The government announced that with the introduction of the top marginal tax rate of 39%, there would be increased focus on trusts. The trust tax rate is still at 33% and so there could be the incentive to funnel income through a trust if trustees or beneficiaries were paying 39% on their individual income. Any trust that receives income during the year will be required to report more information to Inland Revenue (IR) for the 2022 income year. For most, that is the year ended 31 March, 2022. We’ve summarised some of the more important changes below. From the 2022 tax year onwards more informat ..read more

The government recently announced an increase to the Small Business Cashflow Scheme (SBCS). This scheme is available for businesses with 50 or fewer employees. The SBCS was introduced to support small to medium businesses and organisations struggling with a loss of actual revenue due to COVID-19. When the scheme was initially announced, businesses could draw down $10,000 plus $1,800 per full-time equivalent employee. This base amount has now been doubled to $20,000. Existing borrowers will also benefit from this change as they will be able to apply for a top up loan of $10,000, plus any amount ..read more

Inland Revenue (IR) has recently released information setting out the tax rules which apply on fees paid to board members. The way taxation applies to any fees paid to members will depend on the personal circumstances of the individual member and the terms of their contract/appointment. Employees Many SME companies have employees sitting on the board of the company. In this instance, any fees paid for their service on the board will be defined as a salary, wage or an extra pay, and it will be subject to PAYE deductions. Contractors such as independent directors Where an individual is acting as ..read more

The team at Generate Accounting would like to wish all our lovely clients and suppliers a very Merry Christmas and a happy and prosperous 2022. We hope you take the time to unwind with friends and family after such an exhausting year. We will close at midday on Thursday 23rd December and reopen again on Monday 17th January. Merry Christmas and a Happy New Year to you all. The post Merry Christmas and a very Happy New Year appeared first on Generate Accounting ..read more

The government has announced that a new one-off transition payment will be available for businesses from 10 December this year. Businesses need to have suffered a 30% drop in revenue between October 3 and November 9 compared to a typical week in the six weeks prior to August 17 to be eligible. The transition payment is designed to assist businesses in moving to the new traffic light system. Only businesses in areas where they are designated red are able to apply. The payment is intended for businesses in Auckland, Waikato and Northland to acknowledge the restrictions they faced under higher al ..read more

The government has extended the COVID-19 Business Debt Hibernation (BDH) scheme until 31 October 2021 in response to the pressures placed on businesses during the pandemic. Businesses who qualify to use the BDH scheme can buy up to six months grace in order to pay their creditors and have time to address their cash flow difficulties. At a high level, the scheme: allows for businesses to set up an arrangement to pay their existing debts; gives the business a month to set up the arrangement and is protected from their creditors during this time; and if 50% of your creditors agree to your propos ..read more

Inland Revenue have announced that a new resident withholding tax rate for high income earners is now available. If you are New Zealand resident, income that you earn from interest and dividends has tax deducted “at source”. This means that it should be tax free when it is paid to you but only if you have the advised the bank or share register of your correct resident withholding tax rate. The government introduced a new top marginal tax rate of 39% effective from 1 April 2021 for individuals earning over $180,000.00 per annum. Institutions that pay interest, such as banks and finance institut ..read more

When you purchase a business, thought needs to be given to how you will value assets like stock, property and financial arrangements. Inland Revenue has brought in Purchase Price Allocation Rules to standardise the process. The rules apply from 1 July 2021 and will ensure that both the purchaser and the vendor account for valuations on the same basis. Until now, there has been no requirement whatsoever for vendors or purchasers to agree on the allocated purchase price when buying and selling a business. Not surprisingly, vendors and purchasers have often chosen purchase prices that best suit t ..read more

The government has announced significant changes that will impact residential property investors. The Bright Line Test will be extended to ten years, a move that was widely anticipated. In a surprise move, the government will remove interest deductibility on residential rental property mortgages. Brightline Test Extension The existing bright line test will be extended from five years to ten years. New builds will be exempt from the brightline test. Inherited properties and those which have been the owner’s main home for the entire time they owned it will continue to be exempt from all bright-l ..read more

Recently we posted some thoughts on proactive steps business owners can take when faced with a challenging economy. The article set out some activities that owners should prioritise. We thought it might be a good idea to have a look at each of those initiatives in more depth. The first thing that we know from research is that owners need to really understand their numbers and work with an accountant regularly to ensure that they take steps early to avoid or reduce the impact of challenges. That might include monitoring staff costs, rent, marketing and purchases, to name but a few. One of the m ..read more