Hiring? Look for Traits not Talent.

Soft skills are the personal qualities that make people easy to work with and they are key for business success.

Here are six important soft skills and the best open-ended interview questions you can ask to help find out whether a candidate is right for your business:

Communication

Give me an example of when you had to deal with a difficult team member. What did you do to communicate properly?

Adaptability

Tell me about a time when you were asked to do something for the first time. How did you react? What did you learn?

Culture fit

What three things are most important to you in a job?

Collaboration

Tell me about a time when you had to work with someone who was difficult to get along with. How did you handle interactions with them?

Time management

Describe a time you fell behind schedule. What went wrong and what would you do differently next time?

 

If you would like to discuss your plans for hiring or expanding your team with a trusted advisor, call us on (06) 878 8824.

How Cyber-Secure are you?

Blackmail, extortion and identity theft might sound like something straight out of a blockbuster movie but cyber crime is not only a reality, it’s on the rise and research shows the average Kiwi business isn’t prepared.

Is New Zealand really under threat? We’re so far away!

Unfortunately ‘out of sight, out of mind’ doesn’t apply to cyber criminals. More than a quarter of Kiwi businesses surveyed in 2017 faced a cyber-attack in the previous year, placing us eighth in the league table of 37 countries surveyed.

What can happen if I’m attacked?

Cyber security threats, which include data breach, insider threat, cyber bullying and more, can mean facing larger financial loss from reputational damage, theft of customer details and intellectual property, and infrastructural damage.

How much protection do I need?

It can be as simple as switching on two-step verification on your email but if you rely on sensitive data or store personal information about staff and customers, you’ll need to do more. Being proactive could mean software updates, setting up logs, using cloud services (if you’re not already) and securing devices.

Unfortunately, it’s not a question of ‘if’ but ‘when’ your business will be attacked, so take action to protect your business. To find out the best way to keep your business safe in 2019, give us a call on (06) 878 8824.

The Domestic Violence – Victims’ Protection Bill

Have you heard about the new Domestic Violence – Victims’ Protection Bill?

Here’s what it means for you.

FACT: New Zealand police respond to 270 domestic violence incidents every day and it’s estimated that’s only the tip of the iceberg – with 80% of incidents going unreported.

FACT: Did you know domestic violence already costs New Zealand workplaces at least $368 million a year due to higher turnover and lost productivity? Addressing the problem directly will be better for business and victims of domestic abuse.

Imagine trying to work while juggling court, counselling, and your family’s needs following a domestic violence incident. This is the situation for thousands of Kiwis, but it’s set to improve with the new Domestic Violence – Victims’ Protection Bill coming into effect on 1 April. The law enables people affected by family violence to apply for specific leave and flexible working arrangements to help them keep their jobs during a challenging time.

What does this mean for you?

Local companies such as Countdown, The Warehouse and ANZ already offer domestic violence leave – and it’s time for the rest of the country to follow suit. As an employer, you need to be aware of what leave and flexible working arrangements victims of domestic abuse are entitled to, what you have to do, and how to support your staff.

10 days’ domestic violence leave

Employees will be able to apply for up to 10 days’ domestic violence leave per year to deal with the effects of domestic violence, such as court appearances, doctor visits and looking after children.

  • Employees need six months’ continuous employment to be entitled to this leave and entitlement does not accrue from year to year.
  • Staff don’t need to provide proof they have been affected by domestic violence, but employers can ask for proof before agreeing to the request.
  • If an employee fails, without reasonable excuse, to provide proof, their employer isn’t required to pay for any domestic violence leave.

More flexibility at work

To support staff affected by family violence, you are required to provide flexible working conditions, such as changes to:

  • The location of their workplace
  • Their duties at work
  • The extent of contact details the employee must provide to their employer
  • Any other term of employment that needs variation to enable the employee to deal with the effects of domestic violence.

Stay open-minded and make a plan

Now’s the time to think about how you’ll approach requests for domestic violence leave. It’s a good idea to put together a practical plan to ensure you respect and protect your staff members’ privacy throughout the process. Keep in mind you could get requests for leave for a range of reasons including physical, sexual and psychological abuse, harassment, threats, intimidation and financial abuse.

