Hello and welcome to our September newsletter. Spring has finally
sprung, although it is certainly off to a soggy start! With daylight
saving taking effect this month, we're sure everyone is looking forward to
the days becoming lighter and longer. The countdown to Christmas has also
begun with only 3 months to go!
We'd like to remind all of our clients that we always look forward to
hearing from you if you have any queries at all and we are only too happy
to help in any way we can.
Tax Dates
For all of you GST registered clients: we've reached the end of the GST
period and returns are due for filing on the 28 th
of
October. Please get your information into us as soon as possible to
ensure we can get your return completed on time.
For those of you who are registered for GST on a 6 monthly basis and pay
provisional tax: your first 2016 provisional tax instalment is also due on
the 28 th
of October. Tax reminder notices will be going
out on the 7 th
of October so please keep an eye on your inbox.
As always, please let us know well before the 28 th
if you will
not be able to make your payments on time. The 28 th
is too late
to avoid tax penalties if you set up a payment arrangement.
Tax Pooling
For those of you unable to pay your provisional tax on time, tax pooling is
a very viable option.
Tax poolers, such as Tax Management New Zealand, pay large amounts of tax
to Inland Revenue on each tax payment date and will sell you some of that
tax at a later date for a very reasonable rate of interest (currently about
5.5%).
Once purchased, the tax pooler then transfers the tax from their tax pool
account to your tax account on the due date so you don't incur any
penalties or IRD interest. With IRD's interest rate currently over 9% and
penalties of 5% after one week and an additional 1% each month thereafter,
this method is preferable to paying late or setting up a payment
arrangement with Inland Revenue.
So before taking matters into your own hands and making arrangements with
Inland Revenue, please contact us to see if tax pooling is an option for
you.
Please note that tax pooling cannot currently be used for GST payments, so
always ensure you pay your GST first.
Audit Insurance
At the end of October, audit insurance policies will be up for renewal
again. Letters will be going out to all clients during the month,
whether or not you were in scheme last year. It is a requirement of our
cover to offer it to all clients annually.
In order to opt into the scheme all you need to do is pay the premium and
you are automatically covered from that payment date.
For those of you not familiar with the scheme, the insurance covers all of
your accounting costs in relation to a review or audit of your tax affairs
by Inland Revenue. The insurance starts from the moment we receive a letter
from Inland Revenue stating their intention to review or audit you.
We had our first audit ever this year – unfortunately for a client who
didn't choose to take the insurance. With resulting fees in excess of
$2,000 it's been a costly lesson as to the risk you take in not insuring
yourself. This audit was actually triggered as a result of an audit
on our client's employer – so completely outside our control.
Inland Revenue audits are on the increase – particularly in the following
areas: property development and speculation, trades and hospitality.
So for those of you with interests in these areas we do encourage you to
consider this insurance.
Please come and see us!
We've recently noticed an increase in clients asking us to email or post
year end accounts out, rather than coming in for an annual meeting.
We absolutely understand that people are busy and that coming to see us
takes up precious time. However, it is in these meetings that we can
often discover plans and changes in your lives which may have a major
impact on your tax or working for families entitlements. Often these
are facts that may not occur to you to mention in emails, but could enable
us to save you money or tax manage your affairs to prevent you from a big
tax bill! We only ask for half an hour of your time, once a year, so
please resist the urge to communicate only email and pop in for a visit.
And following on from this…
If you're thinking about setting up another business or changing your
business structure, please talk to us first. It's far cheaper to get
it right in the first instance, rather than having us fix it later.
Also, if your spouse or business partner uses another accountant to us,
please make sure we know about this and that all relevant information is
passed to us each year end. We've had a couple of recent cases of
needing to refile old tax returns to include income from other
sources. The resulting tax is subject to interest and penalties so
can be costly.
Fees paid through our trust account
Almost all of you receiving tax refunds this year have taken advantage of
our trust account to receive your refunds. We've had great feedback
regarding the speed in which you receive the refunds (because we are
cutting out NZ Post and the need to go to the bank to deposit the cheque),
and the fact that your fee is deducted off the refund so you don't have to
pay us yourselves.
