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Changes to financial reporting for companies - are you affected?

Paul Martin • Jul 14, 2015

Last year changes were made to the requirements for financial reporting for companies with balance dates after 1 April 2014. Therefore companies with accounting years ending 31 March 2015 are the first to be affected by the new rules.

Financial ReportingThe changes introduced under the Financial Reporting Act 2013  and the Financial Reporting (Amendments to other Enactments) Act 2013 stated that not all entitles need to prepare general purpose financial statements in line with New Zealand Generally Accepted Accounting Practice (NZ GAAP).

However in reality, even if your company is not required to prepare financial statements under the Financial Reporting Act 2013, you are still likely to need to prepare company financial statements for IRD purposes. Exemptions do apply for some non-active and small companies.

So actually very little has changed! For most it simply means the applicable legislation has changed from Financial Reporting Act 2013 to the Income Tax Act and the need to prepare company financial reports remains.

Minimum company financial statement requirements for IRD purposes:

  • A balance sheet stating the assets, liabilities and net assets of the company for the stated income year
  • A profit and loss statement showing income and expenditure during the income year; and
  • A statement of accounting policies explaining the policies and assumptions that have been used in the preparation of the financial statements and a description of any material changes in accounting policy from prior years, along with Notes to the Accounts including various additional disclosures the IRD now require.

For assistance with preparing your financial statements, please contact us today or request an appointment online.

How the new Government and coalition agreements might affect owners of residential rental properties

By Paul Martin • 04 Dec, 2023
There were some key takeouts of interest to many of our clients from the recently signed coalition agreements between National, ACT and New Zealand First and the formation of the new Government. In particular there are a number of policies which will likely benefit landlord clients who own residential rentals. I have summarised some of these below. 1. Return of Interest deductibility for residential rental properties Interest deductibility for residential rental property owners will return. It will be phased back in over three tax years: • 2023/24 tax year: 60% of interest cost will be deductible. • 2024/25 tax year: 80% of interest cost will be deductible. • 2025/26 tax year: 100% of interest cost will be deductible. 2. Reduction in bright-line period National signalled in their pre-election campaign that the bright-line period for residential rental property sales would reduce from 10-years to 2-years. While the exact implementation of this policy is not yet known, it is good news on the horizon for residential property investors. 3. Reinstatement of 90-day no-cause termination notices The new government will reinstate 90-day no-cause tenancy termination notices. This will avoid many unnecessary disputes in the Tenancy Tribunal and gives landlords more confidence in letting to possibly “marginal tenants". Many landlords have avoided what they considered to be risky tenants because eviction for anti-social behaviour was so difficult. With this reinstatement, landlords might be more inclined to give a marginal tenant a chance because they know that if the tenant misbehaves, they won’t be stuck with them. If you would like more information on how these changes might affect your personal circumstances, please feel free to contact us to discuss further.

How does provisional tax work, especially in an economic downturn?

By Paul Martin • 18 Jul, 2023
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.

How to handle inflation as a sole trader

By Paul Martin • 18 Jul, 2023
Sole traders have had an especially difficult few years as inflation surges. We have got three tips to help lighten the load for your sole trader business. 
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