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Bright Line Extension

After 27 March 2021, if you sell a residential property within 10 years of purchasing it, any increase in value will be taxable income. There are some exemptions such as the main home, if the property is transferred to you under a relationship property agreement, or if the property was acquired through an inheritance. These exemptions will depend on the specific facts of your situation. There is also an exception to the 10-year extension for new builds which will continue to be subject to the 5-...

March 30, 2021

No Interest Deductions on Residential Properties

For residential rental properties purchased after 27 March 2021 that are not new builds, you will not be able to claim any interest deductions. Interest incurred on a new build that is bought for investment purposes is still able to be claimed as an interest deduction. There is limited detail on what qualifies for a new build, although it appears to include properties that are acquired within a year of the Code Compliance Certificate being issued. From 1 October 2021, residential property inves...

March 30, 2021

Minimum Wage Increase

From 1 April 2021, the adult minimum wage will increase from the current rate of $18.90 per hour to $20.00 per hour. The starting-out and training minimum wage rates will also increase on 1 April 2021, from $15.12 to $16.00 per hour remaining at 80% of the adult minimum wage.  There are 3 types of minimum wage The adult minimum wage – applies to employees aged 16 years or older who are not starting outworkers or trainees. The starting out minimum wage – applies to workers who are: 16 a...

March 12, 2021

Low Value Asset Threshold

Prior to 17 March 2020, if an asset was purchased that cost more than $500, the asset was capitalized, and no immediate tax deduction was available. Depreciation (the write down of the asset over the assets life, calculated at a specific rate set by the IRD) was allowed as a tax-deduction each year. Any asset below the $500 threshold was able to be claimed as a deduction in full. When the Covid-19 pandemic arrived, the government responded by temporarily increasing the low value asset threshold ...

March 4, 2021

Common Expenses for Contractors

We are often asked “what expenses can be claimed as a deduction against contracting income?” To claim a deduction, there must be a nexus between the expense incurred and the income being earned.  If there is no nexus, the expense is unlikely to be deductible (and would be considered private expenditure). Common expenses incurred by contractors include the following. Vehicle/Fuel Costs With vehicle/fuel costs, there are two options available: Actual costs Keeping a logbook Keep track of...

March 4, 2021

Depreciation on Commercial Buildings

In 2011, the government changed legislation to remove depreciation being claimed on all buildings.  Due to Covid-19, the government have done a U-turn on this decision and from 1 April 2020, have reintroduced depreciation on commercial and industrial buildings. The applicable depreciation rates are 2% diminishing value and 1.5% straight line.  Depreciation is being reintroduced to encourage investment into buildings, support short term cash flow and promote long-term economic recovery...

March 3, 2021

New Trust Act 2019 - Part 2 - Prepare Now

Welcome to part 2 of our Trust Act updates – what you need to do now to prepare for the new Act. Part 1 of our series of articles, covered an overview of the new Act and can be read here. The new Act commences from 31 January 2021 and its application will be different for each trust depending on the nature, assets, and purpose for the trust. Please contact us now if you would like to discuss the purpose of your Trust with us, ensure it meets your needs moving forward (in conjunction with thes...

November 17, 2020

New Trust Acts 2019 - Part 1 - An Overview

Accountants have received guidance about the new Trust Act 2019. This new law (the first in more than 60 years) will affect everyone who is involved with a Trust. The new trust law will be effective from 31 January 2021 and includes clarification of the existing trust laws and some significant changes. Many clients have trusts and are also trustees of trusts. However, some trustees may not be aware of their role and duties as a trustee, recording keeping and disclosure requirements. If you have ...

October 16, 2020

Companies 28% Tax Rates

A company has a tax rate of 28%. This is a flat tax rate and applies to all company profits. So, why not structure your business, investments, or contracting in a company and only pay tax at 28%? Individuals marginal tax rate is 33%, so would you not be 5% better off and pay less tax (only 28% compared to 33%)? For individuals earning more than $70k pa and paying the highest marginal tax rate (33%), companies may not provide tax savings. They may however, delay paying a further 5% tax. This...

October 16, 2020

39% Top Marginal Tax Rate

The Labour Party has announced that if re-elected, they would introduce a new marginal tax rate of 39% for an individual’s income over $180,000. The 39% tax rate would only apply to income over $180,000 and the remainder of an individual’s income will be taxed at current marginal tax rates. Labour believes this change will only affect 2% of the population (who earn more than $180,000) and explain that it will help maintain balance as they continue to manage the impact of Covid-19....

October 9, 2020

Business Continuity Planning

This service may be fully funded by the regional business partners network. If your business qualifies, you can get our COVID-19 specific business support services (up to $2500 per service).  The funding will not last forever, so let us know that you are interested, and we will connect you with our Growth Advisor so that it is fast-tracked. To help speed up the process make sure you register with the Regional Business Partners Network – this only takes 5 minutes: Register your b...

September 7, 2020

Cashflow Forecasting

This service may be fully funded by the regional business partners network. If your business qualifies, you can get our COVID-19 specific business support services (up to $2500 per service).  The funding will not last forever, so let us know that you are interested, and we will connect you with our Growth Advisor so that it is fast-tracked. To help speed up the process make sure you register with the Regional Business Partners Network – this only takes 5 minutes: Register your b...

