queenstown, Cromwell, & Alexandra, and still have a fantastic team who are ready to work with you.

All our contact numbers remain the same – check out our new website www.affleck.co.nz

A warm welcome also goes out to our newest Superhero, Megan Staples, who has recently joined the team as a Client Manager, and is based in our Alexandra & Cromwell offices.  


The clock is ticking… are your taxes sorted?

2017 Year End Tax Returns are due now!


Just another reminder that time is running out for those clients who are yet to send their 2017 information to us. Please can you get your information to us ASAP! Unfortunately, the IRD will apply penalties, and your extension of time to file future tax returns will be revoked if these are not filed by their deadline of 31 March 2018.

We won’t be able to help you if you supply us information on 30th March. Please help us to help you!


Calendar reminders

28 March 2018 

Monthly based GST returns and payments due for the taxable period ending 28 February.

31 March 2018

31 March 2017 Income Tax Return due for clients of tax agents
(with a valid extension of time).
Student loan repayments for overseas-based borrowers.

7 April 2018

Terminal Tax due for the year ending 31 March 2017 for clients of tax agents
(with a valid extension of time).

7 May 2018

GST return and payment are due for the taxable period ending 31 March.
Third Provisional Tax due for relelvant clients on a March balance date

20th of each month 

PAYE Returns are due for the previous month, on the 20th of the following month
i.e. PAYE tax for February wages is due 20 March.

Note

If a due date falls on a weekend, public holiday or provincial anniversary day, IRD can receive your return and payment on the next working day without a penalty being applied.



AIM: Making Tax Simpler?


As mentioned in previous newsletters, the government is providing the tax payer with a new option of which to calculate provisional tax.

The Accounting Income Method (AIM) uses your existing software and the accounting information you enter to calculate how much tax you need to pay each time you complete a GST return.

The government is offering AIM to businesses with turnover of less than $5 million and:

  • Want access to overpaid provisional tax throughout the year as opposed to waiting for year-end tax returns to be filed.
  • Are new to business so they only pay tax once a profit is being made.
  • Are experiencing significant growth. AIM may reduce the chance of provisional tax being underpaid during a time of significant growth.
  • Experience seasonality. Tax will only be payable during profitable months.

We still believe there are a number of uncertainties associated with this method and it will be something we will monitor in the future. The feedback the IRD has received from Accountants is that most will choose the wait and see option.

Click here for more information.


Bright-line Test


The majority of you are probably aware of the basic rules of the Bright-line Test. However a lot of people, accountants included, are not aware of minor intricacies of the test that can create major headaches for tax payers when they are not identified early and can result in significant tax liabilities.

For those of you contemplating an acquisition or disposal, we urge you to contact us as early in the process as possible to ensure you do not receive an unpleasant and costly surprise.

The existing test results in the gain on a property purchased after 1 October 2015 and disposed of within 2 years being deemed taxable income, subject to certain exclusions, most commonly the family home.

The recent announcement from the Labour government confirmed earlier thoughts that the test would be extended to 5 years and is expected to become legislation shortly.

Some property speculators will be caught out, but there could potentially be a lot of ordinary New Zealanders that also get stung when personal circumstances unexpectedly change resulting in a forced sale.


Short Term Rentals


With the huge rise in demand for holiday houses locally and the success of websites such as AirBnB and Bookabach, it is essential that home owners who choose to rent their house are aware of some of the basic rules.

Agreements

Short term rentals are not covered by the Residential Tenancies Act, therefore you will have to create your own written agreement. The likes of AirBnB and Bookabach do include terms and conditions on your listing but it is still a good idea to have your own agreements in place. Key areas to cover include maximum number of guests, pets, smokers and payment terms.

Tax

Short term rental income must be included in the tax return of the property owner. Expenses incurred in relation to earning the rental income such as a portion of rates, insurance and interest are deductible.

Mixed use rentals

With the high rates offered, it is becoming increasingly common for holiday home owners to rent their holiday homes when they are not using them. The tax rules differ depending on how many days the holiday home is rented, used by the owner or left empty and the amount of income earned. The IRD provide a good run down on what you need to know so check it out.

The QLDC also has rules that apply specifically to our region. Have a look at their website for more information.


Deductibility of travel expenses


Most of you have probably had a laugh or two when saying “this is on the business” when it comes to travel or entertainment, but it is important to ensure that such expenditure is treated correctly from a tax perspective. The rules vary depending on the nature of the expenditure and it can be quite confusing.

Generally speaking, when you or one of your employees are away from home on work related travel, you can claim the majority of expenses incurred, such as flights, taxis, accommodation, food and drink.

Food and drink costs are 100% deductible when away on business, but if the trip is for a staff party, or entertaining an existing client, it will only be 50% deductible.
The IRD has a good booklet which discusses each type of expenditure in detail.


Upcoming IRD changes for PAYE Filing online


The IRD are making minor changes to the way PAYE returns are filed. They will now be included under a “Payroll Returns” account in the renamed “My Business”. From what we have been told, the process should be the same, it is only the access that is different. This will go live in April 2018.

Have a look at the IRD website for further information.

The IRD have advised that its online system will be unavailable from 12th – 17th April to allow them to implement the changes above.


Minimum wage increase


From 1 April 2018, the minimum wage will increase by 75c per hour. This could place additional stress on tight profit margins so it might be a good time to review these now.

Click here for more information


Strategies to Increase Revenue


5 ways to increase revenue:

Reduce the sales cycle time – stop typing and pick up the phone!

  • It is all too easy to send an email to a customer outlining a new sales proposal. In some cases this may work, but in a lot of cases it simply gives the client more time to ponder the proposed project and may result in the loss of a sale.
  • Eliminate this possibility by talking or meeting with the customer earlier so that any concerns can be identified and resolved earlier in the process to ensure both parties reach the desired outcome.

Pricing

  • Pricing is a crucial area for all businesses. Price too high and you may deter customers. Price too low and you may dig yourself into a very deep hole.
  • It is essential that as a business you know what customers you are targeting and the state of the industry you operate in.

Various purchase channels

  • Times are changing and businesses need to change accordingly.
    Offering your customers different ways of doing business with you is now seen as essential for a lot industries and those who don’t realise this can often be left behind.
  • Ensure you keep on top of what your competitors are doing and also look for new ways of getting your products to your customers.

Customer attention

  • In the extremely competitive markets businesses find themselves in, it is becoming increasingly important that you pay special attention to your key customers. They are quite often the source of new business whether it be directly with them or via referral.

Digital Marketing

  • This is now something we cannot avoid and in a lot of cases would be silly to do so.
  • Social media websites use technology to specifically target users that meet certain criteria, thereby giving businesses the opportunity to get their products in front of potential customers with relative ease.

Foreign Trusts / Wills

For those of you that are Trustees of a foreign/offshore Trust or are an executor of an offshore persons will/estate, please contact us to ensure that there are no unexpected tax surprises of being so.

The IRD is increasing its efforts to ensure such positions are treated correctly and those that aren’t, may end up being fined or with income taxed at a much higher rate.


Benjamin Franklin’s tip of the day…

“An investment in knowledge, pays the best interest”

 

 

AFFLECK
O'MEARA

QUEENSTOWN
Level 2, 45 Camp St
PO Box 1010,
Queenstown 9300
New Zealand
+64 (0)3 441 3901
zqn@affleck.co.nz

ALEXANDRA
Level 1, 65 Centennial Ave
PO Box 199,
Alexandra 9320
New Zealand
+64 (0)3 448 6088
info@affleck.co.nz