News

Often the first reaction when thinking of setting up a new business or undertaking a new venture is to establish a company. Companies are familiar to us, offer limited liability, are quick and cost effective to establish (at least at a basic level) and people feel as if they understand companies. However, despite their popularity, we commonly see situations where a company is not in fact the best option, due to some of the tax pitfalls that can arise from using a company.

Some situations where companies can present problems and increased tax costs include:

• Where one or more investors have tax losses available to them (or may do in the future)
• Where one or more investors are on lower tax rates for some reason
• Where one or more investors have dependents to whom income could potentially be distributed and then taxed at lower tax rates
• Where capital gains are likely during the course of the project or business
• Where one or more investors are overseas tax resident, or where New Zealand tax residents are investing overseas.

We recommend, particularly in these situations, that consideration is given to other structures such as a limited partnership, an unincorporated joint venture, or a look through company (LTC) rather than an
ordinary company. These can be put in place and deliver the same or similar commercial advantages (such as limited liability) but also potentially much improved tax outcomes in comparison to an ordinary
company structure. This is due to the fact these types of entities don’t pay tax themselves, rather each investor includes their respective share of the overall profit or loss in their own tax return, and they can then deal with the
tax consequences of that in their own way based on their own appetite for risk and their own circumstances. This also provides greater flexibility to adapt to law changes etc. in the future.

If you’re not sure about your situation give one of our specialist tax advisers, or your usual Johnston Associates adviser, a call so you know you’re on the right track.

To keep up with our growth we are looking for talented and passionate Senior Accountants to join us in our Blenheim, Nelson, and Richmond offices.

We are looking for people with the ability to work largely unsupervised on the preparation of Annual Financial Statements, Tax Returns, and GST returns, through to review stage.

Primarily compliance based, this role would suit someone happy to prepare accounts and interact directly with clients.

What you need:

• A minimum of five years recent NZ BAS & Tax experience gained within another NZ CA firm.
• Experience working with MYOB, Reckon, and XERO products.
• Excellent verbal and written skills, and the ability to liaise with a range of clients across a variety of industries.

This role offers a competitive salary for the right candidate, as well as ongoing professional development, and external training courses.

If this sounds like your ideal working environment, and you have the right skills to fit the position, we look forward to hearing from you.

To find out more about this opportunity, please contact Ben Halliday bhalliday@jacal.co.nz

Seek job application link here

“Our tax system will be fairer and more balanced to encourage investment in the productive economy.” Grant Robertson.

The budget position on tax is something of a watching brief. The Tax Working Group (TWG) was a tangible presence while the Budget was read but their interim report is not due out until September this year, their final recommendations coming out early 2019. In the meantime, the measures announced include:

• Ring-fencing investors’ tax losses on rental properties so they cannot be offset against other taxable income to reduce net tax paid
• Tax credits for research and development
• Changes to bloodstock tax rules for the New Zealand racing industry attracting new investment to the breeding industry.

Compliance Agenda

There is a drive to widen the tax base. With that in mind, the Government will provide extra operating funds to Inland Revenue to collect more taxes and, in particular, to ensure outstanding company tax returns are filed. At a proposed cost of $31.3 million this is expected to raise revenues in excess of $183 million over the next four years. Taken with Inland Revenue’s tax policy work programme, there’s a strong compliance agenda to plug leaks and stop rorts to the system.

The message for businesses, of course, is to ensure tax compliance is a priority, all those i’s dotted, all those t’s crossed. Johnston Associates Tax team is here to assist you with all of your tax needs, contact us today.

There has been a perception amongst some commentators that with the abolition of gift duty, the need to have annual trustee meetings for a trust is no longer important.

Nothing could be further from the truth as the regime post gift duty and the current Law Commission Review of the Law of Trusts has, in our view, increased the need for trusts to be properly established and managed.

Good record keeping is essential. Where we prepare annual financial statements for the Trust, we also prepare Annual Minutes.

Those Trusts that only own the family home and have recently obtained an IRD number, should seriously consider having an annual meeting of Trustees and preparing annual minutes.

To talk to one of our experts please don’t hesitate to contact us.

Given the importance of keeping your PAYE and GST record-keeping and payments in order, it might be tempting to think that Fringe Benefit Tax, or FBT, is a relatively minor thing. But don’t be fooled. In 2017, Inland Revenue created a dedicated audit team to focus on this issue.

One of the team’s aims is to ensure employers have the right business structures and documentation in place. And it turns out that many don’t.

