Balance Accounting held a successful and informative client seminar last week at The Arthouse. We discussed the immanent changes looming regarding GST rate increase to 15%, LAQC and QC structures being remodelled to resemble a partnership, decrease of corporate tax rate and personal marginal tax rates and depreciation on buildings being reduced to 0%.
To support the GST changes, Larissa Paris from Xero presented on the advantages of Xero and gave a brief overview of the fabulous functions of this product. We at Balance Accounting are complete advocates of this product which exhibits so many redeemable features, such as
-
Understand your business- you receive timely, relevant and understandable information.
-
Grow your business - we provide insight and tools to assist you with your goals.
-
Online -We can view your status at the same time as you
-
Improve your cash flow -you pay the same amount every month, so there are no surprises.
-
Meeting your needs we provide the services that are right for you, from our wide range of expertise.
-
No surprises- you’ll know how much tax you’ll need to pay
If you were unable to attend the seminar and would like to find out more regarding Xero, please do contact either Sarah or myself and we can discuss your particular requirements and what packages would be suitable for you. Being with an accountant does mean you are entitled to packages that the general public are not privy to. Now is the perfect time to consider this package with the looming GST changes which will result in, generally speaking, all business owners needing to upgrade their accounting software packages. Do not fear though – if you are a small turnover client or have a non-GST business such as rental property etc, there is a package that can be tailored to your needs and is priced accordingly. Please contact us to discuss further.
Additionally Brent Kelly from Zeald.com presented on the basic fundamental principals of a good website. Brent was a motivational and inspiration speaker and provided great insight into how to update your existing website or indeed the tools needed to create one from scratch. Once again if you were unable to attend and are interested in either updating your existing website or creating a new website, then please do contact us.
Increase in GST to 15% not as simple as many believe
In a little over eight weeks, the biggest change in GST for 20 years will occur. There are many issues for business owners to be aware of and if you are GST registered, you need to be seeking advice from your accountant, your accounting software provider and maybe even your lawyer, now, so you are all ready to roll on the 1 October 2010.
As mentioned above, Balance Accounting ran a client seminar last week to raise awareness of what needs to be thought about and completed before the 1st October.
After the 1st October, you will be dealing with two GST rates for transactions that span both periods. Can your accounting software cope? Do your accounts people (or whoever enters your data) know how to deal with lay-bys, refunds, work in progress, debtors and creditors as at 30th September, quotes, existing agreements and contracts, enduring invoices, insurance premiums paid monthly, FBT, non-standard balance dates (i.e. not 31 March), stock on hand, POS receipts, imports, customs, etc etc? This is just a small sample.
Tax Tip -Spouse/Partner going to conference
IRD is cautious about claims for the cost of taking a family member to a conference.
The argument that a partner is expected to attend is weak. In 1988 Case K 75 referred to a husband taking his wife with him to an overseas conference. A directly associated company to the one that employed him put on the conference.
The Taxation Review Authority, in allowing the deduction, noted that it was company policy for wives to accompany executives on overseas conferences and other business trips. The company benefited because the wives were familiar with company business and contributed to business-related social activities.
The Judge said, “At these conferences and meetings Mrs G's presence was expected for a delegate of the stature of Mr G." Perhaps one should be forgiven for asking what stature has to do with tax deductibility.”
Note Case K 75 refers to a directly associated company only.
Generally, the spouse needs to be actively engaged in the business whilst overseas or contribute in an integral manner to the conference, for a claim of costs to be acceptable.
Claiming the cost of taking a spouse to any conference, at which it is generally expected that a spouse will attend, may be deemed a private cost by IRD. There would almost certainly be an insufficient nexus between the income earning activity and the cost incurred.
Gifting to Trusts
Gifting is under review. Should you stop gifting? Our advice is to continue with annual gifting until details are known. Very little tax (gift duty) is collected so the government is looking at repealing gift duty altogether. However, careful consideration in the legislation needs to be applied to ensure protection from creditors and social welfare rorts are not initiated.
Sarah’s Two Cents
I am off to Rarotonga on 9 August until 16 August on a well-deserved break.
