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Welcome to the Vision Accounting e-newsletter for June 2016. This is a great way for us to share important information you need to know, helpful tips and hints and practical resources to help you in business for 2016.
 

What’s very current?

Budget Perspective

No drama


The 2016 budget has come and gone and the only people really shouting about it are the Opposition and the tobacco companies.
 
Perhaps the Government felt they have already given businesses enough to be excited about with their pre-Budget announcements of the proposed tax simplification and business transformation. Beyond the reform of the provisional tax system and other changes announced to be staged over 2017 and 2018 (see further along), there were no dramatic shifts for business.

New spending: Health and education will see most of the new spending, $2.2b and $1.44b respectively over the next four years. However, total annual new spending will be around $1.6b shored up by whatever additional funds can be found in other cuts or underspends. $258m goes to provide more social housing in the epicentre of the nation’s housing crisis, Auckland, with an additional $100m freeing up Crown land for housing. Science and innovation projects will receive an extra $410.5m over the next four years, with increases to support tertiary education and apprenticeships in science, engineering and agriculture as well as regional R&D initiatives.

Debt reduction: while net debt is forecast to peak round 25.6% of GDP in 2017, the plan is for overall reduction, bringing it within the Treasurer’s target of 20% for 2020. Surpluses are forecast for the next few years. Some of the figures, however, seem to rest on the hoped for dairy price recovery which remains to be seen.

ETS subsidy: From 1 January 2017, the Emissions Trading Scheme subsidy will be removed. This was only ever a temporary measure during the global financial crisis, allowing some businesses to pay one emissions unit for every two tonnes of pollution emitted.

Tax: There is some promise of tax cuts and of lowering tax rates and thresholds, primarily to take some pressure off lower and middle income earners. However, that’s on a wait and see basis for next year’s Budget.

Inland Revenue’s new tax administration system has been allocated $503m in new operating funding and $354m in new capital funding. This is closely aligned with giving effect to what the Government has planned for tax simplification and business transformation. A reshaping of Inland Revenue also seems inevitable. Balancing the additional allocations are cuts to Inland Revenue’s existing budget – $284m over the next four years – those savings to be recycled back into business transformation. The overall aim, however, is to generate more tax revenue with a smoother system ensuring better tax compliance.

The Government announced that they will be making further changes targeted at multinational companies, to make it harder for them to avoid paying their fair share of tax. What those changes are, we don’t yet know but it is probable they hinge on sharing tax compliance information internationally as the Government is now party to the OECD multilateral competent authority agreement. This enables automatic sharing of country-by-country reporting and is part of a larger OECD project to reform the international tax framework. Disclosure requirements for foreign trusts will also come under scrutiny.

What you need to know

Making tax simpler


In April, the Government announced proposals to simplify business tax, with legislation to be passed in August this year. They asked for feedback by end May on the best way to implement these proposals. The earliest of the changes would take effect from April 2017, with more coming online in 2018. At the moment, this would change the tax landscape to look something like this:

From 1 April 2017


Use of money interest
Hundreds of thousands of taxpayers will be better off following the government’s proposed revamp of business tax, as they will be removed from Inland Revenue’s use of money interest regime, says Tax Management NZ chief executive Chris Cunniffe.
 
Taxpayers using the standard uplift method (paying 105% of last year’s tax bill) will no longer be charged interest if they underpay at their first and second provisional tax dates, provided they pay the income tax they owe at their last provisional tax date.

Businesses and individuals who have residual income tax below $60,000 will also not be subjected to interest. It is expected that 67,000 taxpayers will benefit from this.

Penalties
Incremental late payment penalties will be removed from new debt for goods and services tax, income tax and working for families tax credits.

Credit reporting of tax debt
Inland Revenue can disclose significant tax debts to credit reporting agencies, so that other businesses considering extending credit can make more informed commercial decisions.

Information sharing
Inland Revenue can share information with the Registrar of Companies to help enforce company law requirements. This will help weed out non-compliant companies continuing to trade with an unfair commercial advantage over compliant businesses.

Withholding tax and schedular payments
Contractors will be able to elect their own withholding tax rate.
Contractors working for labour-hire firms can be covered by withholding tax.

