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The ACC levies have been set by regulation for the 2019-20 and 2020-21 tax years.

For both tax years the earners’ levy remains the same at $1.39 (GST-incl) per $100 liable earnings.  The minimum liable earnings for self-employed workers increases from $32,760 to $34,320.

The maximum liable earnings will increase for:

  • self-employed people from $124,053 to $128,470 in the 2019-20 tax year, and to $130,911 in the 2020-21 tax year.
  • employees and private domestic workers from $126,286 to $128,470 in the 2019-20 tax year, and to $130,911 in the 2020-21 tax year.

You don’t need to do anything — ACC will update your levies for you

‘Well, Mr Dinthwait, I think there’s quite a strong case for compensation for your whiplash injury from your recent car accident.’
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Ontrack Bookkeeping by Ismae Meyer - 2M ago
Minimum Wage to Increase as at 1st April 2019.

The minimum Adult wage increases by $1.20 per hour on 1 April 2019.

The new rates are:
Adult $17.70 per hour
Starting out $14.16 per hour
Training $14.16 per hour

The rate will continue to rise with increases planned for 2020 and 2021 to reach the minimum adult wage of $20.00 per hour.

You and your staff can agree to any wage above the minimum rate. If your employment agreements are a few years old, you can use this as a chance to update them. Please note that it is a legal requirement to have a written employment agreement with all of your staff.  If you do not have one there could be far reaching consequences for your business.

There is a great calculator on the Business.govt website to calculate the cost of an employee, and what the new wages increase may mean for your business.

They have also put together a list of the five key rights and rules for Employment.  Choosing the correct arrangements for each worker is the start of a healthy working relationship. But if you get it wrong, it can hurt your business — not to mention your employees. Labour inspectors have increased powers to check if workers are getting the right pay, leave, and other legal requirements.

Rule 1 – Employment agreement – Every employee must have a written employment agreement.

Rule 2 – Right conditions for each employee type – ie permanent, fixed term or casual.

Rule 3 – Fair pay rates – There are minimum pay rates for workers aged 16 and older. You can pay more, but you can’t pay less.

Rule 4 – Paid time off work – Employees must get at least the legal minimum for paid leave, eg for holidays or when they are sick.

Rule 5 – Working hours – Employers and employees must agree hours of work, and note these in a written employment agreement.

To help employers and employees know what they can and can’t do, Employment New Zealand offers free online courses covering employment basics and minimum rights. This information was bought to you curtesy of Business.govt.nz.

And of course our team are here to help.  Please do contact us for support.

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FBT, or Fringe Benefit Tax, can be confusing at the best of times, especially if you are a small to medium business with a handful of employees. Recently we’ve had clients asking if they can pay for certain items and avoid paying PAYE for the employee, unfortunately this is not the case – the tax must be paid somewhere! Sometimes it’s about identifying the situation and ensuring the best solution for everyone.

What is FBT?

Employees receive cash benefits for working for a business in the form of wages or salary, and are taxed through income tax (PAYE deductions). The non-cash benefits don’t get taxed in this manner, so FBT was introduced to tax these benefits.

What are some of the potential advantages of offering fringe benefits to employees?

For many small businesses, offering fringe benefits may be a way to differentiate themselves from the competition and to attract and retain new employees. At the same time, employers who choose to offer such benefits need to be aware of tax requirements. These benefits are considered taxable income unless specifically excluded by current tax laws.

How can I tell what FBT applies to in my business?

Here’s a few examples of what might be deemed as a non-cash benefit, and therefore attract Fringe Benefit Tax.

  • Vouchers or Gift Cards, to use at places such as petrol stations or supermarkets
  • Use of a company vehicle during weekends and days off
  • Payment of the Employees home telephone, fax or internet connection, or their cell phone
  • Full payment of Gym memberships
When do I register for FBT?

As an employer, you need to register for FBT when you first start giving your employees, shareholders or other people associated with your business, a fringe benefit. We can help you register and select a filing frequency that suits your business best. Be warned, if you haven’t registered yet but you have been giving fringe benefits, you will need to back date your registration and file for earlier periods and make any outstanding payments.

What do I do once I’ve registered?