It is a long overdue tropical break (being the first time we have been to the Islands) with my lovely partner; Brent and we are both very excited. I will be sure to fill you all in on the details of the trip in our next newsletter.
The winter weather has put a holt on the mountain biking. However I do have a relay race coming up in mid October, thus am going to have to think about dusting off the pedals again soon.
Sarah
MYOB Awesome Service Awards
There are few things more fundamental to great business than awesome service.
The MYOB Awesome Service Awards recognise exceptional service provided by people in business. You can nominate any person or business that has gone the extra mile to treat you like the most important customer in the world.
To nominate someone for a weekly award – and a big public pat-on-the-back – go to
www.awesomeservice.co.nz. Tell MYOB your awesome service story, and help celebrate hardworking Kiwi businesses.
Tax Tip
ZERO DEPRECIATION IMPACT
Depreciation deductions on buildings with an estimated useful life of 50 years or more will be removed from the beginning of the next financial year. The depreciation rate on these buildings will be reduced to 0%. Look carefully at your classification of assets in a residential rental property. Anything which ought to be part of a building structure will have nil depreciation from the beginning of the next financial year. This is a good time to review your depreciation schedules to see you are getting it right.
Pay special attention to knowing what is repairs and maintenance and what is capital expenditure. Now that there is no depreciation on residential fixed assets that are part of the building, the temptation to want to call everything possible R and M to get full deductibility is greater than before.
If you are in doubt, check with us first. You don't want the IRD catching you out.
Trust and Personal Tax Alignment
Now the trust tax rate is going to be the same as the top individual marginal income tax rate, the tax advantage of having a family trust as a shareholder in a company has been reduced. However, the leader of the opposition has already announced his intention to increase the top individual tax rate when Labour is re-elected as the Government. Therefore, you may wish to keep your existing structures in place and carry on as usual. You may also wish to continue setting up company shareholdings involving trusts in anticipation of a possible future increase in the top tax rate. Get your salary patterns set up while there’s no tax advantage in doing so. It may help in the future.
Trivia
The Washington Post's Mensa invitational once again asked readers to take any word from the dictionary, alter it by adding, subtracting, or changing one letter, and supply a new definition.
Here are a couple of the 2009 winners:
Cashtration (n.):
The act of buying a house, which renders the subject financially impotent for an indefinite period of time.
Intaxication:
Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.
Inoculatte:
To take coffee intravenously when you are running late.
Business Tip
CAN A BLOG BE BAD FOR BUSINESS?
Do not start a blog if…
You only plan to blog about your company and its products or services.
It’s boring and people won’t engage with it. The whole point of a blog is to add value through content so a reader is inspired or they learn something new. It’s about education and entertainment, not plugging your business.
You can’t commit to posting at least three times a month.
You should update at least once a week - even worse than not having a blog is having one and not updating it. You don’t have to write every post yourself, but make sure whoever is writing your company blog understands why you’re blogging and posts need to sound human.
Your blog isn’t part of a larger social media strategy.
A blog is a crucial part of a social media strategy - you should be on Twitter, Facebook, and YouTube as well. This can be hard work, but at a time when businesses are looking for creative and low cost ways to get their messages out, blogging may well be worth your time. Without consistency, however, it can also be a waste of time.
(The Main Report)
Business Social Networking
A global survey shows social networking has become a mainstream marketing business tool with 40% of businesses having successfully used social networks to win new business.
The survey by workspace solutions provider Regus, reveals well over a quarter of businesses world-wide (27%) have set aside a proportion of marketing budget - hard cash - specifically devoted to social networking activities.
Small companies are a little more likely than average to use social networking, and 44% of small companies have successfully acquired new customers through social networking compared with 36% of medium companies and 28% of large businesses. On a sector basis, the IT, Retail, Media & Marketing and Consultancy sectors made above average use of social networking, while Manufacturing, Financial Services and the Health sector are lagging behind.
(The Main Report)
To follow on from that, Balance Accounting is now on Twitter and Facebook.
Become a Fan
Follow us on Twitter
