In This Issue
. Changes to the GST Rules
. Death of LAQC
- Economic Update
. Tax Debt
- Budget and Structural Review
. The Power of Focus
Resources
- Tax Dates
- Tax Facts
- IRD Website
Contact us
|
How has 2011 started for you? Here at Tax and Trust we have been faced with a number of significant law changes which will affect most business taxpayers. I thought the Government had a political desire to make tax simpler for small business owners so they spent less time and money on tax matters. This is proving not to be the case, in fact, with the continuing tax changes I think tax accountants will have more complex work than ever before.
I am going to mention some of those changes in this newsletter, as always the advice is for general information and how the law affects you personally will be discussed with you individually when appropriate.
|
There are a number changes; here are two big ones.
|
| 1) |
Zero-rating land transactions - effective from 1April 2011
GST registered vendors will be required to charge GST at the rate of 0% on any supply to a registered person involving land, or in which land is a component, if at the time of settlement:-
- The recipient intends to use the goods for taxable supplies; and
- The supply is not a supply of land intended to be used as the principal place of residence of the recipient or relative of the recipient.
- This will affect all property transactions, particularly for property developers. We will run a client seminar in April to over these changes |
| 2) |
New apportionment rules
Due to the frequency of changes happening, after an asset has been purchased and GST has already been claimed, the IRD have introduced new legislation. There is now a huge amount of new rules and calculations to apportion the GST that has previously been claimed if the asset reverts from 100% taxable use to some private or GST exempt use as well. It was introduced to counter the judgement in the Lundy case for those of you who know property law, but the ramifications are much bigger than just for land.
The actual taxable use is compared with the anticipated taxable use. It affects all assets but particularly concerning assets with a value of over $5000. So basically your home/office computer is ok, but even motor vehicles are being affected by this legislation.
As a very small example the IRD are ruling that, as far as they can see it, it is not possible to drop children to school, ie private activity, and do a taxable activity on the same run. I question that completely. Most small business owners with children do their personal business on the way to or from taxable activities and personal detours can often be very little; such as pulling over to the side of the road to grab a coffee or pick up a child. There is no mention of log books that I can find - yet I will be interested to learn whether or not the 3 year rule for log books is still allowed to be used as the basis for GST and income tax.
For land used concurrently, such as when a property developer rents out a house, there are now special rules and adjustments which will make usually simple GST returns much more complex. |
| No information about this GST Law has been published on the IRD website. We are still in the process of learning the new rules ourselves. The IRD are saying information will be published in a Tax Information Bulletin sometime in February. |
On the IRD website there is now more information on these changes. We are holding a casual networking function on Friday 4th February at 5.30pm where some of the choices about the different structures will be discussed. Please click here to register, or click here to email us if you have not already registered to come and you are interested in knowing more in this area.
Election forms for the different entities and a factsheet will also be available in late February. A guide about look-through companies will be available from the IRD in April. The important fact for all our rental clients to know is that you must make the election to change before 30 September 2011. So we will be asking for your records earlier this year and an interview with Michelle or another accountant from the practice is particularly important for you. |
| I think that's about enough of tax for the year and it's only the first month! There is not too much space here to report on the economy - however, I am finding most of our clients are optimistic that the recession is over and while everyone is still debt-averse, normal spending on goods and services is taking place. I will expect to see many of my tradesman clients having more frequent, profitable work this year. |
As mentioned in on of our previous newsletters, the IRD are being much more active in chasing this than previously and I think it's just great. All business people must pay tax and if some pay none (ie simply don't pay or who operate mainly in the black market) it makes it harder for those who do pay tax to compete.
If for some reason you are unable to pay on time let the IRD know asap. We can help you with your budget and for some clients we manage their money completely to ensure they always pay their tax debts on time. Please enquire about this service if you are finding yourself landed with any unwanted penalties because you "forgot" or didn't make an arrangement to pay your taxes on the due date. Click here to contact us. |
Every year I take at least one day out of my business to work on the next year's financial budget and planning for focus for improving the service of Tax and Trust, as well as setting personal goals and reviewing my dreams. This year, we would like to help you set monthly and annual goals for your business - please call us. We find those that have written budgets, that are clearly communicated to the bank and outsiders, work much harder at attaining the income and keeping within their expense limits than those who simply don't make the effort to write their goals down.
Please enquire about this service and don't hesitate to ask for an engagement letter outlining the likely investment required. |
Focus - the ability to stay on one course of action until you succeed.
Winners are the most focused and losers are the least focused. Have you ever imagined being a professional athlete? Every day what you ate, drank and what you did with your time would be determined by how close to the next event you were. For the very top athletes the difference between winning or coming 2nd is often measured by milliseconds.
Focus is a goal or picture in your mind's eye of something you want to be, have or do. Focus will captivate your attention and provoke you with a sense of optimism, faith and hope for the future.
With all the distractions of emails, social networking, drop-in visitors, TV shows, children and other commitments along with endless opportunities to do other things with our time it is really hard to keep ourselves focused on our goals. Every new opportunity competes with your existing focus and if your focus is lost this will create massive damage to both your business results and even your momentum.
You must jealously guard your time and focus well to be a successful organisation or person. By being unconscious about our actions we become unfocussed. To live a focused life requires a high degree of concentration and consciousness.
So we need to concentrate our efforts on the smallest number of activities that will produce the greatest impact on our goals. What do you really want to focus on to completion in your business this year? A good question to ask each day would be what single thing can I do today that will have the most impact on my goals - remain focused on nothing else but that thing.
Sometimes the best thing we can do for ourselves will be to relax and sleep. However, too much sleep and resting of the hands makes you careless, and as it says in a biblical proverb, "poverty comes upon you like a thief" So yes enjoy the summer evenings and work well while the sun is shining on your business.
Have a great month |
|
