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Get your year end right and save tax!

With not long until year-end, we encourage you to spend a few minutes this week reading our top tips to sort your end of year paperwork.

  • First make sure you have all the documents we'll need, such as PAYE statements, bank statements showing interest earned, dividend statements for shares, and receipts for expenses. It can be tricky to keep track of everything so if you're not already, go digital. Scanning receipts and saving electronic invoices in the cloud saves time and space. Xero offers a great service to enable you to do this, and remember, even if you are on a great accounting system such as Xero, we do still need that additional information!
  • Look at writing off old debts – if you don't think that a bill is going to be paid, then write these off before year end.
  • Review your inventory. The value of your stock affects your business's taxable profit. Do a meticulous stocktake before year-end. Get rid of any out-of-date or damaged items so they can be written them off. See our helpful fact sheet on stocktakes. 
  • Check out your assets – year-end is the time to ditch surplus assets. If you can sell them, great, otherwise write them off. And if you're planning to buy any new equipment or assets, do it on or before 31 March (rather than 1 April) to reduce your taxable income and gain a full month's depreciation.
  • Talk to us on any planned dividend payments, as managing imputation credits will be important.
  •  And lastly, if you were considering a move to Xero, then the start of the new financial year is the most ideal time to do this. Give us a call and we can provide expert advice on how to convert, as well as provide the most tailored Xero subscription to your needs.

The Companies Office is now recording more information to be shared with the NZBN Register. As technology moves forward, providing this additional information will make it faster and easier for you to work with other businesses and the government. 

The information collected includes your GST number, your contact details, including phone numbers and email address and trading details such as where the company trade, and it's main business activities. This information will then be made made publicly available on the Companies Register and the New Zealand Business Number (NZBN) Register, which can be seen by other businesses, government and the public.

If you would like this information to be included on the Companies and NZBN Register, let us know, and we can update this for you.  

For more information about this, please see the Companies Register page. 

Changes to ACC for the Self-Employed

For those of you who are self-employed and not on ACC CoverPlus Extra, there has been a change to the way that ACC invoices you.

In the past, your ACC levy was based on your previous years earnings, however going forward, this will now be based on your actual earnings, charged once we have filed your income tax return.

What this means for you is that most of you who are self employed will not receive an ACC Levy invoice in the 2019/2020 year. Instead, you will receive your next ACC invoice in the2020/2021 year once your tax return has been filed.

For more information, please see the ACC website

Note that if you are on ACC CoverPlus Extra, you should have already received your invoice. Please make sure that this is paid by the due date as ACC has a very strict cancellation policy around CoverPlus Extra.

Air BnB - What are the tax implications?

There has been a rise in popularity recently of using Air BnB (or similar) to rent out a spare room or a holiday home to earn some extra money.

Unfortunately, some people don't think of the tax implications that this could cause. It's important to be aware that any income that you receive (less any costs associated) will need to be included in your tax returns and have income tax paid on this amount. If it is a holiday home that is being rented out then the mixed use asset rules will apply, apportioning deductible and non deductible expenses based on days rented and days used personally.

Another consideration is GST consequences. Because the rental received is short-term, this can potentially be subject to GST. The threshold to register for GST is $60,000, and whilst your Air BnB income may not take you over this you need to consider any other income that you already earn. Also, if you are already GST registered, then you will need to account for GST on your short term rental income as well.

If you are considering, or have been renting out a space, then don't hesitate to contact us to discuss your tax requirements. And don't forget about any other implications of renting out your own space, such as insurance. Your insurance company will want to know if there are tenants in the property, and will recommend specialised insurance for this.  

ACC Refunding Historic Business Levies

ACC released on Thursday that two historic overpayment issues have been uncovered, relating to self-employed customers and businesses who paid levies when they were not required to do so.

The press release detailed that the issues revolve around:

  • First-year levies collected since 2002 from self-employed customers, who worked fulltime (ie averaged over 30 hours per week across the financial year). This affects approximately 106,000 customers.
  • There are also around 200,000 businesses who paid provisional invoices over the same period, in situations where they were not required to do so.

To read more, the press release is linked here.

The refunds will begin in October 2018, and are expected to take till April 2019 to complete. Of course it is expected that some customers will have changed their details and not updated this with ACC.

To check if you are due a refund, and to update your details if you are, please click here.

If you've seen the film The Wolf of Wall Street, you'll be familiar with the concept of money laundering – an illegal process where 'dirty money' received from criminal activities is passed through legitimate businesses and made 'clean.'

In response to a growing number of laundering incidents in New Zealand, the government has made changes to the law, which now affect accountants and small businesses like yours. As of 1 October 2018, we're required to put new preventative measures in place to help tackle money laundering and financing of terrorism.

What does this mean for you?

We are going to be asking you for more information in order to confirm your identity as part of our customer due diligence process. While this will only apply to new clients from 1 October 2018, it's likely that we will also need to ask this of our current clients in the near future.

We might also need to ask you for more information about your business than what we have in the past, especially if it involves large cash transactions ($10,000 or more in one transaction or international "wire transfers" of $1,000 or more).

For more information, please follow the link for the Justice Department's commentary

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