If you need help putting together a plan, please call us on (06) 878 8824.

Checklist: Can your Business Survive the Holiday Period?

While the Christmas/New Year period is traditionally a slow time of year for business, you still need to meet your expenses.

Ensure your bases are covered before you clock off for the year.

1. Plan ahead

Do a budget to figure out how much you are going to need to cover your overheads. This is especially important if it’s going to be several weeks before you start earning a crust again.

A cashflow forecast will help you identify any issues before they become problems.

2. Get your cashflow in order

You can achieve this by:

  • Prioritising jobs you can complete quickly so you can invoice clients straightaway.
  • Incentivising early payment for completed work by offering a discount.
  • Chasing outstanding invoices.
  • Seeing if you can re-negotiate payment terms with suppliers.
  • Reducing unnecessary spending.

3. Don’t forget taxes

IRD expects GST and provisional tax payments to be made on 15 January 2019. Interest of 8.22% and late payment penalties apply if you don’t.

Here’s a tip: If paying both is going to hurt the bank account, prioritise paying the GST. You can utilise the services of an IRD-approved tax pooling provider such as Tax Management NZ to pay the provisional tax later. They reduce IRD interest by up to 30% and eliminate late payment penalties.

As always, we’re happy to work with you so you have nothing to worry about while you enjoy your summer break. Feel free to give us a call on (06) 878 8824.

Managing Entertainment and Gift Expenses for the Festive Season

How to enjoy all the bells and whistles without the tax headache

Parties and gifts are all part of the festive fun but they can cost a small fortune.

Here’s a list of the rules around entertainment expenses so you know what’s deductible and non-deductible before you fork out for your staff and customers.

  • To claim 100% of your customer gifts, keep it non-food or drink related. Book vouchers, tickets to a sports match or a personalised calendar as these can be claimed in full.
  • Got a staff party planned? Half of your food, drink, entertainment and venue hire can be claimed in your GST and income tax returns.
  • You don’t need to pay Fringe Benefit Tax on entertainment expenses (that come under the 50% deductibility rules) unless it’s being enjoyed by staff outside of their work duties.
  • Heading to Aussie for a fun-filled weekend with your staff? It’s 100% deductible (and they’ll love you for it!)
  • If you’re giving customers and staff food and wine for their efforts you can claim 50% as a business expense.
  • Donating to charity this Christmas? You can deduct 100% of the cost of entertainment you provide to members of the public for charitable purposes.
  • If you’re taking your family (who don’t work for you) out for brunch to thank them for putting up with your long hours… it’s not deductible because it’s not related to generating income for your business.
  • Taking the team out for lunch? Ordering in a Christmas feast? You can claim 50% as a business expense whether you’re out of the office or on-site.
  • Top tip: If you run out of time to organise Christmas gifts for customers, why not surprise them with a ‘Welcome back to work’ prezzie in the New Year?

Remember to keep your invoices and receipts for business entertainment expenses. If you have any questions about what’s deductible and non-deductible, give us a call on (06) 878 8824.

Pre-Christmas Business Health Check

Do your Christmas housekeeping!

The festive season can be a hectic time for businesses. Here is our pre-Christmas checklist to keep things on track during the silly season:

  • Chase up unpaid invoices to encourage payment before Christmas to get cashflow off to a good start for the New Year.
  • Make sure your voicemail message and website mention closing date info and emergency contact details. Who’s responding to work related emails while you’re on holiday?
  • Is payroll all set up for the holidays? Don’t leave it till the last minute and double check your calculations.
  • Shutting the doors over Christmas? Remember to give staff 14 days’ notice.
  • Back up your client and financial data on all IT systems and run any anti-virus updates.
  • Feeling hectic? Make the workplace more relaxed in the lead up to Christmas by decorating the office, organising a Secret Santa, playing festive music or letting staff dress more casually in the final few days.

