News

Employee Housing

Wed, 03 Jul 2024 09:35:26 GMT

It is always worth reviewing your employee accommodation allowances and preparing for the next contract negotiations.

Are you charging your employees the right amount for their housing?

You may have already locked into your employee contracts for the season, but it is worth reviewing your employee accommodation allowances and preparing for the next contract negotiations.

Traditionally, an accommodation allowance for an employee might have been a nominal $150 or $200 per week to highlight to them the value of living on-farm. An example of this would be a job advert offering a “$60,000 salary plus housing on farm”.

More commonly now though, terminology used refers to a total salary package , where accommodation and wage are grouped and marketed as one amount. As an employer, you might have settled on a value for the accommodation based on what you might be prepared to pay but not thought further about the market value or Inland Revenue guidelines. At the same time, employees have used it as a bargaining tool when negotiating their pay package suggesting that their last job charged $X less/week, leaving more funds of their salary to be paid out.

The accommodation benefit does need to be market tested and the IRD has recommendations on how they encourage calculation of an appropriate weekly rent.

Where accommodation is provided to an employee, it is treated as a taxable benefit allowance and as income to that employee. Its value is determined by taking the market rental value of the accommodation less any adjustments made for:

o Employee contributions, such as rent paid

o Business/work use of the premises, such as a dedicated office or workshop for repairing farm equipment

o Where there is shared accommodation with other employees.

Market rental value can be determined by researching similar rental properties available in the area, considering factors such as location, size, condition and access to schooling.

In rural situations, where there is minimal market information available for similar housing, it would be appropriate to discount the market rental value where local town rental comparisons are used, and reasoning is provided.

It is also important to recognise that employer-provided accommodation isn’t covered under the Residential Tenancy Agreement but rather a Service Tenancy Agreement, and an employee’s rights differ also. Most plainly put, when the employment relationship ends, so does the tenancy.

It would be appropriate to discount the market rental value acknowledging the reduced rights of the tenant/employee.

The IRD places emphasis on showing your workings as to how you derive the market rental value, and it is encouraged you review this value at least every three years.

The average residential home rents for 25% more in 2024 than it did in 2020 which is worth considering if you are basing your accommodation allowance on what you think your staff housing would rent out for.

Take the guess work out of calculating your staff accommodation by booking an appointment with a member of our team at Rural Business Accountants. More information is also available online at DairyNZ or the MBIE website for Tenancy for further information.

Christmas Hours

Wed, 08 Dec 2021 02:59:21 GMT

Office hours over the Holiday Season

Our office will be closed from 5pm Thursday 23rd December 2021 and re-opens 8am Monday 10th January 2022.

Aaron and the Team wishes everyone a very Happy Holiday season and we look forward to a productive and prosperous 2022.

IRD Update on Covid Support

Sun, 22 Aug 2021 22:00:56 GMT

Please follow the link for IRD update regarding Covid support - https://www.ird.govt.nz/updates/news-folder/resurgence-support-payment

IRD To No Longer Accept Cheques

Sun, 23 Feb 2020 21:47:55 GMT

As the end of another financial year is quickly approaching we want to remind everyone that Inland Revenue and Accident Compensation Corporation will no longer be accepting cheques.

1 March 2020 will be the last date you can pay be cheque. There are however other ways to pay:

Inland Revenue - Options for payment:

• Electronic via internet banking or direct debit in MyIR. Paying this way minimises delays and includes a formal notification of the date and time the payment was made to Inland Revenue.

• Customers can make payment by debit/credit card over the phone, through the unauthenticated payment page on the Inland Revenue website, and through myIR.

• Taxpayers can also set up direct debits in myIR.

• Cash or eftpos are still payment options but only at Westpac branches. They’re not accepted at Inland Revenue offices.

Accident Compensation Corporation – Options for payment:

• Electronic payment via internet banking.

• Direct debit payments and monthly instalments can be set up via MyACC for Business.

• Payment by debit/credit card over the phone, through the unauthenticated payment page on the ACC website, and through MyACC for Business.

