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 Welcome to the Accounting Solutions Blog

Easter and ANZAC Day are fast approaching, therefore it's a great time to check your trading hours and responsibilities for paying staff.

 

Easter and ANZAC day public holidays for this year are:

 

Good Friday - Friday 18 April

Easter Sunday - Sunday 20 April (note, this is not a public holiday)
Easter Monday - Monday 21 April
ANZAC Day - Friday 25 April

  


Opening Hours

All shops must be closed on Good Friday and Easter Sunday. Any shops that don't comply are at risk of prosecution. The same applies on ANZAC day before 1pm. 

 

Some exemptions apply such as dairies and service stations. You can find out if your business is exempt by clicking the link below:

 

http://www.dol.govt.nz/er/holidaysandleave/publicholidays/shop-opening-hours.asp

 

 

Paying Staff

Employees who normally work on a Friday or Monday will be entitled to a paid day off. If your employees are required to work, they will be entitled to time and a half for the hours worked on those days, and an alternative holiday if the day is otherwise a working day for the employee.

 

As Easter Sunday is not a public holiday, employees are not entitled to a paid day off or time and a half for hours worked on this day.

 

Please note that public holidays can affect your payroll processing timetable. You may have to pay staff earlier than usual, ie. if you normally process wages on a Friday or Monday make sure that you process wages on the Thursday prior.

 

 

Should you have any questions at all please call the Accounting Solutions team on 03 374 9393







Important tax changes that will affect you!

Important Wage Changes from 1 April 2014

 

Everyone's wage packages need to be updated and changed for your first pay relating to April 2014 because the ACC earner levy change. If you are using the IRD booklets make sure you have an updated one as at 1 April 2014, or download your updated wages software.

 

ACC Earner Levy

The ACC Earner Levy Rate decreases from 1.7% to 1.45% and Annual ACC Threshold increases from $116,089 to $118,191.  The cuts affect the Earners Account (paid by workers) and the Work Account (paid by employers).

 

 

Work Account Average levy (per $100 of liable earnings, ex GST)

Earners' Account levy (per $100 of liable earnings, ex GST)

(NEW) 2014/15

$0.95

$1.26

(OLD) 2013/14

$1.15

$1.48

 

Minimum Wage Increase

The adult minimum wage rate will increase from $13.75 to $14.25 an hour.

The starting-out wage and training minimum wage will also increase from $11.00 to $11.40 an hour.


The Adult Minimum Wage

The adult minimum wage applies to all workers aged 16 and over who are not starting-out workers or trainees, and all workers who are involved in supervising or training other employees.


The Starting-Out and Training Minimum Wages

The starting-out wage is focused on:

  • 16 and 17 year olds starting out in the workforce
  • 18 and 19 year olds who have been on a benefit for six months or more;
  • 16 to 19 year olds in training in a recognised industry-training course involving at least 40 credits a year.

The training minimum wage applies to employees aged 20 years or over who are doing recognised industry training involving at least 60 credits a year in order to become qualified.

The new starting-out and training minimum wage rate (before tax) is $11.40 an hour, which is $91.20 for an eight-hour day or $456.00 for a 40-hour week.

If you are over doing the wages in your business, we provide a wages service at Accounting Solutions Ltd and can do these for you, just give us a call to discuss this further.

 

 

Working for Families

The minimum family tax credit threshold will increase from an after-tax income of $22,724 to $22,776 from 1 April 2014.

 


Apprenticeships – What You Need to Know

Offering apprenticeships in your business is a great way to keep staff and provides someone with a qualification for life.

The new NZ Apprenticeships scheme makes it even easier for employers to supply on the job training. Find out more about taking on an apprentice and subsidies available for your business by clicking on the link below.

 
CLICK HERE TO FIND OUT MORE!
 


Student Loans & Allowances

 

The government continues to tighten up access to assistance for students as well as extending their reach for repayments. 

Limits on access

If you are starting study after 1 January 2014, there is now a residency requirement of three years (previously two years) before you are eligible for a Student Loan which applies to those who are not New Zealand citizens, refugees, or protected persons. 

