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To Corporatise, or not to Corporatise, that is the Question?

What structures are available to builders that can balance tax efficiencies, flexibility for businesses, and ease of compliance?  There are 4 main structures that are available: Sole Trader, Partnerships, Companies, and Trading Trusts.  Each structure has benefits and negatives, and it is the balancing of those competing factors that works out what the best structure should be.  Members who have their LBP have the additional complication that the structure is “looked” through ...

UOMI Remission

IRD has issued guidelines for the remission of UOMI on tax obligations due after 14 February 2020. To qualify, you must satisfy the department that you are physically unable to make their payment when it’s due because of COVID-19 or that you are struggling financially to pay on time because of the economic impact caused by the outbreak of the virus. IRD also requires taxpayers seeking relief to both contact them and pay the tax they owe “as soon as practicable”. Sounds simple, but then thi...

Government Guaranteed Loans

As we enter into Week 4 of the COVID-19 lockdown, client’s thoughts will move to “what will my business look like?” and how to fund the cashflow to get it back up to recovery. Any business that was successful pre COVID-19 will be successful post COVID-19, it is just a matter of how long it will take to get back to full capacity and how much cash is needed. The Government recognises this and has made available $6.2 billion in business loan support. Sounds good, but like all political promis...

From Crisis Comes Opportunity

For the first time in many of our collective memories, New Zealand has imposed restrictions on our personal freedoms that we may ever see again. While the reason is noble, it has forced many businesses to look internally to their own systems and business continuity plans. From this crisis come the opportunity to look at how digital solutions and changes to business models can assist businesses moving forward.Traditional distribution models are being investigated with on-line ordering and collect...

Companies Duties Post COVID-19

In the ever-evolving world of COVID-19, the government have announced a number of different changes for company directors that will assist with companies surviving the post COVID-19 trading era. The proposals are not intended to be long-term but to assist with the companies understanding they may be in breach of their legal duties, but are doing so in the best interests of the company. The proposals are intended to keep affected companies afloat by: ‣ Encouraging directors to keep trading...

COVID-19 Wage Subsidy Q&A

With many clients applying for the wage subsidy, Karl (our Tauranga partner) has developed some Q&A’s for our clients as part of a presentation to business owners. What are the Governments Expectations? There is a requirement to pay staff 80% of their wages if the business is in a financial position to do so. If it is not, the minimum requirement is to pass on the subsidy in full where employees’ wages are equal to or exceed the subsidy. If wages are less than the subsidy you should pay staf...

Retentions – Are They Really in Trust?

After the collapse of Mainzeal in 2013, which sent shockwaves through the construction industry, resulting in changes to the Construction Contracts Act that required the retentions from a contract to be held in trust. It does not need to be held in a specific trust account, but proper accounting records that correctly record the retention money held on trust must be kept and also must be made available for inspection by the contractor. The rules came into effect 31st March 2017. BDO in their 201...

Are Accounting Journals Still Relevant?

When I first started out in accounting, which I can say was last millennium, the basics of accounting that we learned was the double-entry system of accounting. Everything had to balance and journals were the normal accounting process. Technology has changed (and change is the only constant in life) and now there are sophisticated accounting packages that do all the interface with a push of buttons that once was done by journals.  At a recent accounting meeting, there was the next generatio...

The Role of The Company Secretary

The Company Secretary was a role that all companies were required to have before the Companies Act changed in 1993. Now the position is seen as a redundant position, especially with a large number of smaller companies being used as a commercial vehicle. But is the role of the company secretary really understood and does it still have some relevance in the modern commercial environment? The Company Secretary is seen as a minute taker, collator of information and “keeper of the information” fo...

Airbnb, Borders & Short-Term Stay

At a recent seminar on technological disruption in the business environment, an interesting fact was that in 10 years, Airbnb had gathered the same number of beds as the Marriott hotel chain (the 3rd largest in the world at 1.33million), but the Marriott chain started in 1927. But the question now arises as more people are looking to capitalise on the new trend and help the increasing cost of acquiring and maintaining property, what are the tax consequences of the alternative rental arrangements...

The Need for Good Information

How often have we heard of Construction companies failing followed by the statement, “why”? The businesses are often expanding, have a number of projects on the go, and seem to be doing well. However, the Construction industry is often so project-focused that Owners don’t check in on the integration of projects into the overall accounting systems and profit and loss results. Often companies have grown organically, and the Business Owner may be an excellent builder, but is not good at runni...