• Cash or Eftpos are still payment options but only at Westpac branches. They’re not accepted at ACC offices.

If you are struggling with payments or would like any advice going forward, please contact us and we will be happy to advise the best way forward for you.

Entertainment Expenses

Mon, 17 Jun 2019 02:54:51 GMT

An entertainment expense where the benefits are enjoyed or received by employees may be subject to fringe benefit tax (FBT).

There are 4 major types of business entertainment expenses:

100% deductible, not liable for FBT
50% deductible, not liable for FBT
100% deductible, liable for FBT
50% deductible, liable for FBT.

These are summarised briefly below. Read our Entertainment expenses guide (IR268) to find out more about entertainment expenses.

100% deductible, not liable for FBT

Entertainment expenses will be 100% deductible and not liable for FBT if they’re completely business related. This includes:

meals an employee buys while travelling on business (unless it is with an existing or potential business contact, or the meal is a celebration, reception or similar event – in these situations it would only be 50% deductible)
food and drink provided at a conference, education course or similar event that lasts at least 4 hours (unless the conference is mainly for entertainment – in which case it would only be 50% deductible)
light meals provided in a dining room for senior managers and consumed as part of their duties (such as sandwiches provided during a board meeting)
entertainment that promotes your business (as long as the public has the same access to this as your employees, business contacts or people associated with the business – if the public has less access it would only be 50% deductible)
entertainment that is only a secondary part of either a function that is open to the public, or any trade display (for example, serving coffee at your business’s trade display)
freebies promoting your business (such as branded stationery, but excluding any given to employees or people associated with you – these are only 50% deductible)
entertainment provided to someone who’s going to review it for publication (such as giving a free meal to food critics)
entertainment provided at a discount, if your business regularly provides entertainment at market prices (for example, offering half-price meals at your restaurant)
entertainment enjoyed outside of New Zealand.

50% deductible, not liable for FBT

Entertainment expenses will be 50% deductible and not liable for FBT if they are not completely business related. This includes entertainment that is away from work or out of usual working hours, so it has a 'significant private element'. The expense will be 50% deductible even if you think the private element was more or less than 50%.

Examples of this include:

entertainment at sports or cultural events (for example, a corporate box)
business use of a holiday home
hiring a boat, and providing food and drink to people on it
food and drink you provide for social events (such as parties) or in an area set aside for senior employees (though there is an exception for 'light meals' consumed as part of the manager’s duties, which are 100% deductible)
gifts of food and drink that benefit your business and are enjoyed privately by the person who receives them (for example, if you give a bottle of wine to each customer who buys a car off you)
'supporting expenses' for other entertainment that’s 50% deductible, such as hire of wine glasses and wait staff for a party

100% deductible, liable for FBT

Entertainment expenses will be 100% deductible and liable for FBT if they are received by employees because of the work they do. Examples of this include rewards for good performance, such as a restaurant gift voucher or weekend away.

50% deductible, liable for FBT

Entertainment expenses will be 50% deductible and liable for FBT if the benefit is not provided while the employee is working, or because of the work they do. This includes situations that would usually be 50% deductible and not liable for FBT (see above), except that in this situation the employee:

can choose when and where they receive the benefit, or
will receive the benefit outside of New Zealand.

To download the Ir268 - Entertainment expenses form click here

Please note that this information has been extracted from the IRD website.

ACC Coverplus Extra

reception@falloons.co.nz (Rural Business Accountants) — Tue, 04 Jun 2019 21:28:07 GMT

What is it? The Benefits. Is it right for you?

What Is It?

ACC CoverPlus

When you are self-employed you are invoiced each year by ACC according to your previous years income and your industry. This means your ACC invoice can vary from year to year depending on your income or if you change industries.

ACC CoverPlus Extra

With ACC Cover Plus Extra you agree with ACC on a level of cover for lost earnings, to suit your personal circumstances. you will receive 100% of the amount you negotiate and because you have agreed cover you will receive compensation immediately.

ACC Cover Plus Extra puts you back in control of your premiums, puts you in control of what you get paid at claim time and gives you peace of mind regarding what you will get paid.

