We believe in passing on knowledge.
How are costs for meeting the Healthy Homes Standards for residential rental properties claimed in my tax return?
21/01/2021 by Paul Martin
Most residential rental property owners should be well aware of the Healthy Homes Standards which became law on 1 July 2019.
The healthy homes standards introduce specific and minimum standards for heating, insulation, ventilation, moisture and drainage, and draught stopping in rental properties.
Trusts are common in NZ and the reasons for setting them up vary. The Trusts Act 2019 comes into effect on 30 January 2021. Changes to the act aim to make trusts more accessible. There are increased compliance obligations on trustees and duties that ensure greater transparency for beneficiaries.
The changes to the act include:
- The age of majority (the default age that a person can inherit if not specified) changes from 20 to 18.
- The maximum duration period of a trust is extended from 80 years to 125 years
- Obligations on trustees to keep certain information about trusts
- A mechanism to request the court to review the decisions and actions of trustees
- Flexible powers for trustees to manage trusts.
The world of work has been transformed this year and the only way forward is to adapt. Here are two businesses who rejigged their offering to keep the invoices rolling and who experienced great success.
Bringing home the bacon
Pop-up restaurant founder Stacey Jones from Mount Maunganui describes time in lockdown as a 'tale of two halves' for her business Kitchen Takeover. "It was hard because my seven events sold out in 24 hours before lockdown and they all had to be cancelled. But this was good because it forced me to pivot and move really quickly into something new, which would never have happened if I hadn't had my hand forced."
Stacey decided to package up her pop-up restaurant night into a dinner party box - a fine-dining experience delivered to your door.
If you had to pay tax of more than $5,000* in your last income tax return, you may have to pay provisional tax for the following year. Provisional tax is like making progress payments on next year's income tax.
The amount you have to pay relates to your expected profit for the year. In practical terms, the amount of provisional tax you're expected to pay is based on the tax you were liable for on your profit in the previous year. This is often referred to as residual income tax (RIT) and your provisional tax will be based on RIT plus a standard percentage uplift as determined by the IRD.
Even if you are not required to pay provisional tax, you may still elect to do so, to spread your tax obligations over the year. This can help you manage cash flow and take away the pressure of having to find and pay a lump sum of tax at the end of the year.
COVID-19 and provisional tax
With the impacts of COVID-19, many clients are rightly questioning the amount of provisional they should be paying at the first 2021 payment date of 28 August 2020 and asking us to re-estimate the payment amount down.
We all know that cash is king when it comes to business success, but what exactly is 'working capital' and how does this financial metric help measure the health of your business?
Working capital is made up of the cash and assets that are available in the business to fund your operations and keep you trading. It's worked out by taking your current assets (the things you own) away from your current liabilities (the things you owe to other people).
So, why is working capital such a critical metric?
Having the liquid capital needed to tradeIt's possible for your business to be busy, successful and profitable, but for your cash position to still be in poor health – and that can have a serious impact.
When you own a residential rental property, the tax you pay depends on whether you are an investor or dealer in residential rental property as dealers are taxed more heavily.
Rental property investors generate ongoing rental income, without any firm intent of resale, while property dealers/speculators buy property intending to sell it and have established a regular pattern of buying and selling property.
In this article we focus on the first category – rental property investors.
Rental income and paying tax
If you're charging rent, you may need to pay tax on the rental income you earn in the same year you receive it. Your rental income could be from a house, land, caravan, sleep-out, building, holiday home or room in your own home.
Is your business plan up to scratch? Is it really doing its job as the blueprint to lead your business into the future? Let's look at some of the key points to be included.
The Mission
Upfront you need to describe what your business does and the goals and objectives you wish to achieve in your business – let's face it, you've got to have a dream or a mission and this is the place to state it.
The market
Researching your market and your competitors is important before you go into business. Information about market size and growth and whatever 'intelligence' you can find about competitors should all go into your business plan. This information can then help plan your marketing strategy – what segment of the market will you target?
Deductibility of clothing and items relating to personal presentation as business expenses
24/08/2019 by Paul Martin
Unlike our Aussie neighbours, the New Zealand Inland Revenue Department has very strict rules on what you can and can't claim when it comes to clothing and personal presentation expenses. You might think the justification for why you should be able to claim it is legitimate but unless it falls into the below categories, unfortunately you are out of luck.
Below are guidelines on claiming clothing and personal expenses:
Don’t break the (piggy) bank! Why your current account matters, especially if it is overdrawn
29/07/2019 by Paul Martin
Tucked away toward the back of your annual financial statements you will find details of your shareholder current account. It might be in credit or it might be overdrawn, and you might ask does it really matter?
The answer to this question is yes – it does!
We find current accounts is an area that is not well understood, and therefore the consequences of overdrawn balances can come as a shock to clients. Below we have outlined what a current account is and key things you need to know.
Have you considered what would happen if you were subject to an audit by the Inland Revenue Department (IRD)? You may not have ever have considered this, knowing you keep good records and work with us each year to prepare and file your annual tax return. However, even we don't know when the IRD might come sniffing and start asking questions. Often the outcome is that everything is in order, however, getting to this point comes at a cost.
That's why we offer clients the option to purchase Audit Shield Accountancy Insurance.
