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IRD - Buying whitebait, your tax responsibilities

If you run a business, e.g. restaurant, takeaways, hotel, fish shop, dairy, supermarket, fuel station and purchase whitebait - the following may help you work out what records you need to keep and if you need to deduct tax from the payment made to the seller.

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Source - Inland Revenue

Record keeping

Use this factsheet as a quick guide to why it's important you keep records if you run a business and the advantages of good record keeping.

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Source - Inland Revenue

Use-of-money interest (UOMI) rate change

The use-of-money interest rates on underpayments and overpayments of taxes and duties have changed, in line with market interest rates.The new rates are:

  • underpayment rate: 8.27% (previously 9.21%)
  • overpayment rate: 1.62% (previously 2.63%)

The new rates came into force on 8 May 2016.

Rates are reviewed regularly to ensure they are in line with market interest rates.The new rates are consistent with the Reserve Bank floating first mortgage new customer housing rate and the 90-day bank bill rate.

The rates were changed by Order in Council on 4 April 2016.

Source - Inland Revenue website

IRD Scam alert

Every so often we are warned of hoax phone calls and emails supposedly from the Inland Revenue Department or one of its employees. Communication is often very pushy and regularly involves a request for payment. The correspondence often appears very legitimate and the call display may even be masked to show the IRD’s 0800 number.

If you are ever in any doubt about the validity of a caller simply tell them you can’t talk at that time and will call the IRD back. You are welcome to call us, as your tax agent we can usually deal with the issue on your behalf. Otherwise call the IRD on 0800 227 774.

The same goes for email correspondence or faxes asking for bank accounts or other personal details – do not respond or click on any links. Be wary.

More information about current scams can be found on the IRD website http://www.ird.govt.nz/identity-security/scam/scam-alert.html

Changes in Reporting Requirements for Registered Charities

Reporting standards for registered charities have changed from 1 April 2015. The new rules will apply for the first year following this date. For example if your balance date is 31 December then the first year of the new standards will be the year ended 31 December 2016.

Our initial assessment is that most organisations we work with currently will be classed under ‘tier 3’ or ‘tier 4’ in the new framework:

  • Tier 3 – total operating expenses less than or equal to $2.0M
  • Tier 4 – total operating payments less than $125,000

The classification tier will determine the reporting requirements going forward, however, all charities will be required to prepare a ‘Performance Report’ containing both financial and non-financial information.

Financial information will be required to fully disclose any related party transactions and show revenue received from ‘members’ separately to ‘non members’.

A major change is the requirement to include non-financial ‘Entity Information’ and a ‘Statement of Service Performance’ in the annual report. These reports basically explain the organisation, why it exists, what it hopes to achieve and how it is trying to get there.

More information can be found on the Charities Services website www.charities.govt.nz/

IRD have changed the “authority to act” requirements

IRD has advised they have changed their requirements for agents using authority to act on your behalf.

An authority to act for you as an individual client doesn’t extend to any of your related entities such as a company, partnership or trust. We as agents must have a separate authority to act for each IRD number we’re linked to. For non-individuals we must have all signatures for the entity if there’s more than one director, trustee, partner, or person with delegated authority from the other members in control of the entity.

Over the last few months we have been re-issuing our letters of engagement where required so that we are in compliance with the new IRD requirements. If you are sent an up to date engagement we hope this does not cause you any inconvenience, and if you have any questions please don’t hesitate to ask.

Residential Property – what deductions can I or can’t I claim? (From IRD)

The following expenses can be deducted from your rental income:

  • Rates and insurance;
  • Interest paid on money borrowed to finance your property;
  • Agents’ fees and commission relating to the rental of the property;
  • Repairs and maintenance (except if they substantially improve the property);
  • Motor vehicle and travel expenses;
  • Legal fees for arranging the mortgage or finance to buy the property;
  • Legal fees for buying and selling a property can be deducted. This is provided your total legal expenses for the income year, including the fees associated with buying and selling a property, are equal to or less than $10,000
  • Mortgage repayment insurance;
  • Accounting fees for the preparation of accounts;
  • Depreciation on chattels.

Why do I see some information with “NZ Institute of Chartered Accountants” and some with “Chartered Accountants Australia and New Zealand” – are they different?

No. The NZ Institute of Chartered Accountants joined with Chartered Accountants Australia on 15 December 2014. Special legislation was enacted declaring Chartered Accountants Australia and New Zealand to be a special association for the purposes of the New Zealand Institute of Chartered Accountants Act. This Act sets out the membership rules and expectations of members. Only chartered accountants in NZ or Australia can advertise that they are members of the NZ Institute of Chartered Accountants or a member of Chartered Accountants Australia and New Zealand.

I’m going overseas for a long time soon, so will I have to pay interest on my student loan when I’m away?

Usually you don't qualify for an interest-free loan if you go overseas for 184 days (about 6 months) or more. However you may still qualify for your existing loan to remain interest-free if you meet the conditions for one of the following situations:

And you may still qualify for your existing loan to remain interest-free if you have an unexpected delay in returning to NZ or an unplanned absence:

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