September 7, 2020

Update on Finance Applications

We are experiencing a record low interest rate environment, currently below 2.55% pa. This makes borrowing money cheap and attractive for capital expansion such as a new rental property, capital equipment, buying a new business, funding growth, or consolidating debt. However, banks are being more restrictive for new lending and looking at each application in depth. We noticed this trend from the banks last year when interest rates dropped below 3%. Since Covid-19 the banks have tightened their l...

September 1, 2020

Covid-19 Wage Subsidy Extension

The wage subsidy has been extended to support employers and self-employed who have been significantly impacted by Covid-19. It is available to all businesses (including the self-employed, contractors and sole traders). The extension is available after the current wage subsidy ends; from 10 June 2020 until 1 September 2020....

May 21, 2020

Temporary Loss Carry-Back Scheme

IRD have introduced a loss carry-back scheme to support customers during the current uncertain economic environment. Businesses making a loss in either the 2020 year or the 2021 year can use that loss to offset profits they have previously made. The loss is carried back to the preceding income year. In the preceding income year, tax is paid on profit. With the loss carried back, tax that has already been paid on prior year profits, may be refunded. This scheme does not apply to residential rent...

May 21, 2020

Government Loans - Small Business Cashflow Scheme

The government is providing loans of up to $100,000 to help businesses, including contractors and self-employed, experiencing cash flow difficulties. IRD is administering the scheme on behalf of the government, however the loan is not a ‘tax’ product, therefore you must apply for the loan yourself - we cannot do this for you (but we can help or walk you through the process). Applications are open from 12 May to 12 June 2020 and are made through myIR website. ...

May 21, 2020

Covid-19 FAQ - Wage Subsidy, Holiday Pay & More

We have recently had a high number of questions relating to the wage subsidy, holiday pay during lockdown (Easter), reconciling Xero and taxes related to the Covid-19 subsidy. Our Frequently Asked Questions (FAQ) below contain answers based on the information available now. We have previously outlined key information on the leave scheme and wage subsidy already and this article continues to elaborate on some of the details. The full (updated) wage subsidy declaration can be found here...

April 7, 2020

Upcoming Tax payments due: 7 April 2020 and 7 May 2020

2019 terminal tax payments are due on 7 April 2020. All our clients will now have received notification via email or phone if you have a payment due. If you are currently experiencing cash flow difficulties to meet these payment (related or unrelated to Coronavirus) please let us know as soon as possible. There are options available as outlined below....

March 19, 2020

COVID-19 - Leave and Self-Isolation Scheme for Business Owners

The government has announced a COVID-19 leave payment scheme to provide support. What does this mean for business owners? In summary, if your employee has to self-issolate, is sick with COVID-19, or caring for others with COVID-19, and unable to work from home, Ministry of Social Development will pay $585.80 for a full time employee (20 hours or more) and $350 for a part time employee. This payment is to be passed from the business directly to the employee. The purpose of the leave scheme is to...

March 19, 2020

Covid-19 Wage Subsidy for Employers

The government has put together a wage subsidy package for employers that are affected. If you are an employer, contractor, sole trader, or self-employed you may qualify to get the COVID-19 wage subsidy. The wage subsidy is paid to the employer to assist in paying wages due to significant adverse effects from COVID-19.  This is separate from the COVID-19 Leave Payment Scheme. See the leave payment scheme information here. This article outlines the qualifying criteria and subsidy t...

March 19, 2020

COVID-19 Proposed Tax Changes

The government has announced a $12bn economic stimulus package to assist with Coronavirus. Here are some of the key tax proposalsThese changes are yet to be passed through law and some of the specific information is yet to be finalised. Most changes are proposed to have an effective date of 1 April 2020. We will continue to provide more information as it becomes available. If you would like to discuss how these may affect you, please don’t hesitate to contact us....

March 19, 2020

GST Zero Rated Property Transactions

We regularly review land transactions where either the purchaser or vendor are GST registered, but the other party is not. This inconsistent nature of each parties GST status may result in some uncertainty over the price of the land and have potential significant consequences. This article outlines the GST status of contracts based on different circumstances We normally experience these types of transactions when: purchasing or selling lifestyle blocks purchasing new properties from GST registe...

January 22, 2020

Back to back loans & interest deductibility

When a business borrows money to earn taxable income, the interest cost will be tax deductible. The key test is the “use” of the borrowed money, rather than the purpose of borrowing. There must be a clear nexus between the interest incurred and the production of taxable income. In determining the use of the borrowed money, the “flow” of money is traced. ...

January 9, 2020

Companies with Losses Carried Forward

Companies may have losses carried forward from a prior year. Losses may have resulted from losing money in a previous business venture, one-off signature expenditure (e.g., significant repairs and maintenance on a property), or during the start-up phase of a new business. This article will explain what losses carried forward are, how they can be utilised, and in some situations how it may be appropriate to utilise the losses over more than one year. ...

December 3, 2019

Proactive ways to manage your tax

Benjamin Franklin said there were only two things certain in life: death and taxes. What if there was a better way to manage paying tax on your terms that suit you? Tax Pooling is a system, that allows taxpayers to pay provisional tax when it suits, while ensuring that Inland Revenue (IRD) receives the tax it’s owed on time. Taxpayers can customise payment arrangements so they can pay tax when they have cash, or delay payments if they have temporary cash-flow shortfalls. Tax poolin...

November 20, 2019 Posts 1-25 of 66 | Page next
 

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