CG Update March 2022

Staff News: Alisha Young has joined our team as the new receptionist. Alisha comes from an education background but has settled in to her new role. Alisha will be the friendly face to greet you when you come in to visit.

End of Financial Year: 31 March sees the end of the financial year for most businesses. Those businesses will find a green questionnaire included with this newsletter. To accurately calculate your financial performance for the year, a snapshot of your position at balance date is required. When preparing your accounts we need to determine what you own and what you owe at balance date. This questionnaire is also your instruction to us to compile your financial statements and tax returns. We are required to keep it on file. Even if you think there is nothing to fill in, please sign and send it in. Scan and email it back if that’s easier.

Tax Tips: As the financial year end approaches, here are some tax tips to think about:

Pre-pay expenses: Pre-paying for tax-deductible expenses before March 31 will help to reduce your tax bill. Some categories of business expenses can be pre-paid without any limitations e.g. stationery, postage, courier bags, and vehicle registration. Most other expense categories have limits but can still be claimed in advance. (See the Trial Balance Newsletter for more detail).

Repairs: If any business assets require repairs and maintenance, do it now so the expense can be claimed before year end.

Work in Progress: Review work in progress. Invoice it or write it off by balance date, otherwise you might be paying tax on income you haven’t received.

Bad Debt: Bad debt deductions can only be claimed if the debt is actually written off prior to balance date. Make a decision on your aged debtors. Either call in the debt collectors or accept that it's not going to be paid and write it off.

Fixed Assets: Review your fixed asset register and decide whether any assets are no longer in use by the business. If they meet the write off criteria, a tax deduction will be allowed.

Bonuses and holiday pay: Amounts payable to staff can be claimed as a deduction for the 2022 tax year provided the full amount is paid to the employee within 63 days of balance date.

Trading stock: either dispose of obsolete stock or revalue it to the current market value.

Tax Tips for our Dairy Farmers: As a result of the recent increases in the milk payout for the 2021/22 season, dairy farmers are generally going to see a significant increase in taxable income for the 2022 financial year. If you are hoping to reduce your tax bill in the next two months before balance date, be sure to spend money on items that are tax deductible. A new tractor or ute won’t help much.

Tax deductible expenditure includes R&M on tracks, water and fencing; and applying fertiliser. If you plan to stock up on farm stores such as feed, fuel, fertiliser, and animal health products, the total value of unused consumables on hand at balance date must be below $58,000 to be a tax saving.

Due to the increased payout, we may be looking to revise your 28 June provisional tax as we expect there to be a significant increase in these tax payments.

Covid Support Payments

A number of businesses are being affected by the requirement for household contacts to isolate. Some businesses are having to shut down for 7 days while staff are isolating, or they simply can’t get supplies delivered. Covid Support payments may be available in these instances.

To be eligible, your business must show a drop of at least 40% in actual weekly revenue as a result of COVID-19 in the community and health measures taken to reduce the spread.

Applications are through IRD using your myIR account. You will need details of your actual drop in revenue to apply, so make sure you have these handy. We can help with this.

Each Covid Support Payment is $4,000 per business plus $400 per full-time employee (up to 50 staff). If you do receive a Covid subsidy, please let us know because it has tax implications.

New Zealand Business Number (NZBN)

To apply for Covid Payments, you will also need an NZBN number. All Companies automatically receive an NZBN. If you are a sole trader, you will need to apply for an NZBN using a Real Me login. It can be quite a painful process and a bit of IT savvy is required, but you are potentially missing out on a lot of subsidies if you don’t have an NZBN.

Other Covid support The Leave Support Scheme and Short Term Absence support are still available if you or your staff are required to test and isolate, as is the Small Business Cashflow Loans Scheme. You can apply for these as well as the Covid support Payment if you are eligible.
 

Wages & Payroll: The Minimum wage rate increases to $21.20 per hour from 1 April. The ACC Earner Levy is also increasing to 1.46%. This means that if you have set up an Automatic Payment for net wages, this wage amount may need to change. Give us a call to discuss.

If you are hiring new staff and you want wage calculations done, please provide us with all their payroll information as soon as possible. This will allow us time to get it set up before new staff begin. Please don’t wait until you’ve started employing them before asking for a wage calculation.

Working on Public Holidays: Over Easter, the public holidays are Good Friday and Easter Monday. Easter Sunday is not a public holiday. A reminder that if an employee works on a public holiday which would normally be a work day (e.g. Good Friday), they are entitled to receive time & a half plus a day in lieu. Be careful and talk to us if unsure.

Candy Gillespie Payroll Services: Payroll is becoming more complicated each year. We have in-house payroll specialists who can take care of all your wage & PAYE processing. If you are finding it difficult or don’t have time to process wages and PAYE returns, give us a call to discuss letting our experts take care of this for you. We are familiar with a variety of Payroll software providers, so we can advise on this as well.

ACC: Cover Plus Extra (CPX) is a good option for self-employed people. CPX allows you to choose a level of ACC cover to meet your needs. If you’re not already using CPX, call us to discuss your options. Those who already use CPX would have received notification regarding your cover for next year. If it’s correct, it rolls over automatically. If not, complete the changes and send it back to ACC. You can set up an interest free instalment plan over 6 months.

Donations: The IRD provides a 33% rebate on cash donations paid to registered charities. Pay before 31 March to claim the rebate in the current year. Send your donation receipts in with your annual records and we will process your rebate claim.

If you have questions on any of the information in this newsletter, please give us a call.