IN THIS ISSUE: End of Year Tax Planning Page 1 Key Tax Dates Page 2 Tax Updates Page 2,3, 4 & 5 Xero and SmartPayroll Page 5 NOTICE BOARD Staff Focus Frances Chunn Page 6 Stage 2 of IRD Business Transforma)on Page 6 End of Year Tax Planning - For 31 March Balance Date Clients The 2018 year end is approaching fast! ISSUE 19 MARCH 2018 For us, we are just finishing off the work from the 2017 financial year as you are heading into the 2019 financial year it all seems to roll on from one year to the next! There are a few tax compliance matters for the 2018 year that you should consider before 31 March arrives and some things you should do on that date Unfortunately this year the year-end falls over Easter weekend too! Things that need to be considered and actioned before 31 March: Easter Break Our office will be closed for the Easter Break from 5pm Thursday 29th March and reopening 8.30am on Tuesday 3rd April 2018. We wish all our clients a safe and enjoyable Easter. Review of your Debtors and ensure you write off any bad debts dated 31 March or earlier from your ledger Issue all credit notes to customers if applicable Ensure all expenses are incurred before year end (invoices issued by supplier) so that a deduction is allowed in that financial year Things that need to be considered on 31 March or the last trading day of the year: Ensure stock counts in your accounting system are accurate, that is trading stock, at year end; also write off any obsolete stock by year end Determine the Work in Progress at year end, that is work that s been performed but not yet invoiced at year end (materials and labour should be included) Determine any raw materials held on hand at year end, that is unprocessed material used to produce goods not yet used at year end Record cash/ banking received prior to or on year end but not yet deposited Confirmed Petty Cash and Till Floats at year end Continued All information in this newsletter is to the best of the authors knowledge true and accurate. No liability is assumed by the authors, or publishers, for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients contact us before acting upon this information. www.bennettsproactive.co.nz 8 Queen Street, Te Puke Phone (07) 573-8446
End of Year Tax Planning - Continued from Page 1 We have already made a start on our 2018 year end work scheduling and will finalise that early in April 2018. We will then send you a letter letting you know when your work is expected to be completed. In the meantime, if for some reason you wish for your work to be at a specific time or if your work is urgent, please let us know and we will try our best to accommodate your request. We will also be getting ready for you to collect your 2019 annual folders in early April 2018. This year the tabs will be slightly different from what you have previously received. Key Tax Dates Date Taxes payable 7 April 2018 Terminal Tax 2017 Year 7 April 2018 FBT - Income Year return and payment 20 April 2018 PAYE Period ended 31 March 2018 7 May 2018 2018 Provisional Tax - 3 rd Instalment 7 May 2018 GST - Period Ended 31 March 2018 20 May 2018 PAYE Period ended 31 April 2018 20 June 2018 PAYE Period ended 31 May 2018 30 June 2018 Suggest 10 June 2018 KiwiSaver minimum contribution of $1,042.86 If a due date falls on a weekend or public holiday you can file and/or pay your taxes on the next business day without incurring penalties. Payments must be received by the IRD on or before the due date otherwise they will be considered late. Payments can be made either by cheque or electronically. If you are making payments electronically please ensure you have the correct IRD number, tax type and tax period so that the payment is credited to the correct tax account. PROVISIONAL TAX REVIEW Prior to the 3 rd instalment falling due, we are able to undertake a review of your last 12 months trading to consider if a alternative tax payment can or should be made to adjust up or down so it is more in line with what we expect the actual tax to be, especially if there are significant changes to the 2018 trading year. Once the GST return is completed for February/March 2018 we can obtain the appropriate information from your GST records. We will contact you early April 2018 with a reminder, so please let us know if you would like this completed on your behalf. KIWISAVER - To be eligible for the full member tax credit of $521.43 automatically you have to contribute at least $1,042.86 a year. Only your contributions count. If you have not yet contributed the minimum amount we suggest that you arrange a voluntary contribution early June 2018 to ensure your credits are transferred to your KiwiSaver fund by the due date. Tax Updates We have seen a number of tax changes over the last year or two from both National and Labour. With a change in Government during the year, we have also seen some of the National legislated changes repealed by the Labour Government. We plan to do a more specific update of these changes and a presentation at a client seminar on certain changes. We will also consider if any of the recent changes impact on your tax disclosures as we prepare your returns. Continued...