Holiday Cashflow Blues

Many businesses start to worry about their bank balance around now. The holidays looming recall unpleasant memories of last year. All the regular expenses (wages, rent, suppliers and so on) are still due, but the people who pay you are either away on holiday or slow payers awaiting payment themselves.

Instead of a relaxing break the holidays can be filled with stress. The brutal facts are that December/January are the worst months for slow paying clients.

These are “holiday cashflow blues”.

The classic symptoms:

  1. The staff who monitor and manage cashflow take holidays, leaving you feeling you are flying blind.
  2. You don’t receive expected in-bound cash but must cover regular outbound monthly payments.
  3. Your overdraft isn’t enough to cover all your payments but key bank staff are also unavailable to negotiate an increase.

A clear and concise cashflow strategy is so important to keep your head above water these holidays. It may also improve your business’ cashflow for the whole year ahead.

5 steps from smartAR.com:

How to avoid the cash flow blues this Christmas

  • Issue new invoices early. Some businesses only invoice at end of month. Instead, during Nov/Dec/Jan, try invoicing on a weekly or even daily basis.
  • Offer flexible payment options, including fee funding if possible.
  • Early payment discounts may be cheaper and less hassle than an “unarranged” bank overdraft or high interest credit cards.
  • Call all your debtors. If no one in your business does this (or does it well), consider outsourcing to a dedicated accounts receivable specialist to improve payment speeds.
  • Prepare a 3-month budget before the holidays. If it indicates a cash shortfall, talk to your suppliers and other creditors in advance. They will appreciate the communication instead of unreturned calls and avoidance behaviour.

And… enjoy the beach!

If you would like us to help you with your holiday cashflow blues, get in touch on (06) 878 8824 or via our contact form.

Grow with the (Cash) Flow

Steady cash flow is the fuel that powers your business, but when you’re busy doing a million things at once it can easily slip to the bottom of the priority pile. Here are some tips to keep the cash flowing while you’re growing:

  • Invoice quickly – good debtor management is crucial, so send invoices quickly, ensure your payment terms are clearly outlined and offer discounts for prompt payment.
  • Make it easy – whether you offer mobile, online, credit card or modern POS payment options, make it simple for customers to pay you.
  • Take advantage of technology – ditch the paper and take advantage of cloud accounting.
  • Be one step ahead – use cash flow forecasting to outline your expected income and costs.

If cash flow is king, forecasting is queen – and making informed estimates doesn’t have to be confusing.

Give us a call (06) 878 8824 to chat through your objectives and we’ll help you develop a valuable, detailed and easy to digest profit and cash flow plan so you can confidently stay on track as you grow.

Financing Business Growth with Provisional Tax

There are several options available when it comes to accessing money to invest in your business.

However, did you know that provisional tax payments are also a source of finance?

Tax Finance, an option offered by an IRD-approved tax pooling provider such as Tax Management NZ (TMNZ), lets you free up working capital by deferring a provisional tax payment to a later date, without incurring IRD interest of 8.22 percent and late payment penalties.

The cost is cheaper than using your business overdraft or an unsecured loan. Approval is guaranteed, and no security is required.

Who might Tax Finance suit?

It will suit those who:

  • Are looking for funding that doesn’t affect other lines of credit or who want to keep headroom in their existing lending facilities.
  • Don’t wish to go through the rigmarole of the normal lending process.
  • Want a fixed interest cost.

How does Tax Finance work?

  1. You pay TMNZ an upfront finance fee, which is based on the amount of tax due and the future date you wish to pay, and TMNZ puts a date-stamped tax deposit aside for you in its tax pool account at IRD.
  2. At the agreed upon future date, you pay TMNZ the tax owed.
  3. TMNZ arranges for your date-stamped tax pool deposit to be transferred to your IRD account. IRD treats this as if the tax was paid on time once it processes the transfer, eliminating any interest and late payment penalties incurred.

Call us today on (06) 878 8824 for more information on how Tax Finance might help your business grow.

Get up to Speed

New Rules for Motor Vehicles.

