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We believe in passing on knowledge.

Like most property owners you have probably heard about the bright-line test but not necessarily understood how and when it could apply. We have been noticing an increase in queries from clients about how this property rule applies to their own situation.

Put simply, bright-line says people who sell a house in New Zealand within a specified number of years of buying it, must pay income tax on any gains, unless it's their main home or another exception applies. Originally this period was two years and since 29 March 2018 this has increased to five years. 

The bright-line rule is a clearly defined rule that leaves no room for interpretation. You can think of it as someone drawing a line in the sand. It's clear when you cross that line.

To help you understand and navigate this relatively new area of property tax rules, below are a range of questions and answers as provided by the IRD.

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Sound like silly questions? Not any more! 

New anti-money laundering legislation is now in place and Chartered Accountants (along with lawyers, banks, real estate agents and other professionals) must meet stringent new rules to verify clients are who they say they are (including fellow company directors, trustees and beneficiaries who are not even our clients), as well as having to hold proof of source of funds for investments and more. 

This means we will be starting to request additional information from you, sometimes where it might not previously have been required. At a basic level, we not only need to hold copies of identification such as passports and drivers licences, we must physically sight such documents to comply.

There is too much detail to go into via a short article. This is just to let you know what the new legislation is about and why we might ask for further information when completing future transactions. 

For any questions on this new legslation, please contact us and we will happy to discuss it with you.

According to Google, which offers employees a course on mindfulness meditation, and Lululemon, a company that keeps a Director of Mindfulness on staff, the answer is a resounding yes.

Mindfulness, as American scientist Jon Kabat-Zinn defines it, is simply "paying attention in a sustained and particular way – on purpose, in the present moment and non-judgmentally."

Research has shown that practicing mindful meditation can lead to reduced stress, lowered blood pressure, increased brain activity, and improved immune response. It's also been shown to have measurable value for companies when their leaders and employees practice mindfulness, too.


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“The IRD has a way of finding out….”

Jo was having a good giggle watching Shortland Street last week. She called me to come and watch the 'tax man' making his debut on our nations' longest running soap, chasing down beloved Dr Drew McCaskill for probable (intentional) tax evasion. 

While the one liners such as Drew referring to his tax audit as "….. jumping through pedantic Government hoops so drones like Gerry can justify their jobs" will never be as famous as Dr Ropata's "We're not in Guantemala now", as Chartered Accountants we have found the tax man episodes highly entertaining. 

Drama aside though, there are some very useful lessons highlighted by the scriptwriters' take on tax matters, including the importance of record keeping and taking proper professional advice from a qualified Chartered Accountant.

Here is Jo's commentary on Dr Drew McCaskill's IRD audit woes:

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Most businesses will give to employees, clients and often charities at Christmas time. From morning teas to elaborate Christmas functions, from cards and calendars to hampers and the latest gadgets, Christmas is a season of giving.

When it comes to claiming tax deductions this Christmas season, there are very specific rules that apply. We have put together this simple guide about tax on Christmas entertainment and gifts to help you through the festive season.

1. Entertainment

There are rules that apply to tax deductions for Christmas parties, year-end functions and other client/customer or employee entertainment expenses. Some entertainment expenses are fully deductible, while some are not. Here are some quick tips to help you:

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From April 2019, you must follow new filing procedures for your IR345s and IR348s. Instead of completing these monthly, you will be required to file these every payday in line with your normal employee pay cycles. Yes, that means if for example, you pay your employees weekly, you will soon need to file with the IRD weekly. Please note, the payment date remains the same.

In preparation for this change, we strongly recommend that you look at using payroll software which will automatically file this information for you each pay cycle. Personally, I use and recommend Smart Payroll. The charges are modest compared to the convenience, accuracy and ease of use this cloud based system provides. You may know of alternative systems which do something similar.

We also use Smart Payroll to process payroll for quite a number of clients. For them, the transition to payday filing will happen seamlessly.

In preparation for this pending change, we are happy to assist you with a review of your payroll system and processes. Please contact us to find out how we can help take away your payroll pain and make your life easier.

 

New Zealanders are jumping onboard the Airbnb craze, turning their spare space and holiday homes into income generating assets. Particularly this year, we have noticed an increase in clients utilising this latest example of the sharing economy in action. While the benefits sell themselves, you may develop a tax headache if you haven't considered your overall tax position and approach. A little extra income on the side can turn into an unexpected tax bill.

What is Airbnb?
Put simply, Airbnb connects people online wanting to rent their property (entire property or a set space within a property), with people who are looking for accommodation. Hosts and travellers from over 190 countries worldwide participate in this online global marketplace.

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It didn't stop at the dog - the same (ex) client tried to convince us that his daughter's pony was required to entertain his clients' children. Other clients have asked to claim other day to day household items - the pot plant at the front door, Sky television, the weekly cleaner and even a new outfit for an important meeting.

Unfortunately for these clients, none of these items were able to be claimed as home office expenses. The rules are very clear regarding what you can and can't claim. However, making a home office claim if you conduct some or all of your business from home is still an effective and legitimate way to reduce your tax liability.

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Small businesses can grow in boom times as well as periods of difficulty by working smarter and taking advantage of opportunities. Put these following effective tips into practice to help grow your business.

1. Utilise new technology

Modern technology can save you time, improve productivity and reduce your operational costs. Make use of Facebook, Twitter, Google+ and other social media tools to market your business.

Dropbox is a cloud-based service that can be used for document creation and sharing, while Skype is commonly used for calling or video conferencing.

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These days your personal data is everywhere, and that information is valuable to marketers, hackers and everyone in between. If you want to prevent the unauthorized use of your personal information, you need to take a proactive approach to protecting yourself and your identity.

You can no longer afford to be blasé about your data security - if you are not taking proactive measures to prevent the use of your personal information, you are opening yourself up to all kinds of problems. Here are some tips you can use to protect yourself and your data in this age of data breaches.

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