November 2016 Newsletter

Posted 11 months, 28 days ago by Maggie Waine    0 comments

Hi everyone,

Please see below for Matley's latest newsletter.  The only other major in-house notice is that Matley offices are closed to the public from Wednesday 15th December and re-open in the New Year on Monday January 9th.  

This year has just zoomed by!

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Cyber insurance and Business Interruption information from Xero data

http://www.nzi.co.nz/pages/coverkit.aspx

 The above link explains the Xero add-on which can then extract data from a business’s accounts to produce the information an insurance broker needs to accurately advise on the necessary levels of cover for Business Interruption insurance. One of the key lessons learnt from the Christchurch earthquake was that many, particularly smaller businesses, did not have Business Interruption insurance. Also even those that did have cover did not have a long enough period of cover. Twelve months is not normally enough and businesses should think about 18 month or 24 month cover periods.

The reason for this is that it is not just the rebuilding of an affected building it is the time needed to get the business up and running at turnover level prior to the event.

https://nzicyber.co.nz/index.html

 NZI have been developing a Cyber Insurance cover which goes along with a business’s Liability insurances.

There is a huge amount of information on this web site. Coverage encompasses such things as damage to your own computer systems, having your companies computers used as “bot” computers and damaging others, privacy breeches – not just computer related as well as many other benefits including having your computer held to ransom by hackers.

Key thing with this is to speak to your usual insurance broker and ask for a Cyber Insurance cover.

 

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Deductibility of farmhouse expenses- 24 October 2016

On 21 October 2016, Inland Revenue released draft interpretation statement QWB00082: “Income tax — deductibility of farmhouse expenses” for consultation.

The interpretation statement considers the deductibility of expenditure relating to a farmhouse that forms part of a farming business. The interpretation statement is the result of a review of long-standing concessions for the farming industry which permitted some farmers to claim deductions for private expenditure.

The interpretation statement explains that deductions for farmhouse expenses are available only to the extent that they are incurred in carrying on the farming business. This means that the current concession which allows a flat 25% deduction for farmhouse expenses without any evidence, as well as 100% deductions for interest and rates is to be withdrawn. The main consequence of the current concession being withdrawn is that sole traders and partners of partnerships can only claim deductions based on the actual business use of the farmhouse.

However, in situations where any compliance costs of calculating the private use element far outweighs any likely deduction, the interpretation statement allows some sole traders and partners of partnerships to claim an automatic 15% deduction (a more realistic amount) for farmhouse expenses and 100% deductions for interest. These deductions are allowed when the cost of the farmhouse is 20% or less than the total cost of the farm. Other sole traders and partners of partnerships may be able to adopt the measures recently proposed in cl 62 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (clause 62 proposes inserting new s DB 18AA to provide a square metre rate method to determine the amount of a deduction for a building that is used partly for business and partly for other purposes).

Any changes from consultation will apply from the start of the 2017–18 year.

The deadline for comment is 22 December 2016

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Next steps announced for simpler PAYE - 3 November 2016

On 3 November 2016, the Government released early information on proposals to make the administration of PAYE simpler following feedback on the discussion document, Making tax simpler — better administration of PAYE and GST, released in November 2015.

The document, PAYE reporting — better administration of PAYE, provides early information about proposals likely to be included in a tax Bill for consideration by Parliament in 2017.

The proposals are intended to further integrate tax obligations, such as providing PAYE information to Inland Revenue, into employers’ own systems and processes. Meeting tax obligations will become part of the process of paying employees rather than a separate and additional activity. The proposals are intended to make it easier to get an employee’s pay right and to quickly address issues such as using the wrong tax code. The result will be lower compliance costs for employers and improved accuracy of deductions for employees. A summary of the proposals is as follows:

• Employers and payroll intermediaries would no longer be required to file an employer monthly schedule; instead they would file PAYE information on a payday basis from 1 April 2019.

• Employers using payroll software would be able to file their information directly from their payroll system.

• Employers would not be required to use payroll software but would have to file their PAYE information on a payday basis.

• The smallest employers would still be able to file their PAYE information on paper if they choose to do so. The threshold for electronic filing of PAYE information would reduce from $100,000 a year of PAYE and Employer Superannuation Contribution Tax (ESCT) deductions to $50,000 a year.

• The Government is not proposing to change the dates by which PAYE and related deductions have to be paid to Inland Revenue. However, employers will be able to make these payments on payday if they choose to.

• To improve the workability of the rules minor changes would be made from 1 April 2018 to the PAYE rules for holiday pay paid in advance to align when rate changes come into effect.

• The payroll subsidy, which subsidises employers to outsource their PAYE obligations to listed payroll intermediaries, would cease from 1 April 2018.

A summary of feedback received on the original proposals outlined in the November 2015 discussion document is available at www.taxpolicy.ird.govt.nz.

Further background information about the proposals can also be found in the Minister of Revenue’s speech on 3 November 2016 to the NZ Payroll Practitioners Conference which is also available at www.taxpolicy.ird.govt.nz.

Source: www.taxpolicy.ird.govt.nz

ED0190 released — Retrospective adjustments to salaries paid to shareholder-employees, 03 November 2016

Inland Revenue has released draft standard practice statement ED0190 — Retrospective adjustments to salaries paid to shareholder-employees. Unless specified otherwise, all legislative references in this SPS are to the Tax Administration Act 1994 (“the TAA”).

The item notes that “… SPS 16/01 sets out in detail the process that the Commissioner will use to consider section 113 requests. Because of the recent release of SPS 16/01, this statement sets out the criteria for considering whether the circumstances are appropriate for the Commissioner to agree to retrospectively alter an amount of shareholder’s salary. This consideration takes into account the process used in exercising the section 113 discretion. This statement considers requests to either increase or decrease an amount of a shareholder’s salary …”

This statement replaces SPS 05/05 — Retrospective adjustments to salaries paid to shareholder-employees and should be read with SPS 16/01 — Requests to amend assessments (or any subsequent statement issued in replacement).

The deadline for comment in response is 27 January 2017.

Refer to ED0190 — Retrospective adjustments to salaries paid to shareholder-employees for further information.

Source: www.ird.govt.nz 

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 Flexible payment options for 15 January provisional tax with TAX MANAGEMENT NZ

 With many clients due to pay provisional tax on 15 January, we thought we would mention an option you might useful if this payment is going to be difficult to make payment on time or in full.

 Tax Management NZ (TMNZ) provides an Inland Revenue-approved service that gives you greater control over your income tax obligations by letting you choose how and when you make these payments.

You can put an arrangement in place to defer an upcoming provisional tax payment to a time in the future that suits you, without incurring late payment penalties and interest of 8.27 percent from IRD.

 The arrangement does not affect existing lines of credit. Approval is guaranteed.

 TMNZ also allows provisional tax to be paid off in flexible instalments. You can pay what you can, when you can for up to 75 days past your terminal tax date.

 This method eliminates IRD late payment penalties and reduces IRD interest costs.

 Please contact us if you wish to find out more about these payment methods and how they can help you manage your provisional tax payments.



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