Age limits apply for Student Allowances.  The amount of assistance people over 40 are eligible for is limited to 120 weeks and students aged 65 or over are no longer eligible for a Student Allowance for study starting after 1 January 2014.

Repayment obligations – don't be late

If you defaulted on your student loan repayments while living overseas, but returned to New Zealand, Inland Revenue can now request an arrest warrant if you are about to leave New Zealand.  Inland Revenue and the Department of Internal Affairs now have an information sharing agreement allowing them to share contact details for overseas-based student loan defaulters when they renew or apply for their passport.  Inland Revenue will be able to contact individuals to discuss their outstanding arrears.

 

Remember to do your stock take and work in progress on Monday 31st March. More about this and tax savings next week!

Interest Rates

I recently listened to Graeme Wheeler the Reserve Bank Governor speak at a meeting and some positivity is happening in New Zealand and in comparison internationally.

Our New Zealand Terms of Trade internationally is the highest it's been in 40 years and New Zealand has the fastest growth worldwide at present.

We are an attractive country to invest in so Fund and Portfolio Managers are investing in New Zealand. The demand for the New Zealand dollar is going up because they are buying New Zealand investments. This is what is putting pressure on our New Zealand dollar and is one of the reasons why it keeps going up, rather than the anticipated drop that was expected.

Interest rate increases will definitely be happening in March 2014. The reason is for a control mechanism. The Reserve Bank has kept interest rates low for a lot longer to help keep New Zealand in a growth position. Now with our present high rate of growth, the interest rates going up will not effect this growth. Growth will still continue and our labour productivity is also increasing, wage rates are lifting and all this sustains interest rate growth.

Some banks are offering a capped fixed rate now for purchases you know about in the future. Ring me about this sensible option on 03 374 9393.

Concerning Trend in Canterbury Building Trade

?De-risking your business

There's an old saying "Don't put all your eggs in one basket".

This not only applies to investments but to the number of customers you have as well.

The general rule is not to have more than 10% of your work coming from one customer.

Too many builders, plumbers, plasters, manufacturers, bricklayers, electricians and many other services are now dedicating their entire staff and resources to one main customer. Sure, it makes sense when the rates are good, the employees and contractors know their work week to week, cash flow is good, business is easier and pressure from that one customer to be exclusive to them or they will use someone else. BUT, if there's no signed contract to guarantee regular payments and future work then your business is at high risk.

Do you check out your customer's balance sheet to see how stable their cash flow and net wealth is? Don't presume because they are large that everything is fine.  Remember Mainzeal's damage to our local contractors and businesses earlier in the year.

I'm watching more and more brilliant businesses turn themselves into risky businesses because the money is too good to turn down.

Ensure you have good business practice to hedge risk:

·         Signed Terms of Trade

·         Signed contracts

·         Signed agreements

·         Signed personal guarantees

·         PPSR's/GSA's

·         A contingency plan

·         One month's savings (held in a buffer cash savings account) to cover overheads, wages and loan repayments

Please ring or email me to discuss your business risk and how this can be minimised. A few simple steps can save unnecessary detrimental damage.

 

Local Economy Is Booming!

Because our client's provisional tax is determined on their last four months profitability, it's a brilliant indicator of how the local economy is going.

Remember this is due tomorrow, so while the money's there get it paid to avoid any penalties or use of money Interest. 

Is your Company paying its 2014 provisional tax based on the previous year or on how it's physically performing now?

We are checking all our clients' last four months profitability to ensure they're paying enough tax, this avoids use of money interest & big tax surprises one year later, often it's too late as the money's been spent.  There is no ACC on Dividends but there is on shareholder salaries, this is another reason for the company to be paying more provisional tax in this installment.  A missed opportunity if not done correctly now! 

How to Turn Your Business Around in 3 Months

Bookkeeping Services to Keep you in Financial Control

Excellent book keeping is the key! It is the book keeping that drives cash flow. Having your quotes and invoicing out daily or weekly, collecting your debts in the same manner and all driven by a system that ensures the book keeping happens like clockwork. We have turned many businesses around with our Christchurch Bookkeeping Service, it's a fully computerised system run by an experienced team. The results are accurate and reviewed on a monthly basis by an Accountant and Business Advisor. This is what grows your financial knowledge and awareness. You are left feeling in control and able to recognise and take on opportunities.  The Accounting Solutions Limited Biz 3 package is a full Book keeping Service that really makes a difference.