ACC is an expensive type of cover when compared with private insurance. There are some gaps with regards to illness and degeneration, and moving onto ACC Cover Plus Extra is the first step to make things easier.

The Benefits

With ACC CoverPlus Extra there are no nasty surprises; you can tailor the level of cover for lost earnings to suit your own personal circumstances, subject to ACC underwriting. If you make a claim, there is no need to prove your earnings, as the weekly compensation has already been agreed. This means that you may receive your weekly compensation quicker. You will receive 100% of the amount of the agreed lost earnings compensation until you are fit for full-time work.

Is it right for you?

ACC CoverPlus Extra may meet your needs if:

your income fluctuates
your personal income is not a true indication of your actual earnings
your business will still generate income while you're injured
first year of self employment
you want a guaranteed level of lost earnings compensation.

Who Can Apply?

Self Employed people who work in their own business
Self Employed people who work in a partnership
Sole Traders
Shareholder Employees

If you would like to discuss your options please feel free to contact our office and speak to Aaron on:

Phone: 03 308 9194
Email: reception@falloons.co.nz

Monthly Newsletters

Mon, 20 May 2019 21:52:43 GMT

2019 saw the beginning of Falloons' monthly Newsletter Accelerate.
Each month clients will be emailed the newsletter which is full of key dates, interesting features and helpful tips.
If you are a client and have not received a Newsletter but would like to please contact Emma at reception@falloons.co.nz
We will also be posting links to the Newsletter on our website so look out.

IRD Scam Emails

Mon, 11 Mar 2019 04:16:53 GMT

Please be aware that scam IRD emails are circulating; we would hate for you to get caught out.

If you are ever unsure of the email you have received you can forward us the email at reception@rbal.co.nz and we will let you know if it is real.

Alternatively follow these steps:

1. Create new email
2. Insert the suspicious email as an attachment
3. Send the new email to IRD at phishing@ird.govt.nz

Unfortunately a lot of scam emails are realistic and only minute details give them away.

If you would like to visit the IRD website for more information on scams follow this link: https://www.ird.govt.nz/identity-security/scam/scam-alert.html

Minimum Wage to increase to $20 by 2021

Mon, 14 Jan 2019 02:58:22 GMT

How will this affect your business?

This pay increase in April 2019 will be causing a bit of a stir among employees and employers alike.

Employees and trainees will be celebrating the rise of minimum wage rise of $1.20 to $17.70 an hour, increasing full-time workers' weekly pay by $48 before tax. This leads to another raise taking it to $18.90 on 1 April 2020 and again to $20 on 1 April 2021, in line with the Labour/New Zealand First Coalition Agreement.

Small businesses, however, may struggle to find the extra income and may need access to funding to ensure they could cover the cost increase, if they are not able to raise their prices.

The higher minimum wage may also make it harder for some workers to enter the workforce due to stretched budgets.

If you have any queries and would like some advice from one of our wage experts on how this might affect you as an employer or as an employee please don't hesitate to contact us either at wages@falloons.co.nz or on 03 308 9194.

Donations

Thu, 20 Dec 2018 03:24:11 GMT

Livestock

Some charities seek donations of livestock, indicating that in return they will provide a receipt for 'tax purposes'. However, donations of livestock create serious taxation difficulties for any farmer who tries to assist a charity this way.

- The charitable donations rebate only applies to gifts of money . Refer to the Income Tax Act 1994 here .

- It is not possible to claim a rebate for the donations of time or goods, only money.

- The donation of an animal is a taxable supply for GST purposes. the taxpayer must include the open market value (GST inclusive) of the donated animal in 'sales' in the relevant GST return and will therefore have to pay the GST output tax on that animal. Accordingly, the taxpayer must include the value of the donated animal in livestock sales for the year and account for income tax in the normal way.

To conclude, donating livestock is a tax disaster. It would be better to sell the animal and account for income tax and GST in the normal, then consider giving a cash donation to the charitable

GST Registration

Fri, 14 Dec 2018 01:43:37 GMT

A Brief Example

If you operate more than one taxable activity and choose, or is required, to register for GST, all taxable activities have to be taken into account, however small.