Did you know the mileage rate we’ve been referring to for years is now the kilometre rate?

If you’re a sole trader or in a partnership (and use your own vehicle for business), you can claim your running costs as an income tax deduction. Traditionally, if you own a company you’re liable for FBT any time you provide non-cash benefits (like motor vehicles) to your staff. Recent amendments to the income tax legislation, however, now allow close companies to use the kilometre rate (where one or two motor vehicles are provided to shareholder employees for their own use) to calculate deductions for motor vehicles instead of paying FBT.

We’d love to talk you through these changes over coffee, but in the meantime, here’s a summary.

You can now claim a deduction based on a kilometre rate method. This method uses set rates, which are divided into two tiers:

  • First tier – recovery of both the vehicle’s fixed costs and its per kilometre running costs, for the first 14,000 kms.
  • Second tier – recovery of the vehicle’s per kilometre running costs only, after 14,000 kms.

The following rates per kilometre will apply for the 2017/2018 income year:

Vehicle type Tier 1: First 14,000 kms Tier 2: After 14,000 kms
Petrol or diesel 76 cents 26 cents
Petrol hybrid 76 cents 18 cents
Electric 76 cents 9 cents

As an aside, note where employees are reimbursed for work travel using their own vehicle, a transitional rate of 76c / km is available for the 2018/2019 income year to calculate their tax-free reimbursement amount.

The legislation can be tricky, but with a little advice from an expert (like us!) you can rest assured you’re paying the correct amount of tax and staying onside with the IRD. Call us on (06) 878 8824 to discuss today.

How Anti-money Laundering Legislation impacts you

If you’ve seen the film The Wolf of Wall Street, you’ll be familiar with the concept of money laundering – an illegal process where ‘dirty money’ received from criminal activities is passed through legitimate businesses and made ‘clean.’

In response to a growing number of laundering incidents in New Zealand, the government has made changes to the law, which now affect accountants and small businesses like yours. As of this month (October 2018), we’re required to put new preventative measures in place to help tackle money laundering and financing of terrorism.

What does this mean for you?

We might need to ask you for more information about your business than what we have in the past, especially if it involves large cash transactions ($10,000* or more in one transaction). You may also be asked for additional information about your identity.

If you’re a real estate agent or your business involves sports and race betting or dealing in high value goods, take note – the anti-money laundering legislation will extend to you from next year.

To find out what the changes mean for your business, give us a call on (06) 878 8824.

* For more information see the Justice Department commentary.

Is a Family Trust right for me?

Family trusts are a popular way to protect and manage your assets, such as the family home, for you and your family, now and in the future. They can have a valuable role to play, but they’re not suitable for everyone.

Here are the pros and cons of family trusts to help you decide if it’s worth investigating further.

Five good reasons to form a family trust

  1. Protect your assets against claims and creditors in the event of business failure or a lawsuit.
  2. Set aside money for special reasons, such as a child or grandchild’s education.
  3. Ensure your children, not their partners, keep their inheritances.
  4. Protect your children from squandering assets or falling prey to financial scams before they’ve gained sufficient life experience to make sound decisions.
  5. They have a life of up to 80 years (or 125 years under the new bill) unless it’s wound up and distributed earlier.

Three disadvantages of setting up a family trust

Transferring your personal assets to a trust means you lose complete ownership and it will be the trustees’ responsibility to control them.
The time and cost involved in setting up a trust and meeting its annual accounting and administrative requirements.
Disgruntled beneficiaries have the power to sue trustees where trustees have acted in breach of trust. While it’s not common, it is happening more often.

What’s next?

Get professional advice from the start. We can answer any questions you have about trusts, being a trustee, administering a trust deed, and the proposed new Act. Call us on (06) 878 8824.

The Trustee Act is getting a makeover

Do you have a family trust? Thinking of forming one as a way to future-proof your assets for you and your children? Take note – the Trustee Act is getting a makeover. While there are still a few parliamentary hurdles to jump, now’s the time to get your head around what the new bill will mean for you and your business.

