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End of year write-offs

As increasing interest rates have bitten and with industry sectors such as retail and construction not performing as strongly, some businesses are struggling.

As the end of the financial year approaches, now is a good time to assess whether any of your accounts receivable need to be written off as ‘bad’. This is because, in order to claim a tax deduction, a bad debt needs to be physically written off as bad within the income year.

De facto relationship or not?

The Working for Families Tax Credit (WFFTC) is a notoriously complex scheme when it comes to determining eligibility and quantifying entitlement. This leads you to wonder how well the scheme is policed by Inland Revenue, and whether fraud is able to ‘fly under the radar’.

Accordingly, it was heartening to see a case brought before the Taxation Review Authority in October of last year regarding a taxpayer making false claims about their de facto relationship.

Is it confectionary or ingredient?

Here in New Zealand, we value simplicity and we call things as we see them. A spade’s a spade and a marshmallow is confectionary.

However, over in the UK, things are a bit more complicated. Value Added Tax (VAT) is charged on goods and services (like GST is in NZ) but is subject to a number of fiddly and somewhat subjective exemptions.

The employees' market

In today’s workplace environment, expectations around employee benefits are changing, with the norm shifting in the employee’s favour.

For many, the days of a 9-5 workday and mandatory workplace attendance are a distant memory, to the point where flexible hours and working environments are considered a bare minimum.

As the war for talent has evolved, so to have employee expectations and what employers are willing to provide to not only meet, but also exceed those expectations. It is also being acknowledged as not only a means to attract talent, but also as a way to increase productivity in the workplace.

Prioritizing Wellness: Tips for business owners to maintain wellness

As business owners, it's often easy to get caught up in the chaos of running your business and lose sight of our personal well-being, however, it's crucial to make time for ourselves and indulge in activities that bring balance to our lives. 

As many of our business owners know, this time of year can bring unique challenges and stress. We’ve certainly seen many business owners struggling with wellbeing this year, and have felt the same at times ourselves. 

 

Introducing our Pacific whanau

Over the past six months we have been carefully nurturing and formalising a number of collaborations. An intentional step towards our business growth strategy alongside offering more value to our client experience as part of the Yorke Stone Whanau. These alliances we believe will help all of us strengthen our businesses.

GST registration checks

A standard data policing check completed by Inland Revenue is to review taxpayer GST filing patterns to identify taxpayers that are GST registered, but
perhaps shouldn’t be.

In order to qualify for GST registration, a taxpayer needs to be conducting a “taxable activity”. This comprises a continuous or regular activity that involves making a supply of goods or services for consideration. This is a different test to whether a person is operating a “business” for income tax purposes, as it does not require an intention to make a profit.

Super Profits

Last year, the Green Party hit the headlines for suggesting banks, fuel companies, supermarkets, building products suppliers and energy generators/retailers should pay tax on super profits.

So, as we go into the election, we should give some thought as to whether some new innovative taxes are warranted.

Tax ourselves out of recession?

The buoyant covid subsidy funded days are behind us, and New Zealand has entered a ‘technical’ recession. This was reinforced by the recent announcement that New Zealand’s corporate tax paid was almost 11% down in the 11 months to May relative to Government expectations.

North Drift Cafe achieves business goal!

"Yorke Stone assisted me in purchasing the building for my business, which was one of my three year goals, much sooner than I had expected"

"Through an organization called Wharariki, I met Nancy and Daniel when I was in search of an accountant who could help me achieve my goals and provide proactive, helpful, welcoming, and understanding services.

Read more here

Tax policy from two sides of the political aisle

With the upcoming elections, this article on the Tax policies may be of interest. 
Given that either Labour or National are likely to enter into coalition agreements of some form with the Green Party and Act, respectively, and the tax policies of the two main parties are more ‘vanilla’, it is worth reviewing the tax policies of the two minor parties as this is where unexpected change may come from.

Trust distributions and tax rate change

Using a trust to manage and protect a family’s business and personal assets has been a common practice in New Zealand. However, with the recent increase in the amount of information required to be supplied to Inland Revenue, and now the Government’s decision, as part of its 2023 Budget, to increase the trust tax rate from 33% to 39% from 1 April 2024, many will be rethinking their position. 

Global Tax Rates

Inland Revenue made the headlines end of April 2023 with the release of its report on the amount of tax paid by our high-wealth individuals (HWIs).The findings were that HWIs’overall effective tax rate when taking into account all sources of income, including unrealised capital gains, is 8.9%.

