Newsletter - February 2025

It is still too early to say if the economy will “thrive in 25”. There remains uncertainty around international markets with talk of tariffs. But there are also positive economic signs.

A bit of belated “Tax advice” for Valentines Day, roses are (generally) not tax deductible, however might be a good investment!

Enjoy the newsletter and as always if you have any questions just ask.

Mike

In this newsletter

• Cashflow & Budgets - game changers?
• In the year 2030?
• Life gets a bit easier for Property Investors
• Beyond Sharemilking
• Audit Shield

Cashflow & Budgets - game changers?

We accept that for some it is hard to get excited about anything related to accounting. But your budget and cashflow when used effectively can be an absolute game changer for your business. They are the key to understanding the financial health of your business. At any given point they provide guidance on how well the business is operating.

The budget serves as a benchmark for your business’s performance. It allows you to assess performance over time and identify the areas that need improvement. It also creates operational efficiency by setting spending limits and prioritising expenditure

Your cashflow ensures you understand your businesses cash position. By tracking your cash inflows and outflows you can “time” your expenditure, so it has the least impact on your business. It can reduce the need for short term (overdraft) finance for your operational costs. This will also identify any financial risks at an early stage, creating time to implement strategies to mitigate risks, such as securing additional funding or adjusting spending.

With your detailed budget and cashflow statements, you can make informed decisions. Identify which areas that generate the most revenue and which are costing the most. Besides the operational impact this information is crucial for any strategic planning for your business.

If you would like to know more creating an effective budget or cash flow, please don’t hesitate to contact your manager or Partner.

In the year 2030?

What will your business look like in the year 2030? That is a somewhat daunting question for any business owner, especially in our rapidly changing world. But understanding or knowing the answer is the key to making the right decisions for your business’s future. To find the answer, you will need to undertake a strategic planning session. What that session will look like depends on a variety of factors, but it should (at a minimum) include:

• A SWOT analysis so you understand the current position.
• An “ideas” session to consider what you think 2030 could / should look like.
• Action plans – how do you get from your current position to 2030.
• KPI’s and Accountability - What are you going to measure to track your progress and who is accountable for it.

You can undertake a strategic planning session yourself inhouse however our recommendation is that it is held offsite, away from the distractions of your business. Also, if possible, you should have a third-party facilitator who can challenge your biases about your business and what can be done.

If you are interested in a strategic planning session, then talk to your Partner. We are always happy to facilitate a session in our boardroom for you

Life gets a bit easier for Property Investors

Recently there have been three significant changes that should make it easier for Property Investors.

The most significant of these is the restoration of the ability to claim interest deductions on residential rental properties:

• 80% of interest deductions from 1 April 2024 to 31 March 2025
• 100% of interest deductions from 1 April 2025 onwards

The second change has been the fall in Mortgage Rates (for some from 6.85% in January 2024 to 4.99% today). The OCR is due to be announced this week, and it is predicted to drop a further 25 base points.

Lastly on 30 January 2025 changes to the Residential Tenancy Act came into effect. These changes reduced the notice periods the Landlords need to provide tenants with:

• Landlords can terminate with ‘no cause’ on 90-day notice.
• Landlords can end a periodic with 42 days notice if.
  • Taking possession / occupying.
  • Unconditional sale and purchase agreement that requires vacant possession.
  • Property is required for occupation by landlords or employer / contractor

• Reintroducing landlords’ ability to give notice to end a fixed term at the end of the term with no reason.

Because there are some nuances around when some of these changes take effect you should consult your Lawyer or Property Manager before you give notice.

You can hear David Hogue from our office and Tom Willis from Gallaway Cook Allan talk about the changes here.

Beyond Sharemilking

Last week Tom and the rural team partnered up with Westpac Bank to present a unique presentation for Sharemilkers looking at either farm ownership or wanting to develop their business opportunities.

If you would like a copy of the presentation or would like to know more contact Tom.

Audit Shield

An IRD audit is an examination of your financial affairs by the IRD to check that you have paid the correct amount of Tax, and you are complying with tax laws.

They can vary in scope from just a particular transaction or return through to the tax compliance of a group over multiple years. Or the IRD may conduct a risk review, this is a request for information to identify whether an audit is required. In whatever form an IRD enquiry takes there will be a cost in engaging with the IRD.

It is possible to insure yourself against the professional cost associated with being audited with products such as Audit Shield.

For more information about Audit Shield and IRD audits talk to your manager.

Kind regards,

The Polson Higgs Team.

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