Once you’re registered for FBT, you need to:

  • Find out about the rules for the fringe benefits you provide
    There are different rules and exemptions for each type of fringe benefit, including the way you work out and record their taxable value.
  • Choose a filing frequency
    There are options for filing and paying FBT quarterly, annually for the tax year, or annually for your income year. Your choice of filing frequency might be limited depending on the type of company you have and how much tax you pay each year.
  • Choose a FBT rate and use it to calculate the FBT on the fringe benefit
    FBT is a percentage of the taxable value of the fringe benefits you provide. There are three different rates you can choose from, with pros and cons to consider for each.
  • File FBT returns and pay FBT by the due date
    The easiest way to file FBT returns is online. We also mail out paper returns which you can fill in and mail back. You can claim the FBT you pay as a deduction in your income tax return.

The team at Ontrack Bookkeeping Ltd are here to assist with all your Fringe Benefit questions. More information can be found on the IRD website. You can also find helpful videos about FBT and motor vehicles here.

Source: Inland Revenue, Copyright 2018

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I’m making sales, woo hoo! Now what?

We often are asked, “When should I register for GST?” It’s good to know that you don’t have to register for GST just because you start trading and selling goods and/or services.

You do however have to register for GST if you carry out a taxable activity, and:

  • Your turnover was $60,000 or more in the last 12 months or will be $60,000 or more in the next 12 months, or;
  • Your prices include GST

As soon as any of these things apply to you, you must register for GST within 21 days.

Wait a minute, what do you mean by “taxable activity and turnover”?

A taxable activity is supplying or making a supply of a good or service. So in other words, anything that you sell.

Turnover is the total gross value of all goods and services you sell or provide in New Zealand, excluding GST. It includes exported goods, as well as grants, subsidies and barter arrangements.

So if my sales aren’t $60,000, does that mean I don’t have to register?

Correct – You don’t have to register for GST simply because you start a company, have an IRD number, or because you’re in business or trading.

Specifically, you don’t have to register for GST if:

  • Your turnover (or sales) was less than $60,000 in the last 12 months or is expected to be under $60,000 in the next 12 months
  • Your turnover (or sales) exceeds $60,000 because you have sold business assets due to:
    • stopping your taxable activity
    • substantially or permanently reducing the scale of your taxable activity, or
    • replacing your plant or assets.

There are also special types of GST registration, contact us to find out more.

What if want to register for GST anyway, even if I don’t have to?

If your turnover is under $60,000 you can voluntarily register for GST, but bear in mind:

  • you have to account for GST on all of your taxable goods and services, including grants and subsidies
  • complying with GST requirements takes time – you have to file regular GST returns
  • if you cancel your GST registration you have to pay GST on the open market value of any business assets that you keep for private use.

We encourage you to register only when you know your turnover will be more than $60,000 in the next 12 months. For example when your turnover is $5,000 per month and you expect to maintain that level all year.

If you’re unsure about whether you should register for GST, or if you need a hand with the next steps in the GST registration process, give us a call.

Reference: Inland Revenue website, 2018

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Ontrack Bookkeeping by Ismae Meyer - 7M ago

With the ever increasing price of fuel, we’re excited to be able to offer our clients an increased level of discount on fuel purchases with an FnF Fuelcard!

Far North Fuels are a leading fuel card provider supplying Mobil, Caltex and BP branded fuel cards for use at over 900 service stations and truck stops throughout New Zealand.

FnF understands what it means to be in business and the importance of supplier efficiency and that is why they are able to offer businesses the complete solution for their fuel puuchases.

Together with ATAINZ, Far North Fuels provide several options for individuals and businesses alike seeking to save money on their fuel purchases. This can include discounts available off the displayed pump price, no card fees, and/or no monthly or annual fees. It’s that simple!

As a client on Ontrack Bookkeeping Ltd, you are eligible for these discounts. So contact us and start saving on fuel today!

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About 300,000 business customers were charged incorrect ACC levies since 2002. Here’s how you can find out if you’re one of them.

If you’re unsure, give our office a call on 09 435 5595 and we can investigate for you also.

Are you owed a refund?

If you were in your first year of self-employment between 2002 and 2017, or paid provisional ACC levies after ceasing trading, ACC may owe you a refund.

ACC expects to refund around $100 million to approximately 300,000 business customers who were incorrectly charged levies during that time.

