February 2014 E Newsletter

Welcome

Welcome to the February edition of Focus.

The end of the tax year is fast approaching for most taxpayers, so if you have not yet given us the information to prepare your 2013 tax return, please do so as soon as possible.

Keep an eye out for our newsletter in early March, with your essential tax planning guide including tips and points to consider as we tidy up the 2014 tax year.

We have yet another warning this month about e-mail scams, and you may have seen the NZ Herald article earlier this week where the Inland Revenue Department are advising customers to be aware. If you have any doubts about an e-mail supposedly sent to you from the IRD, please let us know.

IRD warns customers to be aware of fraudulent emails and imitation webpages

Inland Revenue is warning customers be alert for fraudulent emails and three separate imitation websites claiming to be from the department.

"The scheme involves customers receiving emails with links to imitation Inland Revenue web pages for Online Tax Refunds. Information on these pages advises customers that 'we automatically pay refunds of $600 or less to you 15 days after the date of your PTS,' said Group Manager Customer Services Eleanor Young.

"We want to make our customers aware that this is scam and a deliberate attempt to use the Inland Revenue logo and brand to steal confidential and personal information. Although the pages look very similar to those on the Inland Revenue website they are most definitely fake.

"Any information that is given to these fraudsters can result in a business or individuals suffering identity and data theft."

Inland Revenue asks customers to keep their IRD numbers, tax information, online passwords and all other data safe at all times. If you think someone is using an identity fraudulently, or attempting to steal your confidential information, then let the department know.

Information is available on the Inland Revenue website.

Deductibility of ACC Levies

Understanding what is tax deductible and what is not when paying ACC levies has been the cause of some misunderstanding lately.

Everyone who pays ACC, including those on salary and wages, have an ‘Earners Levy’ included in their ACC premiums which cannot be claimed as a tax deductible expense. This applies whether they are on salary and wages, self-employed, a partner in a partnership, or a shareholder-employee.  This rule also applies to ACC CoverPlus and ACC CoverPlus Extra.

So what is deductible for the company and how should the Earners Levy be accounted when the company is paying the premiums?

If the ACC shareholder/Employee invoice is in the name company the levies are then deductible to the company in the year that they are due and payable, which of course gives rise to a GST input credit available to the company. The earners levy component of this invoice should be treated as shareholder/employee drawings if the premiums are being paid through the company, and the GST component of the Earners Levy cannot be claimed by the company.

In the case of the ACC Coverplus Extra policy the invoice will come in the name of the shareholder employee. If the company pays the ACC Coverplus Extra levy on behalf of the shareholder-employee the payment should accounted for as income to the shareholder-employee and subject to PAYE. It will only be deductible to the company if it is being paid as a way of remunerating the employee. The GST on this invoice cannot be claimed by the company.

Non-Resident Businesses soon able to claim back GST

The IRD are changing the GST act which will allow for non-resident businesses to be able to claim back their GST on Goods and Services received in New Zealand. This will take affect from 1 April 2014, but like all changes, there are criteria that the businesses will have to meet. Some of the criteria are:

• They must not carry or intend to carry out a taxable activity in New Zealand – and don’t intent to be, or already be a member of a GST group carry out a taxable activity in New Zealand.

• They must be registered in their country or territory of residence for GST, VAC or qualify for certain consumption tax requirements.

• Expect that their first GST claim will be for more than $500

• Not have a taxable activity which involves providing a service where it’s reasonably foreseeable that the service will be received in New Zealand by a person not registered for GST.   

Non-resident contractors do not however come under the new law as they perform services in New Zealand under contract, and therefore are carrying out a taxable activity.

Registering for this will be done through the new Non-resident GST business claimant registration (IR 564) form. This form will require supporting documents such as passport photo pages, address verification and business numbers. The registration process will also require copies of invoices and proof of payment to be used for their first GST return so the IRD know that the claim will be more than $500. Once registered, customers will be able to register for myIR secure online services to file future GST returns.

There will be risk reviews done by the IRD for all non-resident GST claimant forms before a refund is released, so supporting documents will need to be sent at the same time the return is filed. This refund can be held for customers as long as they require.