For those of you completing your own GST returns don't forget to include
your accounting fee in your GST return! Even though you didn't physically
make the payment, it was still made and you can claim the GST.
For those of you paying us directly, please note that our terms of trade
are the 20 th
of the month following the invoice date and we
would appreciate adherence to these terms as we also have bills to pay.
Regrettably there are a few clients who continually pay late.
In accordance with our terms of trade we have the right to charge
interest. We haven't done this in the past but have made the decision
to do this from 1 October.
IRD's mileage rate decreases to reflect reduced vehicle
running costs
The Commissioner of Inland Revenue has reviewed the mileage rate for people
whose business travel is 5,000 kilometres or less in an income year. This
review has resulted in the mileage rate being reduced from 77 cents to 74
cents per kilometre for both petrol and diesel fuel vehicles.
The Commissioner does not intend to amend tax returns for taxpayers who
have already filed their 2015 returns using the 2014 mileage rate.
Taxpayers can choose to use the Commissioner's mileage rate or use actual
costs. Sufficient records need to be kept to support actual costs claimed – including a log
book covering a period of no less than 3 months taken within the last 3
years
.
Employers can choose to use the 2015 vehicle mileage rate as a reasonable
estimate of costs when they reimburse employees for the use of their
private vehicle for business related travel after 1 st
April
2015. Employers can also choose to use an alternative estimate from a
reputable source such as the NZ Automobile Association.
The mileage rate does not apply to motorcycles, hybrid and/or electric
motor vehicles. If you use these forms of transport for business purposes,
you will need to calculate your actual expenditure, or in the situation of
an employer reimbursement, the employer may make a reasonable estimate of
the employee's costs.
Timesheets
If your business requires the use of timesheets to be filled out by
employees, we have had 'Get Harvest' www.getharvest.com
recommended to us as
being an excellent choice.
ACC information
For those of you who have opted for CoverPlus
Extra
policies, ACC has informed us that any unpaid
policies will be cancelled, and not pursued through debt collection.
CoverPlus Extra policies are a product of choice, and therefore
follow a collection process distinct from ACC's standard product:
- Payment is due 30 days from date of invoice.
- 44 days from date of invoice (14 days past due) – a
reminder is sent.
- 60 days from date of invoice (30 days past due) –
the policy may be cancelled and the client will revert to standard
cover.
Also note that if you are on the standard ACC CoverPlus and have income
protection insurance with accident cover, you are probably doubling up on
your cover! Please either speak to us or to your insurance broker
about moving on to CoverPlus Extra to reduce those costs.
An important update from Xero about keeping safe online
A phishing scam is when malicious emails target customers by pretending to
be from a legitimate company, such as Xero. They're not targeting the
company websites, but rather your login and access details.
Xero are aware of a phishing scam that's targeting their customers. Xero
has not been compromised in any way, and your important data is still safe
- your security is paramount. Since being made aware of these emails
they've been working with their phishing protection service to analyse the
phishing campaign and take down the websites used.
Recent phishing emails (emails that did not come from Xero) had subject
lines such as:
Subject: Credit Note CN-87151 from ...
Subject: ACH Approval Letter
Subject: Invoice INV-...
Emails like this contain malicious content such as viruses. If you've
received one, don't open it - and if you do open it, don't click any links
or attachments. Please delete the email. If you're ever
concerned you've received a phishing email or one that pretends to come
from Xero, please forward it directly to: phishing@xero.com
And on a better note…
If you are a current Xero subscriber, we have the opportunity of passing on
a group discount of 10%. If you are interested in this please contact
our office. Note that Xero prices are increasing from 1 December (the
standard package from $50 to $55 per month) making this discount even more
worthwhile!
For those of you using MYOB Essentials, you just need to let MYOB know that
you are a client of ours and they will automatically give you a 5%
discount. Less of a discount than Xero, but at a discounted price $20
per month for the almost equivalent product to Xero, this represents
fantastic value!
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