February 2013 E Newsletter

Welcome

February has started with the continuation of January’s golden weather – which is enjoyed by lots of us, but there are those who need the rain to sustain their businesses.

Staff are another integral part of many businesses and there are payroll changes coming up on the 1st of April that you need to be aware of. When you have staff, you often have fringe benefit tax too. Both of these issues are discussed in this month’s Focus edition, along with GST on late payment penalties.

Our client focus this month is The Cartoon Workshop – check out their fun website!

Are your ready for 1 April 2012 payroll changes?

Do you or your employees contribute to a Kiwisaver scheme or complying fund?
Do you pay salary/wages or schedular payments to primary and secondary school children?
Do you have any employees who use the ML or ML SL tax codes?
Do any of your employees have a student loan?
Do you use a payroll software package?

If you have answered yes to any of these questions click Read More. Please contact your accountant if we can help you with any queries you may have.

Can you claim the GST you pay on Fringe Benefit Tax?

No. Although you add GST to your Fringe Benefit Tax payment you cannot claim this GST on your GST return.

Why?
Simply put, the company has already claimed a GST input tax credit on the goods or services supplied to the employee when they were purchased by the company. For example the company may have paid $10,000 plus GST in motor vehicle expenses during the year. They have claimed GST of $1,500 from the IRD.
When preparing the FBT return GST is added on the taxable benefit provided to the employee for their private enjoyment. This effectively pays back to the IRD the GST claimed on the private portion of the benefit. If you then went and claimed this GST in your GST return you would effectively double claim GST on the private benefit of the motor vehicle expense.

Changes to Student Loans and Allowances

The following changes came into effect on the 1 January 2013:

Student Allowances will no longer be available for postgraduate study commencing from 1 Jan (except for Bachelor degrees with honours)
All exemptions to the 200-week limit for Student Allowance will be removed from 1 Jan 2013 (except for special circumstances)
Borrowers making significant under-deductions will be forced to make a compulsory extra student loan deduction - IRD will arrange directly with their employer to recover the outstanding amount
Those 55 and over will no longer be eligible to borrow living or course-related costs (with exceptions, depending on when you were enrolled)

GST on Late Payment Fees

A recent amendment to the Goods and Services Tax Act 1985 provides that GST is payable on late payment fees. The amendment provides that GST is payable on the late payment of an account whether the amount is described as a fee, penalty or other charge. However, no GST is payable on amounts which are in the nature of default interest.

Example
Zedco Limited provides businesses with various telephone and internet services. It sends an invoice to its customers by the 5th of each month, with the amount being payable on the 20th of the relevant month. Amounts which remain unpaid after the due date are subject to a $5 late payment fee.

Previously the penalty charged did not include GST, now from 1 January 2013 Zedco Limited must return the GST received on the late payment fee to the IRD. If the customer is registered for GST then they may claim the GST on the late payment fee.

Client Profile - McLeay Workshops

Mcleay Workshops (formally Rob Mcleay Cartoon Workshops) design premium creative workshops for after school and holiday programmes. Our number one workshop Cartooning has been taught for over 15 years, and has been delicately refined to incorporate aspects of animation and game art design into the curriculum by founder and Chief Project Designer Rob Mcleay. Projects are original and engaging, giving the student real world experience on what they may expect if they were working in a studio. We train students the ability to draw well, using tried and tested methods from the animation industry, the classes are fun and educational. By channeling in on the students personal style and interest the workshops can achieve a high level of drawing skill in a short amount of time.

For a FREE no obligation trial, mention Walker Wayland when enquiring.

www.thecartoonworkshop.co.nz 09 4800697 - 021 476 434