Top 10 New Years Resolutions for Businesses

The start of the year is a good time to reflect on business progress and challenges over the past year and plan improvements for the coming year.

Our top 10 resolutions will help you focus on what’s important to you and your business, whilst maintaining a sensible work-life balance and a state we like to call ‘Business Contentment’.

  1. Learn how to delegate and make it a daily habit
    We often delude ourselves that it’s easier to do something ourselves rather than teach a staff member the process. That initial time spent transferring knowledge and skill is a powerful investment in leveraging our own time.
  2. Fight procrastination
    Procrastination is referred to as the ‘thief of time’. The simplest trick in dealing with procrastination is to do the hardest tasks first.
  3. Focus on one thing at a time and stop multi-tasking
    Recent research indicates that people who constantly multi-task take longer to complete tasks and make more mistakes. Get into a real work zone. Turn off your mobile phone and your email and disconnect from all distractions and possible interruptions for blocks of time. You’ll be amazed at what you achieve.
  4. Set realistic goals
    Goals should be SMART – Specific, measurable, achievable, realistic and time bound.
  5. Make business planning a weekly event
    Set aside time each week to review, adjust and look forward. Lock these times permanently into your diary or online calendar.
  6. Promote your business regularly and consistently
    It’s amazing how businesses just expect potential customers to know that they exist. There are plenty of low cost ways to promote your business, so create a simple marketing plan.
  7. Learn something new
    What you choose to learn may be directly related to your business or completely unrelated. Depending on how you choose to learn, you may meet new and interesting people who may become customers, colleagues or friends.
  8. Drop what doesn’t work for you and move on
    If a technique, a product or a business relationship isn’t working for you, take stock. Don’t keep investing a lot of energy into trying to make the unworkable work. Move on. Something better will turn up.
  9. Give something back to your community
    Find a cause that matters to you and give what you can. Serve on a worthwhile committee, be a mentor, volunteer or simply make regular donations to the groups in your community that make the place you live a better one.
  10. Put time for you in your calendar
    Business owners lead demanding lives. All work and no play is a recipe for mental and physical disaster. If you have trouble freeing up time to do the things you enjoy, write time regularly into your schedule to ‘meet with yourself’ and stick to that commitment. If you won’t invest in yourself, who will?

New Year Computer Detox

By the end of the year most computers are feeling the effects of over-indulging. Perhaps not on Christmas wine and chocolate but as the result of viruses, document hoarding and other accumulative hangovers. Detox your computer to get it working faster, safer and more efficiently.

  • Clean it. Literally. You’ll be amazed what appears when you tip that keyboard upside down (only use anti-static wipes or a soft brush. NOT water!)
  • Remove clutter, delete unwanted documents off the desktop and tidy up your folder structure
  • Remove any programs that are no longer required
  • Empty your recycle bin!
  • Check that all necessary updates have been installed
  • Update your security passwords!
  • Double check your antivirus protection is up to date
  • Make sure your firewall is active
  • Perform a virus scan – check out Spybot Search & Destroy
  • Perform a disk cleanup and disk defragmentation
    (set this to run overnight as it may take several hours)
  • Perform routine backups of all files and settings
  • Archive files offsite

Computer systems vary. If you use an external IT provider to manage your computer requirements then liaise with them as to what they have planned and what you can carry out yourself. And remember… your computer needs a rest too – make sure to shut down and turn off before you leave the office!

Heads up on Health and Safety

The Health and Safety Reform Bill has now been passed by parliament taking effect from 4 April 2016. The legislation itself is part of a major reform of health and safety practice in New Zealand.

The new Act imposes a primary duty on employers, with a wide range of duties to ensure health and safety in the workplace. The definition of a ‘workplace’ includes any place where a worker goes, or is likely to be, while at work. The definition of a ‘worker’ is a person – for example, an employee, contractor, person on a work trial or volunteer – who carries out work in any capacity for ‘a person conducting a business or undertaking’ (PCBU). The concept of the PCBU is central to the new reforms, placing responsibility on anyone who owns or controls a workplace and therefore on all links in the contracting chain from principal to all levels of contractor and sub-contractor. Persons who are not necessarily visible at the workplace such as those who design, manufacture, import or supply plant, substances or structures can be PCBUs with responsibilities under the legislation for the health and safety of workers and others who use them in the workplace. Company directors and those in governance roles will have an explicit due diligence duty to ensure that workplace health and safety is managed proactively.

Workers and other people in workplaces will also have obligations to ensure care is taken for the health and safety of themselves and others.

The changes will help everyone involved in the business to be clear on what they need to do to maintain sound health and safety practices in the workplace and ensure workers have the knowledge and ability to keep themselves and their colleagues safe. The regulator and the courts will have a wider range of enforcement tools, including increased penalties for breaches of duties.