Entertainment Expenses - What's Deductible?

Understanding Business Entertainment Expenses

General Rule

If you provide entertainment for your team, clients or any other business contact, some of your business entertainment expenses are tax deductible.

 

Fully Deductible Expenses

The following is a list of the entertainment expenses that are fully deductible:

 1.     Meals while travelling on business

The cost of a meal while travelling on business is fully deductible as long as there are no business contacts present. (becomes 50% deductible)

 2.     Conferences

The cost of food and drink at a conference or business course, which continues for four hours or more, is fully deductible.

 3.     Meal allowances

A tax-free meal allowance paid by an employer to an employee working overtime is fully deductible.

4.     Executive dining facilities

The cost of a light meal provided to employees in an area reserved for senior management is fully deductible when the meal is provided during the course of the employees' normal duties. 

5.     Morning and afternoon teas

Morning and afternoon teas in an executive dining facility or at a conference are fully deductible.

 6.     Promotions open to the public and trade display

Entertainment provided by a business as part of a function open to the public, or at trade displays to advertise the business, are fully deductible.

For example: The costs of crockery/glassware hire, food, room hire, equipment

 7.     Off-shore entertainment

Entertainment enjoyed outside New Zealand is fully deductible.

8.     Monetary sponsorship

The cost of sponsoring entertainment is fully deductible where the sponsorship is principally for promotion or advertising to the public. 

9.     Entertainment provided for market value

Providing entertainment for market value is fully deductible. 

 For example: the cost incurred by a restaurant in providing meals to patrons.

 10.  Samples

The cost of providing samples for advertising or promotional purposes is fully deductible.

 11.  Charitable entertainment

Entertainment provided to members of the public for charitable purposes is fully deductible.

 For example: A business donates food to a Christmas party in a children's hospital.

 12.  Reviewers

The cost of providing entertainment to a person to review your business for a paper, magazine, book or other medium, is fully deductible.

 13.  Licensed premises operators

Costs incurred by a licensed premises operator in providing a special offer are fully deductible.

 For example: Happy hour of cheap drinks or two-for-one price meals.

 

50% deductible Entertainment Expenses

The following is a list of the four types of entertainment where deductibility is limited to 50%:

  • The cost of corporate boxes, corporate marques or tents
  • The cost of accommodation in a holiday home or time-share apartment
  • The cost of hiring a pleasure craft
  • The cost of food and beverages enjoyed in any of the three locations listed above, or food and beverages enjoyed on/off the business premises for a social event

 

Goods and services tax (GST)

You can claim the full GST portion on all entertainment expenses you have incurred throughout the year.  If the entertainment expenses are only 50% deductible, you need to make an adjustment once a year for the 50% non-deductible portion.   

The GST adjustment is calculated by multiplying by 3 and dividing by 23 the non-deductible entertainment expenses, exclusive of GST.  This needs to be returned in the GST return in the period your income tax return is filed or due to be filed.

 Many clients find it easier to claim the correct portion as they go, throughout the year.

 

Fringe benefit tax (FBT)

If employees (including shareholder-employees) can enjoy an entertainment benefit at their discretion and outside their employment duties, this benefit will be subject to FBT.

 Any entertainment expenses that come under the 50% deductibility rules are not liable for FBT.

 

Our Advice

The rules are complex.  For big ticket items, get our advice. But a tip is write on the back to the receipt who and why you were out!

Employment Changes

There are some important facts every employer needs to know, so please take a few moments to refresh yourself

  •  3 Month Trial Period
  • Starting Out Wage
  • Holiday Pay
  • Misuse of Drugs & Alcohol - Health & Safety

3 Month Trial Period

It is important to have new employee's sign their employment contract before their first day of work. If not then the agreement cannot be relied upon for the three month trial period: refer case law Smith V Stokes Valley Pharmacy (2009) Limited. For a trial period to exist it must be written in the employment contract.

