Tenants Must Be Informed of Insulation Status
It's been compulsory since 1 July last year for any new tenancy agreement to include an Insulation Statement. That means landlords must record if rentals have insulation, where it is, the type of insulation and its condition. That allows tenants or potential tenants to make more informed decisions about renting.
Insulating Rentals is now mandatory!
On top of that, if you have a rental property without floor and/or ceiling insulation, you have until 1 July 2019 to install it. If you don't have an Insulation Statement, or your property remains uninsulated from 1 July 2019, you can be fined up to $4000.
The insulation requirements don't apply to in-ground concrete floors and integral ceilings-floors in a multi-storey dwelling.
Note that it's illegal to install or repair electrically conductive insulation, known as foil insulation, in any residence. A breach could cost you up to $200,000.
For this and more information on these new requirements see: https://www.tenancy.govt.nz/maintenance-and-inspections/insulation/
R & D Tax Credits Can Boost Cash Flow
Changed research and development (R&D) tax credit rules, which came into effect at the start of the 2016 income year, can help business cash flow.
The R&D Tax Credit regime allows a "cash out" of an organisation's R&D tax losses. The cashed-out amount must be repaid from future income.
In general, a taxpayer will be eligible for the cash out if they:
• Are a New Zealand tax resident company
• In a tax loss position
• Maintain continuing ownership of intellectual property.
• Have a "wage intensity" of at least 20 percent (calculated as total R&D labour expenditure ÷ total labour expenditure).
The "cash-out" is subject to maximum caps and will be clawed back in certain circumstances such as a substantial shareholding change or the disposal of R&D assets. Only expenditure that doesn't meet the threshold to be capitalised as an intangible asset qualifies for the tax credit. If you think you may be eligible and we haven't already discussed this with you, please contact us.
Creditors Get More Protection From Indebted Businesses
A threshold for reportable tax debt has now been proposed by the government, giving creditors greater protection from businesses owing debts of more than $150,000.
The IRD will soon be able to disclose to certain credit reporting agencies, information about companies with significant tax debt. An Order in Council set a threshold of $150,000, so a company's tax debt over that amount may be disclosed.
A Tip for Employers - Kiwisaver Contributions
We have noticed on the MBIE (Ministry of Business, Innovation and Employment) Employment Agreement Builder that the Employer's Kiwisaver Contribution can be included in their total pay, rather than as an added benefit. This must be negotiated in good faith and made clear to the employee during pay negotiations so keep this in mind next time you are writing a new employment contract.
For this and more information please see the link below
Contractors Get More Tax Choice
The way contractors pay tax changed on 1 April, giving greater choice, and making it easier to get tax right. The rules around schedular payments have changed to allow this, and are compulsory for all contractors hired by a recruiter - or other labour hire business - and those previously under schedular payment rules.Other contractors can opt in if their payer agrees to deduct tax on their behalf.
Contractors must complete the new tax rate notification form (IR330C) when starting any new job. On this form, they pick their preferred tax deduction rate. New Zealand tax residents can pick any rate from 10 percent to 100 percent. If you complete the form but don't pick a tax rate, the labour hire business will deduct tax at 20 percent. If you don't complete the IR330C, the no-notification rate of 45 percent will apply.
If you contract directly for any business and do not have to have tax deducted by the hirer, you may choose to have tax deducted from your payments. You and the payer must agree to this approach, and a written record of the agreement should be kept. If you work for several businesses, each must agree to the request. If a payer doesn't agree, you will continue to pay tax for that work as done previously.
Use-of-money interest charges for underpaying provisional tax are also changing. From the 2018 tax year, new rules mean fewer people will have to pay it.
If your business hires contractors you need to follow the following steps when paying them:
• Check the accounting software includes the option to choose variable tax rates
• Brief the payroll team
• Download the new tax rate notification form (IR330C) and get contractors to complete it
• Add the contractor to your EMS and complete as you would for any other person receiving schedular payments - ignore additional deductions
• If you employ contractors directly, you must record the agreement with them to deduct tax
Contractor or Employee? $65,000 Fine for Getting This Wrong
Not correctly disclosing who is a contractor and who is an employee correctly can have serious repercussions on a business.
In a recent scenario two car sales companies with the same director were penalised $65,000 for incorrectly categorising their staff as independent contractors and not allowing them their basic human rights. The owner did not have a written agreement because he believed that as his staff were contractors this was not needed but that wasn't enough to convince the labour inspector.
For more information on the differences between employees and contractors please click here