The new law will be called the Health and Safety at Work Act. The Act itself will be published on the New Zealand Legislation website soon.

A series of regulations are being developed to support the new Act. These include:

  • General risk and workplace management
  • Major Hazard Facilities
  • Asbestos
  • Engagement, worker participation and representation (available shortly for public consultation)

Go to MBIE for more information

Employment Standards Update

The Employment Standards Legislation Bill has been introduced to parliament, proposing changes to strengthen enforcement of employment standards. This will introduce tougher sanctions for breaches and greater accountability for people and entities associated with the employer — such as directors, senior managers, legal advisors — if they are knowingly involved when an employer breaks the law.

The changes target unfair practices such as unreasonable deductions from employees’ wages; or where an employer does not commit to hours of work, but expects employees to be available when required; or where an employer cancels shifts without providing reasonable notice or compensation to the employee.

Penalties

Serious breaches, such as exploitation, will carry maximum penalties of $50,000 for an individual and the greater of $100,000 or three times the financial gain for a company. Individuals who commit serious or persistent breaches of employment standards may be banned as employers.

The penalties for minor to moderate breaches will remain $10,000 for an individual and $20,000 for a company. Employers who have breached minimum standards may be publically named.

Employment records

Record-keeping for wages, time, holidays and leave again come under scrutiny. Requirements will be made consistent across all employment legislation.

The core requirement is that, when an employee or labour inspector requests it, an employer must be able to produce an easily accessible record of the number of hours worked each day in a pay period, and the pay for those hours.

Breaches will attract infringement notices, with a maximum penalty of $1,000 per breach capped to $20,000 if there are multiple breaches.

Labour inspectors’ powers

Labour inspectors will have greater ability to share information with other regulators such as Immigration New Zealand, the Companies Office and Inland Revenue to better identify and investigate alleged breaches. They will also be able to request records or documents from employers (such as financial records or bank statements) that they consider will help them work out whether a breach has occurred.

There is no set timetable for the proposed legislation yet. We’ll keep you up to date with progress.

New requirements for Companies

From 1 May 2015 new registration requirements come into force for applications to incorporate a New Zealand Limited Liability company. All New Zealand incorporated companies must have at least one director who lives in New Zealand or who lives in Australia and is a director of an Australian incorporated company. Existing companies on the companies register will have 180 days to comply with these New Zealand ‘resident director’ requirements. In addition, all directors must provide their place and date of birth and all companies must supply their ultimate holding company details (if applicable).

Contact us if you think you may be affected.

Tax Payment Changes

IRD have changed their policy on when payments will be considered to have been received on time. Payments made by post are now treated as made on the day Inland Revenue receives them; the date of posting is irrelevant. It’s therefore up to you to make sure you post your cheques in good time to reach IRD on time. There’s no guarantee that a payment posted on the 18th will reach Inland Revenue by the 20th.

If you’re sending a post-dated cheque, Inland Revenue will not bank it until the date specified. So even though it’s physically received before the due date, it will still be treated as received late if the specified date is after the due date. You can also make payments in person, either at an Inland Revenue office or at a Westpac branch (note Westpac no longer accept cheques for tax payments) as long as you do so before close of business on the due date. Now might be a good time to think about making your payments online, if you don’t already.

Rates Rebates – Low income earners

The Rates Rebate Scheme was established in 1973 to provide a subsidy to low-income homeowners on the cost of the rates. The 2014/2015 rating year rebate scheme is now open for applications. From 1 July 2014 the maximum rebate increased from $595 to $605 and the income threshold increased from $23,870 to $24,250.

There is an additional income allowance for dependants at $500 per dependant. Although a ratepayer’s income might exceed the income threshold a rates rebate could still be available, depending on the rates amount per annum and the number of dependants.

If you know someone who may be entitled to the rates rebate – refer them to their local Council website where they will find information on the rates rebate and the application process. More information including eligibility calculators is avaialbe through the Department of Internal Affairs website.

Good news on ACC levies

Workers and employers will pay $387 million less in ACC levies in 2014/15 (subject to the regulation being passed). The cuts affect the Earners Account (paid by workers) and the Work Account (paid by employers).

Work Account Average levy (per $100 of liable earnings, ex GST)
2014/15 $0.95
2013/14 $1.15

Earners’ Account levy (per $100 of liable earnings, ex GST)
2014/15 $1.26
2013/14 $1.48

The Health and Safety in Employment (HSE) Levy is changing to a flat rate of $0.08 per $100 liable earnings. Look for more news on this later in the year.
Motor Vehicle Account levies, incorporated into car registration and petrol prices, will remain the same.

