CG Update December 2022

What a year! And it looks like there will be more head winds to our economy in 2023. Interest rates are rising, costs are soaring and a recession looks imminent and even desired by the Reserve Bank. Well done to those of you who locked in interest rates at 2%. It will be a shock for many when those loans mature and they suddenly become floating loans of 8 or 9%.

There are some positives though. As with all cycles, things will turn again and the economic environment will eventually improve. Look out for opportunities that these market conditions bring. As legendary investor Warren Buffet says, “Be greedy when others are fearful and be fearful when others are greedy”.

Xmas Closure: We will close on Friday 23^rd December and reopen on Monday 9^th January.

Staff News: Since our last newsletter, we have had two new staff join the firm:

• Stephanie Wooller is an experienced Chartered Accountant with a wealth of knowledge. She and her husband Dale also run their own agricultural spraying business.
• Jess England is an experienced accountant and comes to us with loads of skills.

We have also celebrated some significant milestones during the year:

• Melinda McMillan has been working for 40 years at Candy Gillespie. Melinda began work at the upstairs reception in 1982 and is now a very experienced senior accountant.
• Michele Goodwin has been working at Candy Gillespie for 20 years now. When Michele isn’t working hard at Candy Gillespie, she is busy helping husband Todd on the farm.
• Anna Davey became Anna Patel. Anna and Jason were married at the beginning of the year.

Sadly for us, Neilar Shuttleworth is leaving our firm. Neilar is moving closer to family and is planning a new career as a nurse which we know she will excel at.

Tax Tips & News:

• Brightline Test – if you purchase a residential property that is not your main home and it is sold within 10 years, any capital gain is taxable. For new builds the timeframe is 5 years. This also applies to a change in title, so be careful if transferring title between family members.
• Interest on residential rental properties (other than new builds) is no longer fully deductible. For loans taken out prior to 2021, interest is 75% deductible this year and will reduce to 0% deductible over the next few years. However, interest on new borrowing is not deductible at all unless it is for a new build. New builds (post March 2020) qualify for 20 years of 100% interest deductibility.
• If you miss a Provisional Tax payment please get in touch with us before you pay it so we can consider alternative payment options which could save you interest and penalties.
• IRD Use of Money Interest (UOMI) on overdue tax will increase to 9.21% from 2023.

Xero Software: Behind the scenes, we are changing our data processing software from Banklink to Xero. If this affects you, we will be in touch with specific information. We will be phasing this conversion process over the next year. Initially we will be converting our commercial businesses to Xero, followed by our farming entities. There will be very little change at your end, but we do require new authority forms to be signed.

Internet Banking: In the good old days when we paid a bill, we would write a cheque. It was a relatively safe way of protecting your bank account because the bank would only accept your signature and you would have to complete and sign each cheque. Nowadays, although Internet Banking does offer a lot of convenience and safety features, we find that some people are too trusting of others. If you are not computer savvy and just give your internet banking password to others to help you pay your bills, it’s the same as giving someone your cheque book and showing them how to sign your name.

Nine times out of ten, the person you give the password to will be totally trustworthy, but there are bad eggs who might have all kinds of financial troubles. By giving them the password, they will have access to your funds, and if you’re not keeping an eye on it, you might find yourself on the losing end. It does happen. There are ways for banks to set up proper access for other people if you don’t want to or aren’t able to pay bills yourself online. Talk to your bank about it. We have banking permissions arranged for a number of our clients to set up tax payments through their internet banking. If this is something you would be interested in, give us a call.

Christmas Parties, Gifts & Bonuses: A reminder at this time of year:

• Entertainment costs for Xmas Functions are only 50% deductible.
• Food & drinks given to staff or customers are only 50% deductible
• Gifts to customers that don’t include food & drink are 100% deductible.
• Christmas bonuses by way of cash (wages) are taxable to employees as part of the PAYE system. Be aware, bonuses are taxed in a different way to regular wages.
• Non-cash bonuses (e.g. gift vouchers) are tax-free for staff provided the total value per staff member is below $300 per quarter and the total annual value for the business is below $22,500. Remember that GST cannot be claimed on vouchers.

Working on Public Holidays:

• If an employee works on a public holiday which would usually be a work day, they are entitled to receive time & a half plus a day in lieu.
• When a public holiday falls on a weekend and it isn’t an employee’s usual work day, then the public holiday gets moved to the Monday or Tuesday.
• For farmers, it can be more complicated to determine which days are public holidays and it can differ between employees depending on their roster. Talk to us if you’re unsure.

Other staffing advice: Reminders for the Christmas period:

• Employees may request to cash up one week of annual leave per year but make sure they’re taking some time off if you think they need it.
• If you’re employing relief milkers, make sure they fill out an IR330. If they don’t show you an exemption certificate and you don’t withhold any tax from them, it is not tax deductible for you. If we process your PAYE, please let us know about any staffing changes.
• Remember to keep all your time-sheets up to date.

We have a dedicated team who can take the headaches out of processing wages and PAYE. If you’d rather leave it to the professionals, please contact Jo Paton at our office. If you have a significant HR issue, we can put you in touch with the right people for advice.

Our Predictions for 2023

·       Interest Rates     - Will we see double digits? High rates are helping push up our dollar.

·       Politics                - 2023 election will be a close one.

·       Inflation               - Costs will continue to rise sharply until the Reserve Bank gets its way.

·        Employment       - Expect increased difficulty in finding and retaining good staff.

·        Milk Payout        - There are downside risks, but it should hover near $9.

·       Sport                   - Scott Robertson to become All Black coach.

Be sure to take some time this summer to look after yourself & your loved ones. We wish all our loyal Candy Gillespie clients a Merry Christmas and a Happy New Year