Environmental Correctness

The call for action regarding climate change and mitigating man’s negative impact on the planet is not new. However, there has been a shift in the last few years. It has moved from being a focus of ‘greenies’ and the ‘young’ to being accepted by the mainstream population as something that can no longer be ignored

Proposed amendment to directors duties

One of the fundamental director’s duties within the NZ Companies Act 1993 (‘the Act’) is to act in good faith and in what the director believes to be the best interest of the company. This has traditionally been interpreted to mean decisions should be aimed at maximising shareholder returns. In September 2021, an amendment was proposed to make it clear that directors of companies can consider a wide variety of factors.

Provisional tax regime update

In New Zealand the provisional tax regime is designed to help taxpayers manage their income tax obligations, by requiring certain taxpayers to pay tax in instalments throughout the year, instead of one large lump sum at the end of the year. This regime applies to taxpayers who have residual income tax (RIT) of greater than $5,000 in a tax year – RIT is the amount of income tax payable by a taxpayer after deducting tax credits (e.g. RWT, PAYE).

A provisional taxpayer has four different options available when determining the amount to pay at each instalment:

Why are Labour Shortages happening?

The labour market is tight at the moment and seems to be getting tighter with each passing month. What this means, is that recruitment for staff is taking much longer, with a reduction in both the number and skills of applicants. Getting the right staff is imperative for your business growth. 

This article aims to give some background on why this may be happening. 

What is the new normal?

As Covid restrictions at home and abroad start to ease, a feeling of normality begins to surface; gone are the mandates, the scanning in and selected compulsory mask wearing. Life starts to feel good again, as if the last two years were just a fever dream. 

Is it a ‘New Build’?

On 30 March 2022, the Taxation (Annual Rates for 2021-22, GST and Remedial Matters) Act 2022 received Royal assent. Its passing into law brings with it the extension of the residential bright line period from 5 to 10 years and denial of interest deductibility for residential investment properties. 

Broader effects of Covid-19

Over the last two years most of us have had to deal with working from home in some way, shape or form, and for those who are parents, added difficulties arose with trying to entertain and educate children whilst also fulfilling employment duties.

Common Error - Claiming GST on FBT

For those of you who prepare and file FBT returns on behalf of a GST- registered employer, you will be familiar with the GST on FBT adjustment that forms part of the FBT return.

Other tax changes in response to Covid-19

In addition to the tax loss carryback scheme, the New Zealand Government has introduced a number of other tax changes to assist businesses and individuals to get through COVID-19. Currently, if an asset is purchased for less than $500 it does not need to be depreciated.

Emerging from Covid-19

As New Zealand moves down the COVID-19 alert levels businesses face a long transition period from the unknown to the ‘new normal’.

Social distancing, strict health and safety guidelines, restricted international and regional travel are amongst numerous practises that will likely continue to apply for as long as COVID-19 remains a global threat.

Office Closed Notice

The Yorke Stone Team hasn’t stopped since Covid-19 hit and we are taking this time to stop, get our energy levels back up and rest. 

We are back nice and fresh from the 6th of July 2020. Accountants: part time robots but mostly human. We thank everyone for understanding.

Message From Dan

We all know how Covid-19 has impacted our economy and our businesses. Some businesses have experienced a growth, others a downturn and the struggle to keep staff employed and the business open is very real for others.

US tax rules

You may think New Zealand’s tax rules are difficult to follow. The following unusual, yet permitted deductions in the US may change your mind.

GST on land - Holdway and Ellwood

It is common for disagreements to arise between taxpayers and Inland Revenue on the GST treatment of land transactions, but less common for these disputes to arise between a vendor and purchaser.

Resident Brightline

The Income Tax Act 2007 has long contained provisions to tax the sale of property (or other assets) acquired with the intention of disposal. However, ‘intention’ is a subjective concept and has been difficult for Inland Revenue to police.

Tax Working Group

The Tax Working Group (TWG) released its long awaited Final Report (‘the Report’) on 21 February 2019, following a 13 month review during which the Group received over 7,000 public submissions. The report contained 99 recommendations for the Government’s consideration; including the introduction of a broad Capital Gains Tax (‘CGT’).

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YORKE STONE & ASSOCIATES
Level 1
9 Reyburn Street,
Whangarei

 

CONTACT:
Phone: 09 4597574
Fax: 09 4597573
Email: admin@yorkestone.co.nz

 

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