Tax Updates Con)nued 2018 Tax Year Changes Include: Farmhouse expenses an interpretation statement was released which provides an update to the longstanding policy that has allowed a farmer a full deduction for rates and interest and a 25% claim for all other farmhouse expenses. The Department have identified that this treatment is no longer acceptable and the deductibility now needs to be determined through IRD provided guidelines, being closer aligned to the actual business usage. Foreign disclosure rules new compliance requirements have recently been introduced as part of the Information Sharing framework. The purpose of this is to disclose financial transactions for non resident individuals that have a taxable activity or business entity located in New Zealand back to their country of tax residence as part of the global exchange of information. This information sharing framework also applies to NZ resident taxpayers with taxable activity held off-shore. Motor Vehicles owned by a Company and made available for private use - an Alternative method is now available for business related vehicles that are made available for private use by shareholder-employees. Currently FBT rules apply however shareholder-employees now have the option to use a motor vehicle expenditure rule so instead of paying FBT, it allows Companies to either make a claim based on the actual business only expenses or a deduction based on the distance travelled for business purposes only. 2019 Tax Year Changes Include: Increase in the minimum wage recent changes have included: Increasing the minimum wage from 1 April 2018 Type of Wage Old Rate/ New Rate/ Hour Hour Adult (16 and over) $15.75 $16.50 Starting-out $12.60 $13.20 Training $12.60 $13.20 For employees over the age of 18, and employed on a casual basis, the minimum rate including holiday pay will rise to $17.82/hour For paying employees under the age of 16, there is no minimum wage but all other standards and employment rights and obligations apply The Government has signaled that within the first 12 months of it s term they will abolish starting-out rates and consider changes to the training wage. In the meantime, the rates will remain at 80% of the minimum wage Provisional tax recent changes have included: The increase in the safe harbour threshold from $50,000 to $60,000 and this has also been extended to nonindividual taxpayers rather than just Companies and Trusts Taxpayers that do not qualify for the $60,000 safe harbour method, shortfall interest from the 1 st and 2 nd instalment of Provisional Tax has been removed (conditions apply) meaning that interest will only apply from the 3 rd instalment The 1% monthly incremental late payment penalty has also been removed but the initial 1% and 4% penalties remain. Provisional Tax AIM This new AIM method has been introduced! It s a new method for calculating provisional tax that calculates payments on your level of taxable activity over that reporting period (GST period). AIM is only available to certain approved cashbook systems which current is very limited. In order to ensure the tax payments are as close to what the year end tax should be, adjustments need to be made at each GST period for Depreciation, Trading Stock, Livestock, Private Expenditure, Losses, Debtors and Creditors and Provisions (Shareholder Salary). The Department are marketing this method actively at present but without seeing this in action, our initial thoughts are that you will make tax payments more frequently than you currently do and in order to calculate the liability, more of your time and effort will be required to arrive at the correct disclosure, e.g you will need to calculate stock accurately every two months rather than just at 31 March. And from an IRD point of view, they will have up-to-date trading information more frequently as essentially you will disclose every 2 months.
Tax Updates Con)nued Repeal of National Government tax changes (Personal income tax) Reinstating the 2017 tax thresholds for personal income as follows (meaning the removal of possible tax savings) Personal Income Tax Threshold bracket Tax Rate $1 - $14,000 10.5% $14,001 - $48,000 17.5% $48,001 - $70,000 30% $70,000 + 33% Reinstating the Independent Earner Tax Credit (IETC) and the same eligibility applying Repeal of National Government tax changes (Working For Families WFF) Repealing the WFF tax credit changes legislated as part of the Budget 2017 Family Incomes Package Labour Families Package this package boosts income for low medium income families by: Increasing payments of Family Tax Credits Raising the WFF tax credit abatement threshold Increasing the financial assistance for caregivers receiving an Orphan s Benefit and Unsupported Childs Benefit Introduction of a Best Start tax credit (which replaces the Parental Tax Credit) helping families with costs in a child s early years Introduction of a Winter Energy Payment to assist aged persons or those eligible for a social welfare benefit to stay warm over winter Implementation of changes to the Accommodation Supplement benefit. Student Support Increase in Student Allowance payments and Student Loan Living payments of $50/week for each and Fees-Free for new students (eligibility applies). These are only a snapshot of the tax changes already implemented, there is a lot more detailed information that sits in behind the legislation. We plan to do a more specific update of these changes and a presentation at a client seminar on certain changes. We will also consider if any of the recent changes impact on your tax disclosures as we prepare your returns. Proposed Changes: There are also a few changes in the pipeline that could affect you which include: Administration of PAYE It s proposed that: Electronic payday reporting will become mandatory which will require employers to report their employees (and contractors with WH tax deductions) income and deductions on payday rather than on the current monthly basis from 1 April 2019 but permissible from 1 April 2018 Lowering of the threshold for mandatory electric filing of PAYE information from $100,000 to $50,000 from 1 April 2019 Requirement for employers to provide IRD with information about new and departing employees no later than the next return of payday information. Currently PAYE is still payable 20th of the month following. Investment It s proposed that: A higher level of disclosure will be required by payers of interest, dividends and taxable Maori authority distributions and will also include disclosure by payers of investment income that is exempt from withholding tax Disclosures will include the recipient s date of birth and where investments are held jointly, detailed will be required for each owner Electronic filing of withholding returns, including the detailed recipient information will also become mandatory. It is also expected that at some future point, we will not need to obtain this information from you at the time of preparing your income tax returns as the IRD will already have this information available on their system by way of the proposed changes.