ACC will refund:

  • all first-year levies collected between 2002-2017 from self-employed customers who worked full-time (averaged over 30 hours per week over the financial year.) This affects around 106,000 customers and equates to approximately $36 million in levies.
  • businesses who paid provisional invoices and weren’t required to do so because they’d subsequently ceased trading or had changed their business structure. This amounts to around $64 million.

The average refund works out at about $340 (excluding GST) for first-year self-employed, and around $415 (excluding GST) for provisional payments. Customers will also receive an interest payment.

ACC expects the refund process to be completed by 31 March 2019.

What you need to do

If you think you might be eligible for a refund, ACC needs your current contact details.

Either visit acc.co.nz and fill in a web form with your contact details, or if you’re already registered for MyACC for Business, use that channel to check your contact details are up-to-date.

ACC will update their webpage as more details become available.

ACC website (external link)

How did this happen?

An update to ACC’s billing and policy system identified these issues.

Preparations for a new levy system included a legal check on whether the new levy system would be compliant with regulations. ACC discovered the regulations from 2002 were drafted in a way that didn’t allow for levying of first-year self-employed.

They also uncovered the second issue with provisional invoices paid by businesses that had subsequently ceased trading or changed their business structure, but hadn’t informed ACC.

ACC suspended invoicing new self-employed customers for their first year when the issue was uncovered. No first-year invoices have been issued since March 2017, and this will continue until the regulations are updated.

“I would like to apologise to customers who have been affected, our focus now is to make this right as soon as we can,” says Phil Riley, ACC’s Head of Business Customer Service Delivery.

Source: Ministry of Business, Innovation and Employment

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Accountants and Bookkeepers fall under the Anti-Money Laundering and Counter Finance Terrorism legislation as of 1 October 2018 which means more compliance activities are going to be required when agreeing to work together.

The requirement is to verify identities of those we work with, so don’t be alarmed if the process of working with an organisation who falls under the Act (Accountants, Bookkeepers, Banks, Real Estate Agents, Lawyers etc) becomes a little more convoluted in the future.  You will probably need to provide more information than you think is necessary and sign your life away in the process.  This information is used to verify you are who you are which is the requirement under the new law.

Its about protecting New Zealand, making it harder for criminals to launder money provides a significant disincentive to carrying out the criminal activity in the first place.

AN UNSPOILT PARADISE FOR US – NOT FOR MONEY LAUNDERERS.

Our country is a target for money launderers. It’s estimated that over $1 billion a year comes from drug dealing and fraud, and can be laundered through New Zealand businesses. Risking our reputation and economy. So, we’re making law changes to protect New Zealand and everything we love about it. Together, we can keep our money clean.

WHAT IS MONEY LAUNDERING?

To put it simply, money laundering is a crime. It’s the process criminals use to ‘clean’ the money they make from crimes such as fraud, dealing in illegal drugs and trafficking. By making the money look like it comes from a legitimate source, they can cover their tracks and avoid detection. Criminal organisations and people who finance terrorism target businesses and countries they believe have weak systems and controls that they can exploit.

THE SIZE OF THE PROBLEM

Money laundering is happening every day across the country. It’s estimated that over $1 billion a year comes from drug dealing and fraud, and can be laundered through New Zealand businesses. However, the true cost and impact is many times that figure when you factor in all the crimes that generate “dirty” money and the suffering they cause.

People who finance terrorism also use these methods to send money to violent causes and to disguise who is providing and receiving the money. While the likelihood of terrorism financing is low, the potential consequences are significant.

DOING BUSINESS AS USUAL

Any business that provides these services will need to put systems and processes in place to prevent criminals from trying to exploit them, and ensure they can identify their customers, know their addresses and, in some cases, know the sources of their customers’ funds.

Additionally, all businesses and service providers covered under the AML/CFT Act (including those from the first phase) will now have reporting requirements that relate to particular transactions as well as suspicious activities.

WHAT CAN I DO?

Generally speaking, customers and users of these services don’t need to do anything. Simply be aware that some extra information may be required from you during these transactions. Even if you have been a customer of these businesses for a long time, they may need to ask you to help confirm that you are who you say you are and, in some cases, tell them where the money you are going to use has come from.