Last August, a new Trusts Bill was introduced to Parliament – the first big change to New Zealand’s trust law in more than 60 years. With up to 500,000 trusts operating in our country, they are an essential part of our legal system but the current legislation is no longer cutting it.

The current Act is narrow in scope, expensive and too complicated. The proposed bill will be more efficient, give better guidance for trustees and beneficiaries and make it easier to resolve disputes.

What changes will affect my business?

Extending perpetuity laws

At the moment, when you set up a family trust, it has a time limit of 80 years. Then you have to wrap it up and distribute the assets. The new legislation suggests extending it to 125 years, which may involve significant succession planning adjustments.

More information access for beneficiaries

In its draft form, the Trusts Bill proposes to give most trust beneficiaries the legal right to financial reports on the state of the family trust – meaning they’ll be able to request more information including ‘who’s getting what’. Whether beneficiaries have the right to request this information under our current law is a bit of a grey area.

Because this potentially opens a can of worms for trustees, this proposal has been controversial and has attracted a lot of feedback from trust advisers. We will have to wait until later in the year to see what changes (if any) are made to this proposal.

How will the Act change my role as a trustee?

Up until now, a trustee’s job description has been clear as mud with many families getting into strife unaware of their trustee’s responsibilities. If the new bill comes into place, a trustee’s role will be clearly outlined, and include:

  • Knowing the terms of the trust
  • Acting according to the terms of the trust
  • Acting honestly and in good faith
  • Acting for the benefit of the beneficiaries or the permitted purpose of the trust
  • Exercising trustee powers for a proper purpose.

I have a family trust, what do I need to do?

Get your paperwork in order

Document your trust actions carefully (if you don’t already) and make sure they’re accurate.

Revisit your succession planning

Talk to us to make sure your succession plans still make sense if this legislation goes through.

Review your trust

There might be opportunities to improve your tax structure, reduce your risk profile and better your family’s financial situation.

Know your CRS obligations

New Zealand uses the Common Reporting Standard for the automatic exchange of information (AEOI) to help tackle global tax evasion. This means Reporting New Zealand Financial Institutions (NZFIs) have new IRD obligations, so you’ll need to know if your trust falls into this category.

Join us for coffee!

A quick, pain-free chat now (about all of the above) could save mountains of paperwork, and headaches, down the track. Give us a call, email or book a meeting time.

If you would like to discuss how these proposed changes may effect you, call us on (06) 878 8824.

 

Sorted Money Week Tips

Sorted Money Week is aimed at empowering New Zealanders to manage their personal finances. In support of this initiative we share 3 Money Week Tips to help you improve your financial literacy and sort your finances.

TIP #1: Understand WHAT you are Spending

To get a good idea of what you are spending, you need to look at how you spend and where the money is going. Using an app can be useful to help track this, and can be enlightening as to some of those annual amounts you often forget to budget for.

See here for some great tips and apps. Once you have a handle on WHAT you are spending, it makes it easier to look for ways to curb unnecessary expenditure.

TIP #2: Plan for a Rainy Day

Do you have an emergency fund? How well can your bank balance recover from urgent car repairs, medical bills, unexpected trips away? Read here for 10 reasons why you need to sort this now.

By saving just $5 a week (the cost of a coffee), within a year you’ll have $260 tucked away!

TIP #3: Sort your KiwiSaver

JP Morgan states by the time you are 40, a couple should have amassed 2.6 times their annual income in retirement savings! You don’t have to make huge changes to have a real impact on how well you are positioned for your older years.

For those in KiwiSaver, most people don’t understand how their fund works, or have looked to see if it suits them. The KiwiSaver Fund Finder is a nifty tool to help you look for a scheme that is right for your risk profile and age. The fund your mate uses, or the default scheme, possibly isn’t YOUR best option. Choosing the wrong scheme may cost you tens of thousands.

Speak to a financial advisor who can help you make the best decision for you or guide you on other investment options.

If you’d like to chat further about tracking your spending, saving for a rainy day or finding a financial advisor, give us a call on (06) 878 8824.