The Government expects to introduce cuts for motor vehicle owners from 1 July 2015.

In other news, there have been some minor changes to classification unit codes, affecting second-hand booksellers and people working in digital effects industries.
Are you managing ACC on your own? We could help you with that, with our ACC Administration and Advisory service. Talk to us about how the service might save you time and money.

Changes to IRD payments

IRD has just announced changes to how they will accept payments.

From 1 October 2014, cheques posted by mail, will need to arrive on or before the due date at IRD, posting on the due date will no longer be acceptable. Also you will no longer be able to pay by cheque at Westpac (EFTPOS and cash are still ok). For more information regarding payments visit the IRD website.

National Average Market Values Specified Livestock

The National Average Market Values (NAMV) of Specified Livestock Determination 2014 has been released by IRD.
If you have elected to use the herd scheme, these are the allowed values for the 2013/2014 year.

Here is the full listing of values.

We have also compiled an historical chart of Sheep and Beef values that may be useful.

eXPired technology

Taking your business online? Look at whether your current setup will let you keep up with the change.For instance, if you’re still running XP, be aware that Microsoft will no longer support Windows XP and Office 2003 from this year.

From April, if you use Windows XP, you won’t receive technical support for it. This means no new security updates, or non-security hotfixes. No support and no online technical content updates.

Until July 14 2015, Microsoft will continue to offer Windows XP users its malware scrubbing program (MSRT). However, your system will become more vulnerable to security risks and viruses.

Over time you’ll encounter more applications and devices are incompatible as software and hardware manufacturers upgrade their products.

You’re already onto this … right? But call us if you’d like to talk through how your computer system interacts with your accounting system or other business processes.

Repayment obligations – Student Loans – Overseas borrowers

If you defaulted on your student loan repayments while living overseas, but returned to New Zealand, Inland Revenue can now request an arrest warrant if you are about to leave New Zealand. Inland Revenue and the Department of Internal Affairs now have an information sharing agreement allowing them to share contact details for overseas-based student loan defaulters when they renew or apply for their passport. Inland Revenue will be able to contact individuals to discuss their outstanding arrears.

Check the IRD website for more details about overseas borrowers and Student Loan obligations.

Foreign Superannuation Schemes

Superannuation: decisions, decisions

If you have (or had) funds in foreign superannuation schemes, let us know. Recent changes to legislation and further impending changes may affect you.

I transferred my Australian super to KiwiSaver. Is it taxed here?

Transfers from complying superannuation funds in Australia into KiwiSaver won’t be taxed in New Zealand on transfer. However, future earnings on these transfer funds will be taxed as normal KiwiSaver investments.

This isn’t the case with transfers from other countries – there are New Zealand tax implications on transfers in these cases. However, under the new rules, if you transfer your non-Australian foreign superannuation into KiwiSaver after 1 April 2014, you will be allowed to make a withdrawal from KiwiSaver to pay your tax bill.

I withdrew (or transferred) funds from my foreign super last year. What are the tax implications in New Zealand?

If you withdrew or transferred funds any time between 1 January 2000 and 31 March 2014, and have not previously accounted for New Zealand tax on these funds, you will be able to meet your tax obligations by paying tax on 15% of the amount transferred or withdrawn. The remaining 85% of that sum will not attract income tax. However, it has to be shown in the tax return for either the 2013–14 or 2014–15 income years.

For a limited period of time only, you can choose to calculate your tax liability using this concessionary 15% rate option without penalties or interest, or under existing law (which may involve imposition of penalties and interest). Talk to us to work through the options that are best for your situation.

I’m confused. I’ve been declaring my foreign super under the FIF rules. What happens now?

The current foreign investment fund rules will no longer apply to foreign superannuation schemes from the proposed date of 1 April 2014. However, if you previously declared your foreign superannuation and used the foreign investment fund (FIF) income rules prior to 20 May 2013, you may choose to keep using them in relation to your foreign superannuation interest after 1 April 2014 under the ‘grandparenting’ provisions.

Anything else?

Don’t forget also, superannuation is counted as adjusted taxable income when calculating income for child support, family income for Working for Families tax credits, and parental income for student allowances.

Year End Checklist

When it comes to the end of the financial year, you need to consider a few key factors. Here are some of the most important ones.

Consider pre-paying certain expenses
Some expenses can be prepaid in March and claimed as a tax deduction in the year to 31 March 2014, regardless of their amount. These include stationery, postage and courier charges, vehicle registration and road user charges, rates, subscriptions for papers or journals.

Other expenses have limits on the extent to which they can be claimed if prepaid. These include rent, consumables, insurance premiums, professional or trade subscriptions, travel and accommodation, advertising, periodic charges and other services. The rules surrounding prepayments are quite complex, so if you’re planning this type of expenditure, please contact us.

