End of Year 2012
Accounting Services, Chartered Accountants, Accounting & Bookkeeping
Well that time of year has rolled around and the changes both on the road and in the tax arena are changing (and possibly in our district with the amalgamation of Nelson city and Tasman District debate set to go to the polls next month).
Accounting & Bookkeeping
In this update, we are going to fill you in on the tax changes, give some end of financial year tips, some GST reminders and finally changes in our business.
So much for tax simplification as the preparation and management of employees pay is going to get alot more complicated come 1 April. The 2 big areas to change are Kiwisaver and Student Loans:
Kiwisaver - up until now the contributions that the employer has made on behalf of the employee have been tax free. that all changes from 1 April with contributions to be taxed at the employees marginal tax rate. Without going into too much detail, here are some steps that need to be taken: 1. If you run a computerised payroll system, you need to ensure that it is updated before your first pay run after 1 April
2. Any of your employees that are on set payments by automatic payments, you will need to recalculate their normal pay under the new rules (ACC has also changed) and change the AP before any pays are paid after 1 April.
3. You will need to advise your employees of the change as your contribution to Kiwisaver will be reduced.
4. If you manually calculate pays, our recommendation is that you use the PAYE/Kiwisaver calculator on the IRD website
And remember from 1 April 2013, the compulsory employer contributions will increase from 2% to 3%.
Student Loans - there are a number a Student Loan tax codes from 1 April. Any employee that has student loan deductions, will need to give you a new tax code declaration form. Working for Families - as part of the Government's push to tighten up on social benefits, the calculation of family income (for Working for Families and Student Allowances) has been broaden to include alot more income sources and even non-taxable amounts. So gone are the days of using the taxable income that is on your tax return. Therefore as part of the end of year data collection, we will be requiring extra information that previously we didn't require.
End of Year Tips
Although the number of things that can be done before a year end to reduce tax have now almost disappeared, there are a few practical things that can be done to claim expenditure in the 2012 year even though the benefit as such rolls into the 2013 year. Consider the following before the end of March:
1. Business Vehicles - fuel them up, any repairs that need to /could be done, if tyres are needed or going to be needed soon buy them now and fit them later, diesel kms.
2. Equipment - remember any equipment purchased with a value of $500 or less (excl GST) can be claimed as an expense. But DON'T go and buy a group of equipment where the total of the whole purchase becomes an asset.
3. Stocktake - if you carry stock for resale then you need to carry out a stocktake and have it documented. Remember to write off any obsolete or unsaleable stock. The valuation of the stock can either be on a cost price or market value basis.
4. Bad Debts - these need to be written off before 31 March. In order to be classified bad, the debt must be uncollectible and not being pursued.
5. Other expenditure such as stationery, small office equipment (under $500 remember), safety clothing etc all can be claimed in the year that they are purchased even though the benefit rolls into the next financial year.
Over all of this, remember you can only spend what you have got and spending just to save tax is not a wise business decision. Feel free to call and discuss.
GST Trading Names - Just following up on our pre Christmas e-mail ... please please please check the tax invoices that you receive and issue to ensure that they are valid tax invoices. In particular invoices that you receive must be in your legal trading entity name for example if you trade as a company called ABC Trading Limited, the tax invoice must be in ABC Trading Limited name NOT ABC Trading unless you have a trading name registered with the IRD.
Large Refunds - the IRD have changed the policy in regards to sending documentation to support a large refund with the return. We are not allowed now to do that and they will make contact if they want to see any documentation. They are using this change to assist their audit selection process, so can be highly likely that a large refund will trigger an audit. REMEMBER the tax audit insurance offer is still there to those that haven't taken it up.
Changes at BizFitness
As you know nothing in business ever stands still whether it be in ours or in yours. For a while now we have been in the process of developing our internal processes in order to better serve your. This hasn’t gone without it’s challenges and debates but we feel that we are now in a position to start unveiling and implementing. The first to rollout is a revamped annual accounts and tax process. For a couple of years now we have trialled various methods to try and collect all the data we need to complete your work – and this has been with varied success. In order to be clear in what we require, we are going back to the paper copies of the annual checklists but with a few extra steps being:
v Scheduling – We will be scheduling all our work. This means we will be able to provide you with a date to have your records ready by and a guaranteed date by which your work will be completed.
v Check Up Meeting – To meet the guaranteed turnaround time, we will be meeting with you when you bring in your information at the scheduled time. We will send out personalised checklists to you, via e-mail, which you will need to complete and this will also outline what preliminary information we will need. When we meet, we will go over all the information to ensure that we have all we need and at the same time give you a timeframe for the work.
With the guaranteed certainty of when we need your work and when it will be completed, the other component to complete the circle of certainty is the price you will be charged for your work. To give clarity, we will provide you with a price before we start the job and if there is any uncertainty we can discuss this before we start. With the price, we will also give you some payment options as well. So to sum up, the key objectives in doing it this way are:
v Minimise the need to go backwards and forwards to get further information (but this may still happen of course);
v Provide you with a guaranteed timeframe when you completed work will be ready; and v Give you certainty of the price up front, before any work is started along with payment options which you can choose to best fit your circumstances.
We hope that the "fruit" of the change will bear benefits for all of us.
Well that is about all from us .. any questions queries feel free to give us a call or drop us a line
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