CG Update - Dec 2019
Office Xmas Hours: Our office will close on Friday December 20th and reopen on Monday January 6th.
Staff News: We have had new staff join the firm in recent months: Jewell Johnston, Lindi van Deventer and Neilar Shuttleworth all began midway through the year.
As we aim to process your work as efficiently and quickly as possible, it may not be the same person doing your GST from one month to the next. Please be aware that you may get emails or phone calls from different people in our office from time to time.
IRD 2019
- Payday filing began in April 2019. For most of our clients it doesn't seem to be as painful as it appeared it would, especially if we are handling it all for you.
- Capital Gains tax discussion came and went.
- Residential Rental Property Losses are no longer deductible against other income. Instead, losses will be ring-fenced and only able to be offset against future rental income.
- Pensioners can still join Kiwisaver which might offer a better return than a Term Deposit
IRD 2020: No more Cheques. From March 2020, the IRD will no longer accept cheques unless under exceptional circumstances (e.g. if you don't own a phone or don't have the internet). IRD's cheque counting machine is out of warranty and they don't want to buy another one. Many people are already using Internet banking to pay their taxes, but for those clients who currently pay taxes by cheque, we'll have a plan for you before March.
Inland Revenue & My IR: If you make IRD payments online, please be sure to pay them into the correct Tax Type, Tax Period and use the correct IRD number. If you have any doubts, check with us before making payment. If you receive an IRD refund that you weren't expecting, please check it with us.
Provisional Tax Payments : If you miss a Provisional Tax payment (even by one day) please get in touch with us so we can arrange an alternative payment through Tax Pooling. If it's late, you will fall out of the "Safe-Harbour" tax regime. This means that the IRD will charge ongoing Interest (UOMI) even after you have paid. Using Tax Pooling to catch up on late payments can significantly reduce this interest.
Bank RWT & PIR Rates: You may have received letters from your bank and the IRD recently about making sure they have your IRD number and correct RWT/PIR rate. If your bank doesn't have your IRD number, any interest you earn will be taxed at 45%.
PIR rates for income from PIE investments (such as Kiwisaver) need to be correct otherwise you might end up paying more tax than you need to, and it can't be refunded.
Give us a call if you are unsure what your RWT or PIR rate should be.
Christmas Parties & Gifts: Entertainment costs for Xmas Functions are 50% deductible. This is because the IRD states that food & drink are 50% private (non-deductible).
The same 50% deductibility rule applies to gifts of food & drink given to staff, customers and suppliers. However, gifts that don't include food & drink are 100% deductible. Fringe Benefit Tax (FBT) rules apply to staff gifts.
Staff Bonuses: Christmas bonuses by way of cash/wages are taxable to employees as part of the PAYE system. For small businesses, Xmas gifts (non-cash) are exempt from tax provided the total value per staff member is below $300 per quarter.
For example, if you give staff a $300 cash bonus, they will pay PAYE tax on it. But if you give staff $300 worth of gift vouchers there would be no tax on it for them, no FBT, and it would still be 100% tax deductible for you. Warning: If you give staff a $300 voucher and a leg of ham, then you're over the $300 threshold which means all of the gift is taxable, so be careful.
This $300 FBT exemption applies to all legitimate employees of your business including yourself if you are a shareholder employee. It can't be cash, but Gift Vouchers are OK.
If this sounds like something you'd like to do, give us a call to discuss the process.
Public Holidays: At this time of year, public holidays come in quick succession. If an employee works on a public holiday which would otherwise be a work day (e.g. this year Christmas is on a Wednesday and the employee usually works on a Wednesday), they are entitled to receive time & a half plus a day in lieu. To save costs, many of our farming clients give full-time staff a paid day off on public holidays rather than pay them time & a half.
But if you need your salaried staff to work on a public holiday, as long as they don't work more than two-thirds of a normal day, then a top up for time & a half is not required (e.g. if they just milked on Xmas Day and did no other farm work). That's because working two-thirds of a day at time & a half is equivalent to one full day's pay. So they would just receive their normal day's pay. They would still be entitled to receive the extra day in lieu.
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 non-deductible for you. If we process your PAYE , please let us know about any staffing changes.
· Contracts – We are members of Federated Farmers, so if you would like one of their contracts at member's prices, please let us know.
· Remember to keep all your time-sheets up to date.
Contact Jo Storey at our office if you have any questions about staff wages.
Our Predictions for 2020
- Rate watcher Alan Candy - Interest rates will remain flat.
- Foreign Affairs Dept Keith Earl - Trump re-elected in a landslide.
- Weather watcher Craig Taylor - Ice creams drip if not licked. Global warming?
- Political watcher Sonia Hart - Winston will jump ship (or will he be pushed?)
- Fisherman John Gillespie - He'll get his quota of Snapper.
- Rugby Head Keith Rea - Ian Foster for All Black coach
- Cricket fan Briar Earl - NZ to win Boxing Day Test and the series.
- Fashion watcher Heath Tapper - Beards will go out of fashion.
- Dad bod Michael Candy - Fatherhood 2.0 is just around the corner
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