CG Update December 2023
CG Update December 2023
2023 has been a big year. A change of Government, a Cyclone, another War, a few sporting World Cups, Artificial Intelligence taking over headlines, and a new King.
Xmas Closure: We will close on Friday 22nd December and reopen on Monday 8th January.
Staff News: Since our last newsletter, we have had three new staff join the firm:
- Cassie Naea comes to us with a lot of experience. She has been helping out a lot of clients with their Xero questions. Cassie and her husband have 2 young children.
- Melissa Trillo has joined our team as a GST processer. Melissa has farming experience and is quickly gaining experience in the accounting world. She and her husband have 3 young children.
- Samantha McGiven has recently joined Candy Gillespie. As well as accounting experience, Sam also has experience in banking and the rural industry. Sam and her husband are farming and have 2 children.
We have also celebrated some significant milestones during the year:
- Jo Austin has been working for Candy Gillespie for 30 years. Jo began work in 1993 and is now a very experienced senior accountant.
- Earlier in the year we held a function to celebrate with all of our staff members who have reached milestones with the firm.
New government tax changes
We don’t know exactly what tax changes the new coalition government will make yet. But National did promise to make some major tax changes if elected. Here are some potential changes that could affect you:
Adjustments to tax brackets: National had proposed changes to tax brackets for individuals, designed to adjust for inflation.
Current Tax Bracket Tax Rate Proposed Tax Bracket
Up to $14,000 10.5% Up to $15,600
$14,000 to $48,000 17.5% $15,600 to $53,500
$48,000 to $70,000 30% $53,500 to $78,100
$70,000 to $180,000 33% $78,100 to $180,000
Over $180,000 39% Over $180,000
There has been no mention of a change to Labour’s proposed 39% tax rate for Trusts, so this may go ahead from 1 April 2024. We’ll let you know of any tax planning requirements that may result from this change.
Reinstate interest deductibility on rentals and a two-year bright line test: National has said it will gradually return to 100% interest deductibility on residential investment properties. This will happen in stages over the next three years. The Brightline Test, which is currently set at 10 years, would reduce to two years.
We will be looking out for the tax changes as the new Government makes decisions and we’ll keep you updated.
Xero Software: Behind the scenes, we have been changing our data processing software from Banklink to Xero. The Banklink software has been great but its owner, MYOB, has decided that time is up for Banklink. This required us to find the best alternative, so we have chosen Xero. We have already converted many of our commercial businesses. In the New Year we will begin the process with our farming entities. There will be very little change at your end, but we do require new bank authority forms to be signed.
Keep an eye on your Cashflow: Steady cash flow is the fuel that powers your business. But when you’re busy working hard in your business it can be easy to let it slip. Here are some tips to keep the cash flowing:
- Invoice quickly - good debtor management is crucial, so send invoices quickly, make sure your payment terms are clearly displayed and chase up late payers.
- Make it easy - offer mobile, online, credit card or Eftpos payment options to make it simple for customers to pay you.
- Take advantage of technology – make use of cloud accounting to easily send invoices and keep track of who has paid you.
- Be one step ahead - use cash flow forecasting to predict your expected income and costs.
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. If you give staff more than $300 per quarter then you will be required to file an FBT return and pay tax on these benefits. 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.
- This year the Christmas period public holidays are on Monday and Tuesday. If they are an employee’s usual work day they will be entitled to a paid day off, or time and a half plus a day in lieu if they work on it. If they fall on a usual rostered day off for an employee then they don’t get a paid public holiday that day. 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.
- Farmers, 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.
Our Predictions for 2024
· Interest Rates We hope they’ve peaked and rates will start easing back later in 2024.
· Economy A deepening budget deficit will be revealed.
· Inflation Will be stubborn but will start to ease as interest costs continue to bite
· Employment Some good staff will pop up but there won’t be mass unemployment
· Milk Payout A slow growth back to $8.
· Sport NZ to win 6 golds at the Paris Olympics
Be sure to take some time this summer to spend time with your loved ones. We wish all our loyal Candy Gillespie clients a Merry Christmas and a Happy New Year
