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Payday Filing

Ben DuflouMonday, March 18, 2019



For all New Zealand employers, from 1 April 2019, each time you pay staff, you’ll need to file employee information to Inland Revenue within two days.

 

Note: The due date for payment remains the same at the 20th of the month (or 5th and 20th of the month for twice-monthly filers).

 

As previously advised, if you have been filing yourself, you should have noticed that the ir-File service in myIR was discontinued on 11 March. The Payroll Returns account replaces this.


If you are interested in using a payroll provider, we recommend SmartPayroll, who will take care of all of the filing obligations for you.


Get in touch with us as soon as possible if you want to find out more.




Property Update - Q1 2019

Ben DuflouFriday, February 15, 2019

Ring-fencing Residential Rental Losses from 1 April 2019

On 5 December 2018, the Government introduced legislation that, if enacted, would restrict the use of tax losses generated from residential rental properties against other forms of income (such as wages, business income, interest and dividends).

If enacted, the legislation (The Taxation Bill (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters)) is proposed to apply from 1 April 2019, meaning that the current tax year could be the last chance for taxpayers to offset rental losses against other forms of income. These rules will apply to individuals, trusts, look through companies and closely-held companies alike.

The losses will not be forfeited and will be available to offset rental profits in the future.  The losses will also be available to use against any taxable gains arising from the sale of residential rental properties under the bright-line test and likely against any gains generated under any further capital gains legislation (that appears likely to be implemented in 2020/21).

This legislation will not affect investors with mixed-use assets (such as baches), as they are already covered by the mixed-use asset rules.

Legislation, as it stands, will allow the application of the ring-fencing on a portfolio basis.  This means that investors would be able to offset losses from one rental property against income from another property.  There are some anti-avoidance provisions to avoid some forms of debt restructuring.

With this in mind, any investors who have relied on income tax refunds generated by residential rental losses will need to re-evaluate their future cash flow to ensure they are ready for the changes.   

We are happy to discuss any concerns or questions you might have around the likely changes.  In the meantime, we have come up with a few tips and considerations.

 

Repairs & Maintenance

If you were considering undertaking large maintenance projects, such as roof replacement/repairs or painting, the best time to do this would be before 31 March 2019.  This would ensure the full benefit of the deduction before the proposed ring-fencing changes are enacted. 

If you are looking for a painter, Mark Palmer from Precision Decorating Ltd is a great option for a professional paint job with no surprises. He has the team to sneak through a few jobs over the next few weeks.  With 31 March fast approaching, make sure you book any work soon.

If you are looking for a roofer, Mark Juchnowicz, from Trito NZ Ltd would be a great option for undertaking your roof replacement.  The time frame for completing a roof replacement is also narrowing quickly, with just 6 weeks until 31 March 2019.

Insulation and heating for the living areas within investment properties is compulsory from 1 July 2019.  Landlords could be liable for penalties of up to $4,000 if they fail to comply.  Where existing insulation is being replaced or the costs are less than $500, you should be able to claim a tax deduction.

If you would like to discuss deductibility of any upcoming repairs, please give us a call.

 

Increasing Profitability

Moving in to the 2020 tax year and beyond, many landlords with residential rental investments will find themselves covering loss-making residential rental properties from other income.  With this in mind, we want to cover off a few ways in which you may be able to improve profitability of your investments.    

Insurance

Insurance premiums have been increasing across the country, particularly here in Wellington.  When was the last time you undertook a review of your home insurance?  Reducing insurance costs, whilst still maintaining full cover is a great way to reduce expenses on your rental property.

We work closely with Darren Butter from Kauri Financial Planning.  If you would like a free, no obligation meeting to discuss your insurances, please contact him on 022-524-9531 or darren@kaurifinancial.nz.  Darren would also ensure you have sufficient coverage, as many investors tend to under estimate the replacement costs.

Property Management Fees

Now would be a great time to look at how your property is managed.  Investors that engage property managers generally receive higher rent, have better quality tenants and lower levels of vacancy.  We have recently seen an example of a large portfolio of properties that were under rented by hundreds of dollars a week.

If you already have a property manager, how much are you paying your property manager and are they working in your best interests?  We work closely with LPM Property Management, based in the same building as us, in Wellington.  LPM Property has been managing residential and commercial properties in the region for nearly 20 years.

Their fees are 8.5% plus GST of gross rentals and are all inclusive, with the exception of advertising and maintenance costs. They don’t charge separately for inspections or maintenance management fees.  If you are interested in having a no obligation chat, Shayne Thurston can be contacted on 04-805-0599 or shayne@lpmproperty.co.nz.

