New Year, New Start, New Resolutions to break......

Posted 2 years, 10 months ago by Maggie Waine    0 comments

Welcome to 2015!!!  We hope that you all had a great Christmas and New Year break and are ready to tackle the 2015 year.

This year, I'm going to send out an email newsletter like this every 8 weeks or so.  This will help keep you all in the loop with any Inland Revenue news that might be interesting, plus any little articles that we find that may apply to your financial situations.  

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TRUSTS - BEST PRACTICE 

Last year David attended a professional development course that illustrated the best practice for administering Trusts and the potential pitfalls that trustees may find themselves in.  

The following paragraphs are excerpts from this professional development course that was presented by Grey Kelly Law Ltd.

Trusts and Relationship Property

There are a number of issues but in essence New Zealand's matrimoial or relationship property laws over the last 30 years or so have evolved to recognise or enforce equal division of property acquired or built up during the course of a relationship.  This is not unique to New Zealand; jurisdictions such as Australia, the UK and California have rules ensuring equal division of resources.

Trust laws uphold the right of a person (the settlor) to transfer assets to a trust for up to 80 years for the benefit of a number of discretionary beneficiaries who commonly include the couple, their children and grandchildren.  Inherent in the concept of the discretionary family trust is the trustees' ability to treat beneficiaries unequally; indeed some beneficiaries may receive nothing at all.  Fundamental to the administration of a trust is the power to appoint and remove both trustees and beneficiaries.

It makes sense for a person who has inherited a significant sum of money or who retained a significant sum of money from a first relationship which ended, to place those assets into a family trust to protect them.

Section 44C Property (Relationships) Act 1976

If the court is satisfied that since the marriage or de facto relationship either of the partners has disposed of relationship property to a trust and the disposition has the effect of defeating the claim or rights of one or the spouses or partners, and s 44 does not apply, then a range of orders is available to the court.  A umber of points need to be made about s 44C:

a] It does not apply to a trust under a will or codicil;

b] Section 44C allows the court to award compensation - it does not claw back the items of property disposed of;

c] The court cannot make orders under s 44C if the disposition is one to which s 44 of the Act applies.

Section 182 Family Proceedings Act 1980

Secton 182 is an historical anomaly which has its origin in the English Matrimonial Causes Act 1859 which was replicated in New Zealand.  It authorises the court on or within a reasonable time after making an order for dissolution of a marriage or civil union, to enquire into the existence of any property agreement between the parties or eithe rof them or any ante-nuptial or post-nuptial settlement made on the parties.  Having made those enquiries the court can make such orders as it thinks fit about the application of the whole or any part of any settled property of the variation of the terms of the settlement for the benefit of the parties or the children of the marriage or civil union.

Ward v Ward

The most important case on s 182 is Ward v Ward.  In that case the couple transferred their shares in a farm-owning company to a trust and then undertook a gifting programme.  At the time of separation the farm was worth in excess of $2 million with approximately $250,000 owed on it.  Mrs Ward applied to the Family Court for an order under s 182 and in the Family Court an order was made dividing the trust into two separate one-halves; one half for the benefit of Mrs Ward and the children and the other for the benefit of Mr Ward and the children.

The proceedings went all the way up to the Supreme Court which agreed to create two trusts and dispose 50% of the assets in each.

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XERO

For some time now we have been investigating more technological advancements of managing the general ledger for clients in our accounting system and ways of gaining efficiencies to minimise any cost increases in respect to clients.  We appreciate that many clients are happy to pay for our time involved in value added, but see the cost of compliance as a necessary evil of being involved in business.  To that effect we have looked at the developments that MYOB are currently putting into the commonality of ledger with interaction with clients and also with the general ledgers suites being generated by Xero.

The decision has been made by Matley Financial to implement Xero for the ledgers from the 1 April 2015.  While this is an internal decision it has no direct bearing on you the client.  What we will be looking to do over the next couple of years is to progressively move people away from Banklink and into Xero products.  This is in order to maximise efficiencies from our end and what you will find is that while monthly invoices will be generated to cover the Xero fees by direct debit that this will not have an overall increase in your annual accounting fee.  Rather than be billed once a year with these as disbursements, they are billed on a monthly basis to recognise the cost of the Xero fees that are being billed to us.  

The Xero fees overall will generate efficiencies in our system that allows us for data capture and transferring that data capture into a set of accounts.  If clients are integrated into the Xero product as well it also enables you to access those reports and we can also use it as a way of cross referencing and checking information at any time that you may request it.  This is particularly important if you are talking to banks or other people who require a set of financial accounts which no longer requires you to ring our office and get a set electronically sent to you, as these are published onto your ledger directly.

We recognise that a number of clients enjoy Banklink and it is not our intention at this point in time to move people away from Banklink unless they so request.  We have noticed an increase in fees being charged by Banklink over the last couple of years and its important to note that MYOB purchased Banklink two years ago.  We believe that there is a limited shelf life for Banklink as MYOB will use it to integrate into their other accounting software packages that they operate.  While it remains a stand alone product if you wish to continue to use Banklink, we recognise that and there is no requirement by us at this stage to convert all Banklink clients to Xero.

If you wish to discuss anything in relation to how Xero could be used as a tool for the performance of your business then please contact us and we will be happy to assist with your enquiry.

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REMINDER FROM THE ACCOUNTING TEAM

Annual Accounts

If you have not already done so, please bring in your records for 2014 so that your annual accounts can be prepared in a timely manner.  You can drop these off at either the Tokoroa or the Hamilton office.

Direct Debit

Have you been double paying?  If you are paying your monthly fee by direct debit, ensure that your automatic payment for the same amount has been cancelled.  We have had a number of clients who have been double paying their accounts each month - now this isn't a problem for Matley, but it does affect the client's cash flow!!  You can cancel your automatic payment by visiting your bank branch or logging into your internet banking and changing it there.

Xero Subscriptions

We are in the process of instigating a new accounting programme called Xero which enables the client and the accountant to have an interactive view of their bank account transactions to code and view GST returns etc.  This is a great tool and a lot of clients have moved to this system as it saves time and money as there is less handling from our side.

The subscription for this service must be paid by direct debit however.  We are charged directly from Xero for each and every client's subscription to the service and as we have a large number of clients signed up to this awesome product, we disburse the cost on so that our cash flow is not adversely affected.  

Please ensure that you if you wish to sign up to Xero through Matley Financial Services that you have completed a direct debit form.  These are available at both the Tokoroa and Hamilton offices.

 



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