April 2013 E Newsletter

Welcome

While it seems like summer is continuing long in to the new year, we are already in April. Many of you will have payrolls to process early this week, which will include holiday pay for the Easter weekend - have a look at the article below.
Other changes taking place are Kiwisaver rates & student loan repayment thresholds, so watch out for those in your first payroll of the new financial year. The new mixed use asset rules are now in effect too. The article below explains how this works.

Financial Year End Requirements

March 31 spells the end of the financial year for many of us, and so is a time that many will reflect how we have achieved our business and financial goals. Many will wish to reassess their objectives, set new goals, or plan how best to meet their targets and obligations in the year ahead.

The end of the financial year can also be very stressful, what with financial reports to be prepared, tax returns to be filed with the IRD and of course, tax to be paid. It can sometimes seem easier to leave things aside, to deal with “another day”. However, in this modern, fast-paced world, time is of the essence. To be useful as a planning tool, financial reports must be as up-to-date as possible. To avoid interest and penalty charges, returns should be filed and tax paid by the due date.

Holiday Entitlements for Easter and Anzac Day

Over the Easter period there are a lot of issues for business operators to be aware of. Which days are public holidays? What are the employee entitlements? What days can I open? Along with establishing what payments need to be made to employees for what days, there are also Shop Trading restrictions in operation on some of those days, under the Shop Trading Hours Act Repeal Act 1990, that business operators need to comply with.

Reference

Mixed Use Assets

Once again our friends at the Inland Revenue are set to release an important piece of legislation that will take effect almost immediately from 1 April 2013.

Mixed use assets cover any asset that has a predominate business use in addition to private use, such as the Bach, Charter boats, planes/helicopters etc.

The current rules for mixed use assets allow you to claim deductions for expenditure to the extent to which the asset is used to either derive income or is available to derive income.

The Inland Revenue believes taxpayers are getting inflated deductions on these types of assets and is about to release legislation to significantly reduce expenditure claims as well as other impacts depending on the taxpayers’ structure.

Working for Families Tax Credits (WFFTC) – Family Income

This article will explain the changes to income when calculating WFFTC, it will describe the term “payment”, look at passive income of children, Business Income and finally explain what we should do when calculating WFFTC.
The term income is now wider with IRD wanting to capture “economic income” that is not already included in taxable income. This means when working out WFFTC we will need to include income from trusts, controlled companies, fringe benefits, exempt income, pensions etc.
We will need to be careful when working out WFFTC for clients and ensure that all “income” is included in the calculation of the tax credit. If not clients claiming the credits may not be entitled to them and have to repay them.
Income will include payments from any other person or entities that are used for the family’s day-to-day living expenses. If the total amount is more than $5,000 for the tax year, then the total amount must be included as family income. However if the total amount for the year is less than or equal to $5,000 you do not need to tell the IRD about it.

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