You could have one of the taxable activities in your personal name, and the other in a company's; in this case the GST registration threshold needs to be applied for separately - for each entity.

An example of this might be a couple who run an Air B&B and also run a delivery business, you can't keep the Air B&B separate. however if the couple owned the Air B&B as a partnership and one of them owned the rural delivery business alone they would only have to register the latter.

If you have any queries about GST please do not hesitate to get in touch here and a member of our team will be happy to give you their expert advice.

Don't Let the IRD Nail You

Mon, 26 Nov 2018 22:38:10 GMT

Published by The Small Business Institute Limited

Market rental value of employer – provided accommodation on school grounds

Inland Revenue has produced CS 18/01 . It is a supplement to CS 16/02 . It is to be used for determining market rental value of employee provided accommodation in boarding schools. CS 16/02 will apply to accommodation provided off the school grounds. However, where the accommodation is provided on the school grounds there could be restrictions which would generally not occur in a residential tenancy. On page 2 you will find a table setting out the accommodation type and the percentage reduction of the market rental value.
The paper goes on to provide explanations and examples.

Transferring Scheduled Payments for companies to shareholders

Inland Revenue has produced a statement in which it sets out the rules and method to be used. Click here to see the statement. As a rough guide, you can transfer as much as you like to the shareholder employee provided you leave sufficient tax for the company’s liability, regardless of how this arose. Reduce the amount of tax credits in box 12A by the sum being transferred and send a note to Inland Revenue showing the allocation of tax credits to the company’s shareholder employees.

Donations

Inland Revenue has become concerned about how you define a donee organisation and produced IS 18/05 and a Fact sheet. A charity is required to apply its funds wholly or mainly to charitable, benevolent, philanthropic or cultural purposes. Some charities have applied just over 50% of their funds in this way. The Commissioner has, for administrative convenience, usually assented to this practice. Inland Revenue has now decided this practice is not entirely acceptable and has produced Interpretation Statement IS 18/05. There are going to be cases where a distribution of a little over 50% of funds is reasonable. There are also going to be many cases where it is not. Inland Revenue has now decided to create a safe harbour. If 75% of funds are distributed for charitable purposes, Inland Revenue is likely to accept this. Anything less may be disputed. The interpretation statement also goes into an explanation of what “Funds” means and what “Applied” means. Generally, this is not going to be of much concern to most of us, unless we have a client that is a charity. However, it could have unfortunate consequences for our clients as donors. Some of them are very generous. Before donating large sums to a charity, clients should be warned to make sure the charity is complying by clicking on this link and downloading the complete donee list. If Inland Revenue were to deem the organisation not to be a charity, there would be no donation rebate.

Life Style Blocks and Bright Line Test

Inland Revenue has produced PUB00314 for comment. It explains how to treat lifestyle blocks when considering the bright line test. The main home exclusion will apply when more than 50% of the area of the land has been used for the seller’s main home and the land has been used in that manner for more than 50% of the time the seller owned it. If it can be shown the lifestyle block is farmland, the sale will not be subject to the bright line test. Page 3 contains a flowchart to assist you.

Schedular payment rules applying to nonresident directors’ fees

PUB 00302 is an exposure draft which sets out when fees paid to non-resident directors are to be subject to schedular payments. The steps to deciding whether schedular payments apply are:
 Identify who you contracted with
 Determine the source of directors’ fees
You will find some useful flowcharts in this document and a number of worked examples.

Zero Rating of Services Related to Land

Inland Revenue has produced PUB00299 for comment. It results from a change to the GST Act effective from 1 April 2017. The paper sets out the Commissioner’s interpretation of when services related to land in New Zealand and supplied to a non-resident can be zero rated. There is a corresponding rule for services supplied in relation to land outside New Zealand.