Interest Rates

We know that there are some investors still paying 5 - 5.5% interest on mortgages.  For every 1% reduction on $100,000 of funding, interest costs reduce by $1,000 each year.  Some of the banks are prepared to cover some or all of break costs associated with fixed rate mortgages, upon refinancing.  With recent increases in property prices and the LVR changes (70% funding now allowed on investment property), there has never been a better time to review your funding position.

With interest rates around 4%, a significant reduction in interest costs could create that positive cashflow all property investors should be seeking.  We have a close relationship with Pip Paterson, from Paterson Mortgages.  Pip would be more than happy to discuss available options with you.  Pip can be contacted on 027-433-3882 or pip@patersonmortgages.co.nz.

Investment and Debt Restructure

Now is also a great time to review how your investments have been structured, along with your personal home and business. There are some opportunities to restructure investment properties or associated debt, to manage the impact of ring-fencing.

Given there is no one solution that fits all situations, if you would like to discuss your current situation, please contact us to book an appointment.


New Xero Feature - Ask

Ben DuflouTuesday, November 20, 2018
Xero has launched a new feature called Ask, where we can send our clients queries or requests for information through their Xero account. You can respond and upload documents back through this portal, so that the information is retained in your Xero account saving both parties the search through emails. 

Look out for messages received through Ask.


Ring-fencing Rental Losses

Ben DuflouFriday, October 05, 2018

Inland Revenue has released a paper to propose the introduction of loss ring-fencing on residential properties held by speculators and investors. Under this paper speculators and investors will no longer be able to offset tax losses from their residential properties against their other income (for example; salary or wages, or business income), to reduce their income tax liability.

The reasoning for this proposed loss ring-fencing is to help level out the playing field between property speculators/investors and home buyers. The Government believes that investors (particularly highly-geared investors) have a portion of the cost of servicing their mortgages subsidised by the loss, reducing tax on their other income sources and assisting them to outbid owner-occupiers for properties.

The loss ring-fencing rules will apply to “residential land”. The definition of residential land provided under the bright-line test will apply. Such rules will not apply to a person’s main home, a property that is subject to the mixed-use asset rules (for example, a bach that is used privately and publicly) or land that is held under land-related business (business of land dealing, development of land, division of land, or building).

The loss ring-fencing rules will apply on a portfolio basis. This enables investors to offset rental losses from one rental property against rental income from another property.

The current proposed start date for the loss ring-fencing rules is the 2019-20 income year.

If you have a residential investment rental property and have any queries regarding the above proposed changes please get in touch with us to discuss how such changes may affect you.

Audit Shield

Ben DuflouThursday, September 06, 2018

We have been receiving an increased number of queries from the Inland Revenue in recent months around clients' financial activities.  The instigation of an Audit, Review or Investigation on you or your business will likely result in associated costs.  Even if there are no adjustments to returns, there would still be costs surrounding the preparation of material for the Inland Revenue and managing the response process.  Depending on the type of investigation and its results, these costs can be anywhere from a few hundred dollars to a few thousand dollars.


For this reason, we have purchased an Audit Shield Master Policy in our name. This Tax Audit Insurance policy, underwritten by Vero Liability Insurance Limited, covers the professional fees incurred by our participating clients (up to a prescribed limit) for any Audits, Reviews or Investigations relating to both the current and all previous years' lodged returns.


This insurance cover does not automatically apply to you, unless you voluntarily decide to undertake coverage.


Our clients should have received an email this week with an invitation to undertake coverage for you and your associated entities. Should you wish to participate, please reply to us by email and make payment as per the client acceptance form.  We receive the premium payment from you as an agent of Accountancy Insurance and your payment also includes a small fee payable to us to cover administrative costs for operating this service.


If you do not wish to take up this insurance coverage, we would appreciate a response declining the offer and if you do not want to receive this offer in future years, please advise us as such.


We consider Audit Shield to be a very effective way of planning for the professional fees for which you would be liable in the event of an Audit, Review or Investigation.


If you have any queries with respect to this insurance, please do not hesitate to contact us on (04) 970-1182 or admin@aafl.nz.

Late Filing Tax Returns

Ben DuflouThursday, August 16, 2018

When you engage an accountant to file your tax returns, the Inland Revenue grants an automatic extension of time for filing the returns to 31 March following your balance date i.e. with a 31 March 2018 balance date, the tax return is due 31 March 2019.