The Fringe Issue

Given the importance of keeping your PAYE and GST record-keeping and payments in order, it might be tempting to think that Fringe Benefit Tax, or FBT, is a relatively minor thing. But don’t be fooled. In 2017, Inland Revenue created a dedicated audit team to focus on this issue.

One of the team’s aims is to ensure employers have the right business structures and documentation in place. And it turns out that many don’t.

If this sounds like you, now’s a good time to put things right. Regardless of whether you’re acting correctly or not around FBT, a lack of proper records leaves you in a weak position and liable to negotiated settlements (that is, having to pay more than you expected) or, worse, serious penalties.

Most FBT revolves around company vehicles, so let’s look at what IRD expect from you if you provide one to any of your staff:

  • The employee’s job description and employment contract
  • The company policy on motor vehicles
  • Any private use restriction letter in place, signed by the Directors and the employee
  • Documentation that shows regular checks on the vehicle to ensure it’s not being used for private matters
  • The employee’s performance review notes confirming they’re sticking to company policies.

So, what can you do?

For an SME owner, that’s quite a daunting list, and a good reason to talk to your accountant. An expert, independent set of eyes will help you determine what you need to do in all cases, what you don’t need to do, and also how to go about doing it (including creating proper documentation).

The value of expert advice is heightened by some of the finer points of FBT legislation. For example, did you know that if an employee takes a vehicle home one evening and returns to work with it the next morning, the laws says it’s been available for private use on two days?

Did you know that IRD expects you to check that employees are adhering to restricted use policies at least once every quarter?

Did you know that just because a vehicle has your company logo on it, that doesn’t automatically make it a work-related vehicle, which then means it doesn’t automatically become exempt from the usual requirements of FBT?

Did you know there is also a new option for some companies that have one or two vehicles to elect to use the motor vehicle expenditure rules rather than pay FBT in certain circumstances?

If you didn’t know all those things, take a bow – you’re in great company! FBT is complex, to say the least!

The good news is that IRD also recognises this and will work closely with you to help you comply. The best approach is to get professional advice (that’s us) and, where appropriate, go to IRD for a written opinion on any matters that aren’t crystal clear.

That way, even if IRD disagrees with your FBT return, they’ll see that you’ve taken reasonable care to get things right and may not impose penalties.

So, when are you liable for FBT? Any time you provide non-cash benefits to your staff – which means the list is potentially endless. In practice, however, most non-cash benefits fall into one of these categories:

  • Insurance premiums
  • Motor vehicles
  • Subsidised transport
  • Staff vouchers
  • Offsite carparks

If you would like to discuss FBT for your business, call us today on (06) 878 8824.

Accountancy Insurance

Did you know you are able to take out an insurance policy to cover some of those unexpected accounting fees?

At Epplett & Co we prefer to ensure our clients understand the work we do for them and the value we provide prior to invoicing you. Unfortunately sometimes, IRD asks for information back from us, and this time spent needs to be charged additionally.

Under our Master Audit Shield Policy (underwritten by Vero) we are able to offer our clients cover for such queries, whether they be further details on an income tax or GST return, a risk review or full scale audit.

You will be receiving a letter of offer relating to this in the coming month.

It may seem odd insuring against IRD audit, as we and you both know you aren’t doing anything “dodgy”, the reality is that most queries from IRD result in no audit, however there comes time and cost related to proving otherwise!

This is an optional cover, however we are seeing increased IRD activity, and of the requests last month, the average fee to clients to respond to these requests was approximately $200, more than the cost of most cover plans.

Client cover benefits:

  • All your entities under one policy
  • Covers all tax types, even those Epplett & Co doesn’t prepare (e.g Payroll, RWT etc)
  • Retrospective cover – includes all old returns irrespective of year filed
  • Includes any additional charges incurred that may be required such as tax specialists, lawyers etc

If you’d like to find out more, call us on 06 878 8824 or email tax@epplett.co.nz

Business Health Check

Do you know how much you’re spending on printing, advertising, and taking clients out to lunch? Or does it come as a shock when you do your GST returns? If your company is growing, your expenses may too, but in some cases it could be a lack of attention causing spending to creep up.