Attribution Rule

The purpose of IS 18/03 , which has just been finalised, is to provide guidance on the application of each of the threshold tests and exemptions to assist in determining whether the income attribution rule applies. On page 4 you will find a flowchart to help you to determine if the
attribution rule applies and a second flowchart on page 14 to help you determine what is a substantial business asset.
The statement walks you through each step starting with “Identify the parties”. The paper includes 18 worked examples. Even if the attribution rules do not apply, if the principal is providing personal services they need to be rewarded appropriately for those services in accordance with the principles established in Penny and Hooper

Options for relief from tax debt

Standard practice statement SPS 18/04 describes how Inland Revenue will exercise its statutory discretion when it comes to writing off bad debts. Inland Revenue can be inconsistent with its application of the rules so you may find this useful reference material

IRD Moves Away From Cheques and Towards Electronic Payments

Sun, 04 Nov 2018 22:09:27 GMT

Electronic payments the way of the future

The days of being able to pay your tax bill with a post-dated cheque are coming to an end as Inland Revenue moves with its customers, away from cheques towards electronic payments.

Inland Revenue spokesperson Meade Perrin says the plan is to stop accepting post-dated cheques in February next year.

“Payments New Zealand figures show 67 out of every 68 payments in New Zealand are electronic and there’s a 20% decline year on year in the use of cheques generally. So we’re encouraging our customers to go with the trend and move to the simpler, easier and more certain electronic payment methods,” Mr Perrin says.

“Customers send Inland Revenue around half a million cheques each year. That’s 4.5% of the total payments we receive. Around 17% - or more than 85,000 cheques - are post-dated.

“Instead of post-dating a cheque, and mailing it in, customers can use internet banking to set the date a payment comes out their bank account. That has the same effect as a post-dated cheque – the payment’s made on time, when the customers want it to be made and won’t be forgotten.

“There will be some impact on customers who’re used to post-dating cheques but we’re confident that can be worked through given most banks have a simple and convenient system for electronic payments.

“Compared with electronic payments, cheques are expensive to process and the technology used to process them, both by IR and banks, is approaching the end of its working life.

“Technology is more and more becoming part of our everyday lives and there’s already been a significant shift to using digital methods for paying tax and receiving refunds, with 95.5% of all payments received by IR already digital.

“We want to keep that momentum building and ease taxpayers towards digitising all their payments,” Meade Perrin says.

Options for payment:

• Electronic via internet banking or direct debit in MyIR. Paying this way minimises delays and includes a formal notification of the date and time the payment was made to Inland Revenue.

• Customers can make payment by debit/credit card over the phone, through the unauthenticated payment page the Inland Revenue website, and through myIR.

• Taxpayers can also set up direct debits in myIR.

Cash or eftpos are still payment options but only at Westpac branches. They’re not accepted at Inland Revenue offices.

A & P Show & Our Winners!

Mon, 29 Oct 2018 21:47:49 GMT

What a fantastic weekend!

What a fantastic weekend at the 141st Ashburton A & P Show!
We are so pleased that so many of our clients came to say hello and entered our competition to win our hamper worth $200!
We had so much fun playing our garden games and drinking beers in the sun

See you same time next year!

And a massive congratulations to our competition winners Donald Williamson, Rachel Moore and Matt Banks! We hope you enjoy your prizes!

Beware of IRD Scams

Tue, 23 Oct 2018 00:00:00 GMT

Always check to make sure calls, texts or emails from the IRD are real. Tax scams are on the rise

Got a call or email from Inland Revenue? Make sure it’s real.

You get a text message or an email from Inland Revenue (IRD) claiming you’re entitled to an extra refund and all you need to do is provide your banking details. Watch out – this wonderful-if-true situation is exactly what a tax scam looks like.

Another variation is that they call you to say that you owe IR money and that you need to pay right away, or else they will report you to the police.

In any case if you do receive a call, letter, email or text saying you owe money to IRD, contact IRD in the first instance.

Identity theft is using someone's private information to pretend to be that person and gain access to resources or benefits. The most common methods that fraudsters use to collect this information are email and phone scams.

By learning how scams work and how to protect your personal information , you can reduce your chances of becoming a victim of identity theft.