June 2017 Update  www.Myersca.co.nz

OFFICE STAFF

We recently farewelled Megan Sharplin, our office clerk, who is taking time out from working to care for a family member.  We wish them all the best.  If Megan has been preparing your GST returns please direct any enquiries to Sandra in the meantime.  Please bear with us if any delays are experienced during our busy season.

 KIWISAVER

This is the time of year to check the amount you have paid to your Kiwi-Saver fund in the past year.   30 June is year-end for KS, so now is the time to top up.

Self-employed taxpayers may be opting to pay low voluntary contributions, but if you want to maximise your benefit from the KS scheme the aim is to secure the maximum Government subsidies.  Check that you have contributed at least $1043 since July'16 to receive this year's full government subsidy of $521.   To be eligible for this subsidy you must be aged 18-64 & living in NZ.

Check out the tools in the SORTED.ORG website for comparisons of the returns & fees performance of all Kiwi-saver providers.  I recommend an occasional review of your fund and your current risk profile.   Its easy to switch funds, but you need to do your homework first.   There are several ways to switch funds.  1 - stay with the same fund provider but change the type of fund held (based on your revised assessment of risks)  or 2 -  Switch to a different provider.

The SORTED.ORG website also has useful budgeting, borrowing and savings calculators and tips.

BUSINESS TAX QUESTIONAIRES

A reminder that we are not posting out annual questionnaire forms this year. 

Please download your questionnaire forms on our website under FORMS, or if you prefer contact us and we will email you with the appropriate documents.

In our last group email we found quite a few client's email settings rejected our email due to their security settings -  not accepting any emails contacting a web link.    Please add us to your safe senders list.

IRD's NEW GST SYSTEM

We're not entirely convinced that IRD have got it right with their new GST system!   It may be ok for taxpayers logging in under their own My-IR login, however for agents with multiple lists of GST businesses there are a lot of frustrating features that are challenging our patience!   Unfortunately it is here to stay and IRD are moving forward with plans to convert other tax types over to the same system next year.  

Be aware that IRD want all GST returns to be filed online and will only refund direct to bank accounts now, no cheque refunds will now be issued.  IRD correspondence can be viewed online.

*WARNING*  -   we have been concerned at IRD letters issued to some clients "Confirming your DIRECT DEBIT with IRD".   This appears to be an automatic outcome if you use their Quick Link  "MAKE PAYMENT" which appears beside your GST return link on IRD's new GST system. 

We do not recommend setting up any DD with IRD -  as this may take away your control over timing of making future tax payments.  If you have received one of these letters we suggest you contact IRD to cancel the Direct Debit arrangement.

We recommend the best way to pay any taxes to IRD is to use your "Pay tax" bill payment option in your own internet banking Bill payment menu.  You can specify the date and amount to be paid.

TAX CHANGES FROM 1 APRIL 2017

Many recent enactments intend to reduce compliance and simplify taxes,  they will be effective from 1 April 2017, so in most cases will not affect your 2017 year financials.

  • Use of Money Interest -  the residual tax threshold before UOMI is imposed has increased from $50,000 to $60,000 and more significantly is extended to non-individual taxpayers.  If taxpayers use the Standard uplift method to pay provisional tax UOMI will no longer be imposed on the first 2 tax instalments, a significant bonus for companies.
  •  Contractors subject to the scheduler payments rules can now elect their own withholding tax rate.  The rules have been extended to also apply to contractors working for labour-hire firms.    A new tax declaration form IR330C should be completed by contractors.  The minimum rate is 10%.  20% compulsory rate for non-residents. 45% no notification rate if a contractor does not provide their name & IRD number.  Tax exemption certificates can no longer be applied for,  request a special rate if seeking < 10%.
  •  IRD have reviewed Motor vehicles mileage rates and increased rates to 73cents per kilometre for petrol, diesel & hybrid cars and 81c for electric cars.  These rates can be used for business travel up to 5,000km per year.
  •  GIFTS that include food or drink are now caught under the entertainment regime with only 50% being deductible.  This will also apply to gift vouchers.  You will now need to record these gifts separately to other items, to ensure you are not limiting all claims.   Gifts to employees are subject to FBT rules.
  •  The Commissioner of IRD can now disclose tax debt information to credit reporting agencies and the Registrar of Companies, in certain circumstances.
  •  Taxpayers holding Resident Withholding tax exemption certificates will no longer need to renew these annually.

 Closely Held Companies changes

  • Companies declaring Shareholders Salaries now have 2 provisional tax options - full prov tax, or a combination of PAYE wages and provisional tax, within guidelines.
  • A company can now opt out of deducting RWT from dividends, in some circumstances.
  • Motor vehicle expense apportionment rules now also apply to closely held companies and provide an alternative to paying FBT.  We recommend running a motor vehicle logbook this year to determine your business %.
  • Look Through Companies rules have been overhauled - including removal of the owners basis limitation rules; eligibility restrictions; new entry tax and debt remission rules.  We will review all clients to ensure they will still meet criteria to remain a LTC.
  •  IRD's new 'AIM' provisional tax method is still planned to be implemented from 2018/19.   Contrary to earlier media reports this will not replace the existing methods or accountants and will only be an option for taxpayers using computer accounting systems.  They will effectively pay tax every GST period based on their year-to-date Profits.   No details released yet, but we expect limitations are likely around trading stock; depreciation on assets; shareholders salaries;  adjustments; and accuracy in your systems will be important.

BUDGET 2017

Only small offerings for tax from this year's budget. No benefits will be seen until after 1 April 2018 and  then there is no change to tax rates, only a lift in the threshold levels.   The adjustments to the lower tax brackets will mean $20 more in the hand per week, if you earn over $52,000.  It removes the need for the current IETC rebates.

Table of Current and New personal income tax thresholds:

Current Tax Brackets

New Tax Brackets 1 April2018

Tax Rates

$1 – $14,000

$1 – $22,000

10.5%

$14,001 - $48,000

$22,001 - $52,000

17.5%

$48,001 - $70,000

$52,001 - $70,000

30.0%

over $70,001

over $70,001

33.0%

 No changes to Company taxes @ 28%, or Trust taxes @ 33%.

A Family income package will increase Working for Families rates for children under 16 and Accommodation supplements to support the lower earners and student allowances recipients.

Provisional tax calculations and Fringe Benefit Tax will both require adjustments next year to align with the new tax thresholds.   

If you have PIE investments, your PIR tax rates may reduce next year, so a review is recommended.  Prov tax and FBT calculations will also adjust to fit the new tax thresholds from 1 April'18.

 

These updates can only be brief, please contact us if you have any queries in respect of the above details.

 Diane Myers

20 June 2017