This monthly checklist will help you assess the health of your business and stay in control:

  1. Step back and do a financial overview
  2. Review account statements from suppliers
  3. Review annual sales
  4. Keep a close eye on inventory
  5. Make sure your customers remember you
  6. Spread the word about your business on social media
  7. Review your website traffic
  8. Keep on top of industry news
  9. Keep your data safe
  10. Talk to your advisors

If you would like to chat to us about the health of your business, call us today on (06) 878 8824.

Think before you Leap

What are my responsibilities as a trustee?

Whether you’re thinking of becoming a trustee for your own family trust or someone else’s, it’s important to know your obligations under the current law before accepting the role.

8 things to know before becoming a trustee:

  1. It’s a legal responsibility with a lot of work involved (most often voluntary) and you could end up being liable for losses made by the trust if you don’t do the job properly.
  2. You’re in it for the long haul – some trusts have a set end-point, ie: when a child turns 18, but others can go on for over a century.
  3. You must know and understand the trust deed, all associated documentation and the trust’s property, assets and liabilities.
  4. You’ve got to stay impartial when managing or distributing trust property to beneficiaries – no favourites!
  5. You have to ensure all relevant documentation with regard to the trust’s assets are signed by all trustees, not just the ‘Mum and Dad’ of the trust (check the trust deed, though, in case it says otherwise).
  6. When making trust decisions, you have to agree with the other trustees (unless the trust deed says otherwise). So you need to be sure that you can work well with the other trustees before taking on the job.
  7. You must actively participate and make all the decisions – no delegating or relying on others to do your job.
    Paperwork will be your friend – keeping accurate accounts and recording all trustee decisions as requested by beneficiaries will keep you out of deep water.

If you would like to discuss more about becoming a trustee, call us today on (06) 878 8824.

To Claim or not to Claim

Planning a business trip with a personal holiday tacked on the end? Renting out the bach and unsure what expenses can be claimed? Whatever your situation, we want to make sure you’re getting the expense claim tax break you’re entitled to.

Here’s the lowdown on legal costs for trust admin, travel expenses, mixed-use assets and sponsorship.

Facing a legal bill for your business or trust? Good news.

Generally speaking, you can deduct any business-related legal expenditure carried out by your company and/or trust if total legal expenses incurred are less than $10,000 in a tax year.

Examples of deductible claims include: expenses relating to protecting trade secrets of the business, opposing the extension of a competitor’s patent, defending an allegation of an infringement of copyright, defending traffic infringements brought against company employees while on company business, and costs for appointing company directors.

Travel expenses – what can I claim?

If your business involves hitting the road, you can claim business travel as an expense. The best way to prove the business portion of your travel expenses is to keep a diary of your travels. Hang on to your itinerary, invoices and tickets. Jot down the reasons for the trip, date of the trip, and costs of any car hire, air/bus/taxi fares, accommodation, meals and incidentals, as well as the time spent on business and non-business activities.

Mixing business with pleasure? If your trip is primarily for work purposes, but contains a private or capital element, you can claim a deduction (e.g where the holiday aspect is incidental to the work element) or an apportionment (where there are two purposes for the trip, both truly separate). If the work side of things is just incidental to the holiday, no deduction can be made.

Got a bach? Claim away.

If your holiday home is being used privately and for income-earning purposes (and is also unused for 62 days or more) you can claim mixed-use expenses. There are three categories to be aware of:

  • Fully deductible expenses: You can claim 100% of any expense solely for the income-earning use of the asset. For example, costs of advertising for tenants for your bach.
  • Non-deductible expenses: You can’t claim any expenses for the private use of the asset. For example, the cost of a jetski stored in a locked garage that’s unavailable to bach renters. You also can’t claim expenses such as improvements (adding on a carport, or upgrading the bathroom).
  • Apportioned expenses: If an expense relates to both income-earning use and private use, you need to apportion it using this formula:

Apportioned expenses formula

These rules can be a little complicated, especially if a company is involved in the mix, so it may pay to come and have chat to sort out how they apply to your business specifically.