If the return is not filed by that date, Inland Revenue may charge a late filing penalty and revoke your extension of time, requiring subsequent returns to be filed by 7 July following your balance date.  Late payments resulting from late filed tax returns are also subject to penalties and interest.

Of greater consequence, when tax returns are filed late there is no time to plan for tax payments, particularly with terminal tax due on 7 April and for provisional taxpayers; the third installment of provisional tax for the following year due on 7 May.

If you would like further clarification on your tax filing and payment obligations, please get in touch.

Claiming deductions for business use of your private vehicle

Ben DuflouTuesday, July 31, 2018

There are two methods that can be used to claim a deduction for business use of a private motor vehicle:

1. Actual costs incurred in business use of the vehicle

2. Kilometre rate method (replacing the mileage rate method)

The kilometre rate method is used by calculating the proportion of business travel from the total kilometres travelled in the year, which is then multiplied by the kilometre rate set by the IRD, depending on type of vehicle.

They have also introduced a two-tier system for the rates used. The tier one rate applies to the first 14,000 km travelled in a year. Once a vehicle has travelled more than this, the lower tier two rate will apply.

This means it is now important to not only keep a log book of business travel, but the total travel the vehicle has done. Once an election is made to use the kilometre method, it must be used until the vehicle is sold or no longer used for business use.

See some apps that can help you keep track of your mileage.

https://fitsmallbusiness.com/best-mileage-tracker-app/

Provisional Tax Changes

Ben DuflouWednesday, July 11, 2018

Inland Revenue have introduced a number of changes relating to how taxpayers pay their provisional tax.

Safe harbour rules provide protection for tax payers who have paid their provisional tax using the standard method but have had an increase in income during the year. Meeting the safe harbour requirements means that the tax payer is not liable for interest or penalties on the increased tax liability.

Under the previous rules, the safe harbour limit was $50,000 and was only available to individuals. New amendments increase this limit to $60,000, and more importantly extends to include companies and trusts.

The second change affects taxpayers whose tax liability exceeds the safe harbour provisions. First and second provisional tax payments made using the standard method will not be liable for interest and penalties, even if your actual liability is higher.

Inland Revenue also introduced an alternate method for calculating and paying provisional tax - Accounting Income Method (AIM).  This can provide benefits for taxpayers with seasonal fluctuation in revenue.

Xero Status & Xero Bank Feed Status

Ben DuflouThursday, March 15, 2018

For the first time in the ten years we’ve been using Xero, some significant performance issues were experienced on Monday and Tuesday of this week (12th & 13th March 2018).
 
We had never experienced an outage of that magnitude for that length of time previously.  The issue was traced back to an upgrade carried out to a key database server; which thankfully has now been resolved.
 
While we are hopeful that these types of issues won’t occur in the future, given the digital age we now live in, that is highly unlikely.  Therefore we thought now was a good opportunity to distribute links to a couple of useful status pages that Xero continually update.
 

Xero Status - https://status.xero.com/

This status page provides updates on known issues within the Xero database and accessibility issues, similar to those we experienced at the start of the week.
 

Xero Bank Feed Status - https://www.xero.com/blog/bank-feed-status/

From time to time, bank transactional information sent by the Banks to Xero is delayed for any number of reasons.  Those of you that Bank with ASB will be used to transactions being within Xero by 7am each day, but today (15th March 2018), was an example of when those feeds were delayed.
 
This status page will provide updates on any delays with bank transactional information being imported into Xero.


We would recommend you bookmark these links as favourites on your preferred internet browser for easy reference in the future.
 
If you have any questions, please contact the team on (04) 970-1182 or send us an email to admin@aafl.nz.
 
Kind regards,
All Accounted For team

Merry Christmas & Happy New Year

Ben DuflouTuesday, December 19, 2017

Dear Valued Clients,

 

As we approach the festive season, the All Accounted For team would like to take the opportunity to thank you for your business in 2017.

We would like to advise that All Accounted For will be close for business from Wednesday 20th December at 3pm. We will re-open on Wednesday 10th January 2018.

For urgent queries, please email Ben on 021-915-233.


We look forward to working with you and your team next year. Have a great Christmas and a prosperous New Year.

 

Kind regards,


The All Accounted For Team


Ben Duflou, Sarah Toner, Allison Henderson, Viktor Zgomba, Jocelyn Simpson, Gracie Miles, Toni Russell, Matt Percy, Adam Forrest, Leo Duflou, Kirsten Bell, Olivia Booth

Chartered Accountants Smart Payroll Xero Certified Advisor