IRD has good news and bad news on FBT

You may provide company vehicles to some employees. 

In some cases, the vehicle is a work tool – for example, a ute for a project manager.  In other cases, it is part of a salary package.

Whatever the reason, Inland Revenue has good news and bad news.

The good news is that IRD has consolidated all its published statements on motor vehicle FBT into one 57-page document with a logical flow, making the topic easier for you to understand.

Although that doesn't necessarily mean it's easy!

The bad news is that IRD's views on how FBT applies may, in some circumstances, be a bit contentious.

Read more…

New Zealand Trust law to be overhauled

Parliamentary plastic surgery is in store for the Trustee Act, to make trust law easier to access and understand.

On 1 August, Justice Minister Amy Adams introduced the Trusts Bill to Parliament.  This will be the first significant change since the introduction of the Trustee Act 1956. 

The old Act has been viewed as being narrow in scope, with trust administration being complicated and expensive.

Most trusts, like family trusts, business trusts and protective trusts, are set up with a trust deed or other document, like a will.  These are known as express trusts.

In the new Bill, it expressly states that trustees will have to:
  • Know the terms of the trust
  • Act according to the terms of the trust
  • Act honestly and in good faith
  • Hold trust property
  • Act for the benefit of the beneficiaries or the permitted purpose
  • Exercise trustee powers for a proper purpose.

Read more…

GST made easy

Do you hate it when GST return time rolls around?  If so, you're in good company.

For many business owners, the pain isn't so much having to hand money over to IRD, but having to prepare and file a return.

But that pain is easy to avoid.  Here's how:
  • If we complete your returns, of course everything will be done for you
  • If you are GST registered and we don't prepare your returns for you, you may need to check your bank account details.  The easiest way to do this is via your myIR account.
The section inside your myIR account called "My GST" lets you:

Read more…

Tenants must be informed of insulation status

It's been compulsory since 1 July last year for any new tenancy agreement to include an Insulation Statement.

That means landlords must record if rentals have insulation, where it is, the type of insulation and its condition.

That allows tenants or potential tenants to make more informed decisions about renting.

Insulating rentals is now mandatory

On top of that, if you have rental property without floor and/or ceiling insulation, you have until 1 July 2019 to install it.

If you don't have an Insulation Statement, or your property remains uninsulated from 1 July 2019, you can be fined up to $4000.

The insulation requirements don't apply to in-ground concrete floors and integral ceilings-floors in a multi-storey dwelling.

Note that it's illegal to install or repair electrically conductive insulation, known as foil insulation, in any residence.  A breach could cost you up to $200,000.

Contact us if you have any questions.

Subject to Disclaimer 

Airbnb usually a tax case on its own

If you use Airbnb to provide short-term accommodation in your house in which you also live, the IRD's "mixed-use asset (holiday home)" rules don't apply and guests are not classed as boarders.  

Except when you list a whole house which is vacant for 62 days each year, mixed-use asset rules do apply and calculations differ from those for homes where the hosts also live.

Claimable expenses

Anything you spend as an Airbnb service provider may be claimed as an expense.  

For shared expenses, like power and Internet, claims need to be fair and reasonable.  You can claim some home utilities, rates, insurance, and interest – and all food and other consumables that guests use.  

Sometimes boats and aircraft are used for private and commercial purposes.  

In such cases, the income from their use may be liable for tax.

Boats and aircraft (valued at more than $50,000) become mixed-use assets if they are used privately sometimes, and commercially at other times – and not used at all for 62 days of the tax year.

Income-earning days include time you spend either occupying or using the asset to:
  • Repair damage, provided it happened during income-earning days and isn't normal wear and tear
  • Relocate the asset, if you're paid to do that.
But just taking the craft out for repair, or to fix normal wear and tear, is private use.

Read more…

If you rent out your holiday home sometimes, you may have to pay tax on that income.

The IRD says you have a "mixed-use" holiday home if, during the tax year, you use it for:
  • Private use, and
  • Income-earning use, and
  • It's unoccupied for 62 days or more
It is still private use if you receive rent from family members, or from non-family members who pay less than 80 percent of market rates.

The property becomes "income-earning" if you get rent from non-family members at 80 percent or more of market rates.

Tax is payable on rental income... mostly

If you receive income, you must pay tax.  So if you have rental income, you have to pay tax on it, right?

Maybe, maybe not – if you get rent from boarders or homestays.

Boarders and homestays

When you get income from boarders or homestays, your tax position depends on how many boarders you have, and how much you charge, compared with the IRD's standard-cost method.  In other words:

If you have . . .   Then the standard 2017 cost is . . . 
One or two boarders  $263 a week for each

Three or four boarders            $263 for boarders one and two, and
 $215 for boarders three and four
If you charge less than standard-cost figures for four or fewer boarders, you don't have to declare that income.

Read more…

Safeguard your Wi-Fi

Safeguarding your network is a business priority.  

But as most of us are neither rocket scientists nor hackers, it's hard to keep up with the constant turnover of computer security innovations.

Most of us rely on our local IT gurus to keep our precious business information secure.

However, it's still important to stay aware of potential risk areas and take some simple precautions to minimise the risk.

Your Wi-Fi network is potentially one of these risk areas.  

Since its advent, more and more of us can take care of business on the move.  Smart devices have only accelerated this.  

What can you do to make sure your Wi-Fi doesn't provide hackers with a backdoor into your business network?

Keep cash crowned as king

If you want to succeed in business, understand that Cash is King.

Your business can't survive without cash.

The following six takeaways are essential for business success:

  1. Protect your cash position, by knowing what it is.  Build a cashflow statement and always keep it up to date.  If you foresee a shortfall, start at once to fix it.

  2. Create a cash buffer as an insurance against unexpected difficulties.

  3. Protect your cash position against revenue shocks, by maintaining a balance equivalent to at least two months of operating expenses.

  4. Be realistic with revenue expectations.  Take action now if it looks like sales are not going to get you to breakeven.
  5. Read more…

We make it our business to know your business!          Contact Us today