Are Restraint of Trades Worth the Bother?

Restraint of Trade, when inserted into a Sale and Purchase agreement for a business, is an important part of any agreement. But, do they have the same effect in your Employment agreements? Before you insert a restraint of trade you need to consider if you have a proprietary right to protect. This is often trade connections or trade secrets that, in the event that your Employee moved to a competitor, would have an adverse effect on your business and as such you need to protect that interest. Any ...

Enduring Powers of Attorney

We all hear the term EPA (or in full, Enduring Powers of Attorney), and we all have a general understanding of their importance. But, why are they so important? The EPA gives the nominated person (usually a friend or family member) the ability to make decisions on your behalf. It is a legally binding document and is overseen by the Family Court. There are two kinds of EPA; Property (assets and cash) and Personal Care and Welfare (medical and living arrangements). You can appoint one or more peop...

​Disputed Debt – When can it be collected?

We have all heard the many excuses (and some of us may have even used them) when it comes to debts owing.  The key is to distinguish between what is being disputed and what is beings used as a deflection of no money to pay.  The difference?  Disputed debts cannot be collected, but those who don’t pay can be chased. A dispute can be genuine or the dispute can be frivolous.  The key of course is to be mindful that a frivolous dispute to you, the Creditor, could be a genuine a...

Employment Changes – What will they look like?

Now is the time to sit back and reflect on what the potential employment landscape will look like going into 2018-19 year with the influence of the Labour-led Government. We are all aware the minimum wage has increased from $15.75 per hour to $16.50 per hour. The Government's target is that the minimum wage will be $20 per hour by 1 April 2021. What does this mean for every other employee? With a labour shortage in particular skilled areas and shortages to find employees, an expectation for pay ...

Cash is King

Cash is the lifeline of any business.  If you run out of cash it can cripple the business and prevent any growth and in the extreme case, result in the liquidation of the company.  While we would love the cash cow business, the reality is where does the cash go? Cashflow shortfalls can be positive and they can be negative.  When cash is being used to fund growth, this can cause short term cash pain.  Growth is when a business needs to invest in infrastructure, stock, or capac...

Ready...Set...AIM!

Some would argue that it is rare for the IRD to get something right – but, in our opinion, this time they have got it spot on!  What is AIM?  It stands for “Accounting Income Method” and effectively calculates your tax liability as you go, almost like PAYE for trading entities.  Income Tax is then paid every two months at the same time as your GST (although it is separate to your GST return). Here are some common Questions and Answers about AIM; Does it replace traditional P...

New Bright Line Test Applies to Property

One of the worst kept secrets of 2018 was the increase in the Bright Line test.  This has now passed into legislation with effect from the 29th March 2018.  It was also the first “test” for the Government on changes of Tax under the National Government and the impact on Tax planning.   The initial documentation indicated (and we were planning for) that the test applied to all property purchased after October 2015 when the first two year test came into effect.  Howeve...

When a gift is not a gift?

As we come out of the time of giving and look at all the Christmas presents we have received, and in particular the unwanted gifts from Great Aunt Gertrude, we consider what is considered by the IRD as a gift. If for example, you were to gift one of the Christmas presents that you received to a registered charity for their charitable purpose, are you entitled to receive a rebate of 33% of the gift that was made? The IRD have recently clarified the position that a tax rebate applied for annually ...

Cryptocurrency – Is it a bubble?

We have increasingly been asked what our opinion is of Bitcoin and, to a lesser extent, the general cryptocurrency trend.  Are they the “new” money or just a flash in the pan and a form of commodity investment much like Gold futures and stock options? While the intention of this article is not to endorse, nor denounce, these new forms of currency, it is important to consider them next to traditional investment options.  As a start, we delve into the history of money. We view money...

The Cash Economy

There has been commentary in the media in recent years over the focus of IRD on the cash economy. The question that arises is why is there such an emphasis on the “hidden” or cash based economy within New Zealand? It is important to note that while the IRD is focusing on the cash economy it is not necessarily looking into the one or two cash-based transactions that might take place within certain industries, rather the key areas of focus are on areas of high risk such as construction, retail...