If an employee is not performing and within the 3 month trial period it is important you still give them feedback, make sure it is diarised or written, as later evidence if required. This also shows you are allowing the employee an opportunity to improve, and you must be seen to be making an effort to help the employee improve in their performance. If you terminate employment under the 3 month trial period, date and formally give the employee their notice before the three month period finishes. It's OK for them to work beyond the three month period as long as notice is served before the 3 month period is up.

The employee can still bring a personal grievance claim against you, but not an "unjustified dismissal" grievance claim. Some other examples of grieves are sexual harassment, disadvantage or breach of good faith.

New Starting Out Wage

From May 1st 2013 16 to 19 year olds may be paid 80% of the minimum adult wages; this is $11.00 per hour.  The requirements around this are:

  • 16-17 year olds, if hired by any new employer can be paid this rate until they have completed 6 months of work for that same employer.
  • 18-19 year olds who have been on a benefit for six months or more can be paid this rate until they have completed six months work for the same employer.

Holiday Pay

An employee can now request one week's holiday pay be paid out in cash. However an employer cannot require one week's holiday be taken in cash, of the four week's. The employer can decline a request.

Misuse of Drugs & Alcohol - Health & Safety

There should be a serious misconduct clause in every employee's contract covering the misuse of Drugs, Alcohol, Substances and Hazards.

Listing out hazards helps the employer in court when gear, plant, equipment and machinery are misused carelessly or under the influence. The more hazards you list the better, like no quad biking up and down hills - for farmers

Lesson from Pike River:

The Pike River tragedy and the subsequent report of the royal commission provide a sober reminder for both directors and management of the consequences of the failure to adequately consider health and safety issues.

With so many Trades People and high risk work going on in Christchurch safety, and ensuring our men and woman get home safely at the end of the day is paramount, wouldn't you agree?

We have a client who has a weekly meeting with their entire team and first on the agenda is Health & Safety. Management have this as first and it is a huge part of their culture, every team member watches out for one another - it matters!

If you would like any further information regarding employment please contact Tabatha or myself.

Have a safe, productive and enjoyable month.

 

2014 Budget: From A Business Perspective...

MORE benefits for business owners than disadvantages!

Research & Development - We think this is the biggest benefit

There is an R&D cash refund for losses from Inland Revenue, and this applies to "small innovative businesses" and also where there are extensive R&D costs upon set up. There is also an extra $130 Million allocated for R&D grants. More about this as it unfolds, but no definition for "small innovative businesses" as yet.

ACC - Savings to be had!

Businesses - via the Employers Levies

Households - Via vehicle registration costs

Employees - Via Employee Levies

The exact savings are not defined yet, but we will update you as this comes to fruition.

New Tax Deductible Expenses

The following items are going to be Tax deductible expenses

  •          Resource consents for projects that do not go ahead
  •          Patent costs for patents that are not approved
  •          AGM costs
  •          Annual Stock Exchange fees
  •          And a few others, not so relevant to you

Audit - Property Compliance

Additional funds of $6.6 Million will be put into audit around property compliance. If you are concerned about this give us a call today on 03-374-9393. There has been a pattern of increased audit outside of Christchurch noticed by colleagues in our industry. There has, until now been a restriction on Christchurch after the Quakes, however this has now been lifted.

Overall a 2014 Budget that offers a lot of extra advantages to New Zealand businesses.  If you have any concerns or feedback about the budget or business in general please give me a call or email. We love to hear your feedback!

  • "With our previous accountant, I had all this information but didn't really get a grasp of what it meant. Now with Accounting Solutions I understand my overall business and where we are going."
    -Richard Allin, Managing Director, Push Bikes Ltd
  • Accounting Solutions has surpassed my previous experience of a large international accounting firm. An experienced accounting team who can manage complex financial tasks."
    -Phil Bryant, Channel X
  • "We have been clients of Accounting Solutions for over 13 years now. Their proactive approach has helped our business to continue to grow and helped make business simple, profitable and enjoyable."
    -Bernie Hunt, Managing Director, Sydenham Joinery Limited
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F: 03 374 9392

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Sydenham
Christchurch 8023

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