Tax Updates Con)nued GST It s proposed that: Updating the timeframe around Use of Money Interest kicking in Updating the timeframe around default assessments being issued as a result of streamlining IRD systems Provision to allow a threshold for mandatory electronic filing of returns and a penalty being able to be imposed for taxpayers who do not comply (exemptions will be available) Brightline period for residential property it is proposed that: For property sold within 2 years (subject to criteria to determine if exemption s apply) The brightline period will extend from 2 years to 5 years. This will only apply on or after the date which the Act receives Royal Assent (not yet received but due in March 2018), so for those properties where the first interest was acquired before this date of Royal Assent the 2 year period will continue. Until legislation is passed we will not know exactly what the changes will be, but once we do we will be sure to pass it on to you. The proposed changes around PAYE, Investments and GST fits into the reform of the IRD system and to modernise the process through business and technology changes. IRD believe that there should be a reduction of compliance costs for taxpayers, and it should reduce their administrative costs too, as taxpayers will pick up the data disclosure costs. More frequent and comprehensive collection of information will be available to IRD allowing them to be able to intervene more frequently and have readily available information to assist with social policy, debt collection and distribution of benefits. Xero and SmartPayroll Are you interested in moving to a cloud based product for the 2019 financial year? Xero is an online based accounting software that allows you access from work, from home or on the go putting you in control! Using Xero, you will know at any point in time your financial position and as your accountant we can provide valuable real-time advice right when you need it. During April 2018 we will host a client seminar which introduces Xero to you and will provide you with an overview of the software and the functions available to see if it s a good fit for your business. SmartPayroll is a NZ based online payroll system that allows you to record employee time, pay employees, make payments to employees and lodge your PAYE return directly with the IRD. It also provides reports to keep you up-to-date with your employee obligations and allows for a secure employee mobile application to give them access to their own payroll details to view payslips, leave balances etc. ANZ Bank and SmartPayroll are currently offering a package of 6 months free subscription to SmartPayroll with a $5/month saving on the monthly fee after 6 months. Conditions do apply, it is valid until 2 October 2018 and available to ANZ Business and Rural Customers. If you are interested in attending a client seminar or require further information about either Xero or SmartPayroll please talk to your Accounting Specialist.
Staff Focus Introducing Frances Chunn Frances has joined the Bennetts Proactive team as an Accounting Specialist after recently moving to the Bay from Te Awamutu where she was raised and has raised her family. Frances has completed her CAANZ Accounting Technician institute membership requirements and worked for a number of years in Chartered Accountancy practices in Otorohanga and Te Awamutu where agriculture was a dominant focus. She is now looking forward to learning more about our horticulture industry! Frances understands issues from a clients point of view, having grown up on a farm and assisted her father with the accounts, being a shareholder in a company, owning rental properties and a trust all adds to having hands on experience and a good understanding. Frances has four adult children and currently 2 grandchildren with more on the way. When Frances is not in the office, she enjoys spending time with family and friends, enjoys traveling and has an interest in genealogy. Frances working hours are Tuesday to Friday 8:30am to 5:00pm. Stage 2 of IRD Business Transforma)on The second part of the roll out of the new myir tax system is due to be launched April 2018! This will provide you with new and simpler ways to manage your tax affairs including Employment Information (PAYE); Withholding Tax; Gaming Machine Duty and Fringe Benefits Tax. If you have not yet transitioned your GST obligations onto myir and would like to consider a business myir account for future compliance, please visit http://www.ird.govt.nz/online-services/ir-online-servicesregister.html or talk to your Accounting Specialist. myir will be unavailable from 3.00pm Tuesday 12 April 2018 until 8.00am 17th April 2018. Advance No1ce Our office will be closed on Anzac Day Wednesday 25 April 2018 (07) 573 8446 www.bennettsproactive.co.nz