If this sounds like you, now’s a good time to put things right. Regardless of whether you’re acting correctly or not around FBT, a lack of proper records leaves you in a weak position and liable to negotiated settlements (that is, having to pay more than you expected) or, worse, serious penalties.

Most FBT revolves around company vehicles, so let’s look at what IRD expect from you if you provide one to any of your staff:

• The employee’s job description and employment contract
• The company policy on motor vehicles
• Any private use restriction letter in place, signed by the Directors and the employee
• Documentation that shows regular checks on the vehicle to ensure it’s not being used for private matters
• The employee’s performance review notes confirming they’re sticking to company policies.

FBT…so, what can you do?

For an SME owner, that’s quite a daunting list, and a good reason to talk to your accountant. An expert, independent set of eyes will help you determine what you need to do in all cases, what you don’t need to do, and also how to go about doing it (including creating proper documentation).

The value of expert advice is heightened by some of the finer points of FBT legislation. For example, did you know that if an employee takes a vehicle home one evening and returns to work with it the next morning, the laws says it’s been available for private use on two days?

Did you know that IRD expects you to check that employees are adhering to restricted use policies at least once every quarter?

Did you know that just because a vehicle has your company logo on it, that doesn’t automatically make it a work-related vehicle, which then means it doesn’t automatically become exempt from the usual requirements of FBT?

Did you know there is also a new option for some companies that have one or two vehicles to elect to use the motor vehicle expenditure rules rather than pay FBT in certain circumstances?

If you didn’t know all those things, take a bow – you’re in great company! FBT is complex, to say the least.

The good news is that IRD also recognises this and will work closely with you to help you comply. The best approach is to get professional advice (that’s us) and, where appropriate, go to IRD for a written opinion on any matters that aren’t crystal clear. That way, even if IRD disagrees with your FBT return, they’ll see that you’ve taken reasonable care to get things right and may not impose penalties.

So, when are you liable for FBT?

Any time you provide non-cash benefits to your staff – which means the list is potentially endless. In practice, however, most non-cash benefits fall into one of these categories:

• Insurance premiums
• Motor vehicles
• Subsidised transport
• Staff vouchers
• Offsite carparks

Contact us today with any question you have regarding FBT – we’ll be very happy to help.

Johnston Associates South is a progressive three partner CA firm that has an impressive reputation in the market for the quality of our business advisory, and professional accounting services in the Nelson, and Marlborough regions. Our firm offers leading technical expertise in a number of areas, including financial accounting, management reporting, tax, management consulting, and advisory.

We work with a wide range of clients across industries such as aquaculture, manufacturing, construction, agriculture, horticulture, viticulture, forestry, retail, property development, and hospitality to name just a few.

We have a great opportunity for a bright individual to join our Compliance team in Nelson, Richmond or Blenheim. We seek a Senior Accountant with a depth of experience and an understanding of the complexity of finance operations, reporting requirements, and best practice around systems, controls, maintenance and configuration.

Your strong relationship management skills will compliment your ability to interpret business needs and your customer service approach will enable you to provide the appropriate level of business support, financial modelling, and reporting that our clients require.

This is a multifaceted role which will suit a candidate with strong hands-on financial ability, along with commercial nous to work within an environment which is busy, and yet has a youthful energy about it.

Ideally, you will have:
– The ability to communicate and liaise effectively across the organisation, and with clients.
– A solid and proven background in the core accounting roles.
– A commercial understanding around systems, inventory, cost control, budgeting, forecasting, and reporting.
– Excellent system skills with the ability to interpret data quickly and efficiently.
– A mind for numbers and the ability to translate numbers well for nonfinancial stakeholders
– The ability to manage multiple projects and work effectively to deadlines
– A strong customer focus and be known for your ability to build & maintain effective relationships.
– Attention to detail.
– Self-motivated and enjoy working as a team.
– Thrive on quality and success.
– Experience with a number of accounting systems such as CCH iFirm, MYOB, AO, Banklink and Xero is advantageous but not essential as full training will be given to the suitable candidate.

What you need:
– 5+ years of BAS experience in a New Zealand CA environment.
– Excellent verbal and written skills, and the ability to liaise with a range of clients.

This role offers a competitive salary for the right candidate as well as ongoing professional development, and external training courses. We are an ATE and will support your professional development through in-house and external training.

To register your interest and to find out more about this opportunity, please contact Ben Halliday: bhalliday@jacal.co.nz