The end of the financial year can be either stressful or a seamless part of what you do. Ideally, your end-of-year accounts will confirm what you think your business has been doing for the past 12 months.
Be a good scout to avoid end-of-year migraine
Being prepared is the key to avoiding end-of-year financial drama and stress.
Revenue Minister Stuart Nash has confirmed the bright-line test on residential property sales will be extended from two years to five years. At present, income tax must be paid on any gains from residential property sold within two years of acquisition, with some exceptions (such as the family home). The extension means that profits from residential investment properties bought and sold within five years will generally be taxable.
To make this happen, changes to law are currently making their way through Parliament. It is expected these will receive Royal Assent in March. And it is expected that this will affect properties acquired on or after the date of Royal Assent.
We will have more for you on this when the legislation passes. Meanwhile, if you are in the process of entering into sale and purchase agreements to acquire property, please give priority to discussing the tax implications with us.
Money laundering is big business in New Zealand. Every year $1.35 billion of fraud- and drug-related money is laundered through seemingly legitimate businesses. In response, the
Government introduced specific Anti-Money Laundering and Countering Financing of Terrorism legislation to address this risk.
Previously, only a few types of organisation had to comply with the legislation. Following amendments to this legislation passed last year, it is now confirmed that this legislation
extends to these groups taking effect from these dates (or earlier if the Government legislates by an Order in Council):
1 July 2018: lawyers, conveyancers and businesses that provide trust and company services
1 October 2018: accountants who provide particular kinds of business services
1 January 2019: real estate agents
1 August 2019: businesses trading in high-value goods, sports and racing betting
If you are in any of these categories, of course you must make sure that your business complies. We can point you in the right direction. But please also note that as your
accountant we are in one of the categories that must comply with the changes. And to do this, be aware that we will sometimes need to ask you for more information than we have in the
past. This is because we need to be able to document that we have verified your ID and both you and your business entities are all above board.
In April, IRD will also introduce payday reporting of PAYE information – that is, employers will need to report employee payments to Inland Revenue (IR) every pay run. To give you time to put systems in place, businesses will have a year before it becomes mandatory.
Hand in hand with that, IRD will begin collecting PAYE info for the 2018/19 year to allow prepopulation of income tax returns. That should make life a bit easier for SMEs. What’s more, the release of Working for Families is being brought forward to 2019, to coincide with tax returns being done under the new system, which – again – will make things simpler for SMEs.
We are fielding a few queries about the provisional tax changes that apply from the 2018 tax year onwards.
Below is a summary of the new rules for taxpayers who use the standard method to calculate their payments.
Smaller taxpayers (including companies and trusts)
Inland Revenue (IRD) has changed what it calls the ‘safe harbour’ provision.
The safe harbour threshold was previously $50,000 and applied to individuals only.
Medium and larger taxpayers
The second change affects medium and larger taxpayers.
Capping the liability at the first and second instalments provides certainty, particularly if your income is volatile or seasonal.
Johnston Associates has launched an online portal which will enable our clients to complete secure online communication and signing of documents.
Your introduction to this portal will likely be to receive our annual terms of engagement, which you will be able to sign online.
Later on, for many of our clients we will be sending out your annual accounts package via the portal. Again, online signing of these will be possible, even when multiple signatures are required.
We hope this portal will improve your experience with Johnston Associates and make it easier for you to quickly and securely perform your review and signing of documents.
No action is required from you at this stage, but at some point you may receive an email notifying you that a document has been published to your portal account. We will then provide instructions on how to activate your account and authorise your device for online signatures.
Disclaimer – While all care has been taken, Johnston Associates Chartered Accountants Ltd and its staff accept no liability for the content of this newsletter; always see your professional advisor before taking any action that you are unsure about.