IMPORTANT TO REMEMBER

They are not doing this because they think you are laundering money – they are doing it to help protect everyone and because they are required to under the law. Together, we can help keep our money clean.

NOTE:  Information shared from https://www.keepourmoneyclean.govt.nz/

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From time to time, the terms under which you have employed a team member originally may change. This could be as simple as giving them a payrise, or slightly more complicated such as changing from a permanent full time agreement to a casual basis. It’s important to document each change in writing to ensure you, and your employee, remain on the same page and understand the expectations of the employment relationship.

It’s good practice before any changes are made to review the individual employment agreement (IEA) in full and check to see if anything does actually requiring formal changes in writing. Normally, an IEA will contain a clause like this:

“This employment agreement sets out the whole of the agreement between the parties. It replaces all previous written or oral agreements or understandings. Variations to this agreement must be in writing and signed by both parties.”

The above clause enables the employer (you) to make changes in good faith providing you have discussed the proposed changes in full and issued the employee with a variation in writing detailing the changes, giving the employee time to seek independent advice if required. I would not recommend any significant change to an IEA (such as change of hours, position or employment type) be communicated to the employee by way of email, you’re better off detailing the proposed changes in a letter to the employee that has a space for them to sign at the bottom and return a copy to you.

Normally you don’t have to issue an entirely new agreement (only under certain circumstances), just provide them with a letter detailing the proposed changes. So, what should the letter say?

You’ll need to cover off certain points, such as:

  • Identify the original employment agreement, normally by referencing to the date it was signed
  • Explain why the change is needed
  • Identify what clause or clauses will be modified in the original employment agreement
  • Set out the new wording that will replace the previous wording
  • Ask the employee to confirm their agreement

Take the opportunity to sit down with your employee and go over the letter when you give it to them, even if you’ve been talking with them about the change for a while, so you can ensure they understand what you are proposing and how it will affect their agreement with you.

As an employer, it is your responsibility to ensure the terms of the employment agreement are accurate as a matter of law, and it’s not hard to keep them up to date when you know how to.

Remember, any significant changes such as pay rates, change in regular hours or terms of employment also need to communicated to your payroll professional – in some cases, that’s us here at Ontrack Bookkeepinhg! If in doubt, get in touch with our office and we can help you make those changes or update them in the payroll system.

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From the desk of The Commissioner of Inland Revenue.

The Commissioner has issued a new Operational Statement 18/01 – Commissioner’s statement on using a kilometre rate for business running of a motor vehicle.

This updates and replaces the previous Operation Statement issued in May 2009.

The new rules allow the choice between using the cost method (which is based on keeping records of actual costs incurred) or a kilometre rate method which has replaced the mileage rate method from 1 April 2017.

The kilometre rates for the 2017/2018 income year are as follows:

2017/2018 kilometre rates
Vehicle type Tier one rate Tier two rate
Petrol or diesel 76 cents 26 cents
Petrol hybrid 18 cents
Electric 9 cents

Tier one is a combination of the vehicles fixed and running costs. It applies for the business portion of the first 14,000kms travelled by the motor vehicle in a year (being total km travelled, not just the business km travelled).

Tier two includes only the running costs. It applies for the business portion of any travel in excess of 14,000kms.

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The Domestic Violence – Victims Protection Bill has passed its third reading in Parliament. It aims to enhance legal protections in the workplace for people affected by domestic violence.

The changes will come into effect on 1 April 2019.

The new law entitles employees affected by domestic violence to up to 10 days of paid domestic violence leave per year, in order to deal with the effects of domestic violence. Employees will be able to take this leave as needed – similar to the existing sick leave and bereavement leave provisions.

They will also be able to request a short-term variation to their working arrangements (up to two months or shorter) to which the employer must respond to urgently and within 10 working days. The variation can include changes to hours of work, location and duties of work. This is similar, and in addition to, the existing rights employees have to make a flexible working request.

The law also explicitly prohibits an employee being treated adversely in their employment on the grounds that they are, or are suspected to be, a person affected by domestic violence.

Employees will be able to raise a dispute if they believe that their employer unreasonably refused a request made under the new provisions, and must do so within six months.

Are you accounting for the correct leave for your employees?

If you have questions regarding any leave type, get in touch with our office.

[Source: Employment New Zealand]

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