When is sponsorship fully deductible?

For sponsorship to be fully deductible, your business must be promoted and any element of private enjoyment must be incidental.

Sponsorship examples that are fully deductible:

  • Sponsoring $2,000 towards the local hockey team’s new uniforms and in return, the team agrees to display your business logo on the uniforms.
  • Sponsoring $10,000 towards the Taupo Relay for Life and in return, the organisers agree to advertise your business across all promotional materials.

If you would like to talk to us about what you can and cannot claim, call us today on (06) 878 8824.

Livestock Herd Scheme Values 2018

The IRD have recently announced this year’s livestock Herd Scheme Values and we think this is a great opportunity to update you on the latest movements. The Herd Scheme Values are the National Average Market Values as determined by a process involving a review of the livestock market as at 30 April.

Dairy Cattle

With the exception of breeding bulls, all classes of Dairy cattle have dropped in value compared to the previous year. A Mixed Age Dairy cow now has a National Average Market Value of $1,529 compared to $1,649 last year – a drop of 7.3%. Rising two-year heifers have dropped by a similar percentage to $1,313. Rising one-year heifers have a larger decrease of 15.6% to $691. If you recall, there was a very high demand for R1 heifers 12 months ago which inflated that value at year end. This demand has now eased off and the value has dropped back accordingly.

There is certainly some variability throughout the country regarding mixed age cow prices. While the milk price remains strong and potentially increasing, there is obvious nervousness in the industry given the recent outbreak of Mycoplasma bovis cattle disease. The culling of herds in the South Island may push local values up – although due to restriction on stock movements and farmers’ reluctance to introduce new cattle to their herd, we really do need to take a “wait and see” approach regarding where values are heading in the future.

As the Herd Value is a country wide average, we need to consider each client’s circumstances when buying and selling herds and look at what these average values mean for you.

Herd Scheme Values - Dairy Cows 2018

Beef Cattle

Beef values are very much in line with expectations. Following on from four years of increases in values it is not surprising to see an easing or flattening out of beef values for the 2018 year. Mixed Age Cows were the only beef class to increase in value – from $1,431 to $1,497 – an increase of 4.6% – the fifth successive increase. All other classes eased somewhat with small drops in value.

Part of the reason for the decline is the dairy cow kill which is clogging meat processing plants at the moment. This has made store markets a little nervous meaning there is a slight fall in confidence levels – reflecting in the price of meat. The chilled beef market in the UK and China has helped to offset an increase in beef volumes coming out of the US market which would otherwise have negatively impacted NZ beef prices.

Herd Scheme Values - Beef Cows 2018Sheep

2018 has seen another rise in sheep values with an average increase of 15.5%. A two-tooth ewe is now valued at $179 compared to $150 in 2017. There are good feed supplies throughout the country at the moment which is allowing producers to add weight to their animals and benefit from an increase on price. Confidence in the sheep market is definitely buoyant.

Herd Scheme Values - Ewes 2018Deer

Deer values are continuing their upward movement with Mixed Age Hinds increasing by 8.7% from $526 to $572 per head. Key markets in Europe and North America are leading to increased demand for our venison which in turn has increased prices. There is also increased diversification in venison products such as meat and bone meal and venison trim.

Herd Scheme Values - Hinds 2018General

Careful consideration needs to be given to your livestock election choices.

Even though changes were made to the Herd scheme in recent years, there is still flexibility around how to value increases in numbers – if you increase your numbers during the year you are able to choose an alternative valuation option to value that increase.

Whether you take that option or you elect to value the increase using herd values will depend on a number of factors – such as:

  • where we are in the cycle of livestock values (e.g. at the bottom, or at the top)
  • if the increase is a permanent or a temporary one
  • your longer term intentions

As the decision is clearly one that should be made on a case by case basis, we will naturally discuss your valuation options with you on review of your 2017 Financial Statements and Taxation Returns.

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