Don’t forget business expenses paid for privately
If you have paid for any business expenses privately during the year now is a good time to prepare a reimbursement to yourself for these.

Gather up any receipts for business expenses, for example newspaper subscriptions, entertainment, travel, employee smoko supplies. Add them up and prepare a reimbursement from your business bank account to your personal account.

If you are not sure whether an item is business related, please give us a call to check.

Similarly you may have business usage of a personal asset such as a vehicle. Give us a call to discuss your specific circumstances.

Tidy up your General Ledger – Now is a good time to check your cashbook or accounting software matches your actual bank balance. In the process, check for stale/unpresented cheques that may need to be adjusted.

Bank Certificates/Summaries – During the first few weeks of April most banks will issue Loan certificates and RWT summaries. Make sure you keep these in a safe place, or send to our office when you receive them.

Review last year’s fixed asset register
The book value of assets can be written off for tax purposes if the asset is no longer in use by the business, the business has no intention of using that asset in the future and the cost of disposing that asset is expected to be greater than the proceeds from its sale. Actually, it’s simpler than that.

Scan through your asset schedule from last year’s accounts and you’ll probably notice assets that no longer exist (the mobile phone that you dropped in the tide at Christmas time), or simply don’t work.

Maintenance and repairs – If you are planning on carrying out any significant maintenance or repairs, bring this forward to get an early tax deduction. Deciding whether expenditure on an asset is deductible as repairs or maintenance or should be capitalised is not always cut and dried, so please contact us if you aren’t sure.

Bad debts – Always review your debtors. If you have tried to recover the cost of the debt, it’s possible you may be able to write it off. If so, you may be able to claim a deduction.

Stocktake – Trading stock (excluding livestock) must be valued at the lower of cost or realisable value. It’s important therefore to perform a physical stock take at year end and actually dispose of any obsolete lines or alternatively write that stock down to its net realisable value.

Clients with an annual turnover of less than $1.3m can value their closing stock at the opening stock value, but only where closing stock can be reliably estimated to be less than $10,000.

Employee expenses – Any amounts owing to employees at year end (such as holiday pay, bonuses, long service leave, redundancy payments) can be claimed for tax purposes in the current year as long as they are paid within 63 days of balance date.

Dividends and imputation credits – Consider reviewing planned dividend payments to use any imputation credits, the RWT will be payable on these 20th April, so now is the time to make these decisions.

Donations Receipts
Don’t forget to gather up your donation receipts to bring in to us with your records.

You are able to claim back 33% of any donations that have been made to an approved donee organisation as long as your donation was at least $5.00 and you hold a donation receipt. There is a limitation in that the maximum rebate is limited to 33% of your taxable income.

Now is a good time to ask for a yearly receipt for any regular donations you have made and where you have misplaced receipts during the year. School fees as long as they go the general fund and are stated as being donations may also be claimed

Mixed Use Assets – Boats and Planes

We’ve talked a lot about mixed use assets over the last six months so we’ll keep it short. From 1 April 2014 the mixed use assets rules apply to boats and aircraft. This means you now need to keep similar records as for holiday homes.If you use the asset for private use and for earning income, if it’s also unused for 62 days, if it had a cost or market value of $50,000 or more when you bought it, you need to record:

  • The amount of time it was used and who used it (number of days, flying or cruising hours)
  • The amounts received
  • Expenses related to making it available for hire as well as expenses in generally maintaining it

If you make a loss and if your gross income from the asset is less than 2% of its value, you may not be able to claim the loss straightaway. Instead, you’ll have to ‘quarantine’ the excess expenditure and carry it forward to a future tax year to offset against future profits from the asset.

GST input tax deductions are calculated in a similar way to how you calculate expenses allowed as a deduction. If you sell the asset partway through the year, the calculations relating to income, expenditure, apportionment and quarantining can change.

If you’d like a rundown on how this applies in your case, or some tips on easy ways to keep track of it all, please contact us.

Cashing up annual leave

Some things you may not know

What are the rules when it comes to annual leave?

Employees can make a request to employers to cash in annual holidays, opting instead to take a lump sum payment rather than time away from work, but there are a few rules that need to be taken into consideration.

The request must come from the employee and not the employer. Although the employee is entitled to leave, the employer can decline the request at its own discretion and does not need to give a reason for its decision. However, the fact that employers owe a duty of good faith to their employees suggests that an employer’s response to a request should be reasonable.

In addition, there is a limit to the amount of leave that can be converted to payment. By law, the employee can only exchange a maximum of one week annual leave for cash payment per annum.

An employer is entitled to have a policy that it will not consider requests from employees in its business or in a particular section of its business.