Contractors and their payers can forge voluntary withholding agreements so that contractors can have tax withheld on a payday basis, reducing the impact of provisional tax.

From 1 April 2018

A new way to calculate and pay provisional tax
The accounting income method (AIM), which will be available to taxpayers with turnover of $5 million or less, will allow those who have IRD-approved accounting software to pay income tax on a two-monthly basis. Up to 110,000 taxpayers will be eligible.
Companies can pay tax as agents for shareholder-employees in respect of their shareholder-employee salary. This will reduce the impact of provisional tax for shareholder-employees.

Taxpayers who are forced to use the estimate method due to volatility or seasonality may find tax pooling a useful option to manage income tax payments, as they will be subjected to IRD interest.

Tax pooling would also provide businesses with cashflow constraints greater flexibility around when and how they pay their provisional tax payments.
 

But what will it mean for me?

The outcome of the consultation phase on tax simplification may still change how or whether some aspects are implemented but it seems certain that the broad outline of the changes will go through.

Best case scenario for small businesses: this should reduce complexity and make it easier to pay tax. You’ll pay tax more frequently based on your business’ actual income. You may end up paying less in tax, penalties, and interest. However paying tax more frequently may require you to keep a closer eye on cashflow to keep money coming in to pay the bills.

Worst case scenario for small businesses: you may end up paying more tax if you don’t stay aware of your tax obligations and ensure the accuracy of the data input into your business software. We can assist you with regular monitoring and checking your systems are accurate and fit for purpose.
 

Sharing news from my clients with my clients

 

Do you need better trained staff but have no budget or time?

It is a sad reality that in these busy days we seem to have less and less time and less budget for important factors such as staff training.

After a number of years of research, talking with organisations and running focus groups two major barriers emerged as to why staff aren’t being trained:

Time and Money
If you fall into this category then there is light at the end of the tunnel – LearningPlanet. LearningPlanet is the brainchild of two highly experienced corporate trainers - Craig McFadyen & Derek Good. Having been in the training and development industry for over 20 years and having built a number of successful corporate training companies they have heard every reason and excuse as to why companies don’t train their staff!

As a result of the Global Financial Crisis when most companies cut back on their training the pair started to research why and discovered the two key barriers of Time and Money. No time to release staff for workshops or off site events and no budget to pay for it.

As a result they immediately put all their various channels of experience together in the areas of training & development, eLearning and video production and designed a training solution that was aimed at removing every barrier a company has for not training their staff.

Three years later that dream has become a success - over 75 organisations across three countries and totalling well over 1300 users a month. LearningPlanet is an affordable (as low as $10 per person per month) online, easily accessible training product for the key business areas of Customer Service, Sales and Leadership. To address the time issue the training videos range from 1 minute techniques to 10 minute video modules complete with workbooks and testing.

“There are some key factors that we have made sure we did” says McFadyen “Such as running focus groups to find all the reasons people didn’t train their staff or didn’t like having an online product and then we created the opposite”.
Some of the key factors that make LearningPlanet such a growing success are:
  • Price – monthly price per person can go as low as $10 per person
  • Unlimited access – use the training videos and content as much as need to
  • No contracts – month by month so you not tied into annual contracts
  • No minimum or maximum numbers for sign up
  • No hidden costs – what you pay is what you pay
  • Fully responsive so training videos can be watched on any device
  • New content every month – New training content is added every month
  • No cost to replace staff members if they leave
  • Full resource library of free resources already created for you such as posters, certificate templates and ways to maximises LearningPlanet in your business

Here is just one example of the success of LearningPlanet:


Team Leader:
"Learning Planet was able to provide me with the tool to assist my staff that had trouble with angry customers. After he did a couple modules, the number of escalations dropped from 3 a week, to 1 a month to none. Very impressive."
 
For more information and to get your FREE trial today visit www.learningplanet.co.nz or contact craig@learningplanet.me

Ask us a question

Have you got an accounting question that leaves you worried or confused?


We love a challenge – see if we can come up with the answer that gives you the ‘ah ha! moment'.

Contact Virginia at Vision Accounting NOW on 09 415 0319

Remember

We offer the service of a one on one meeting to review your financials and help set you up for a strong 2017.
This one meeting can make a huge difference to the cashflow and profit of your business.

If you would like to schedule a business review meeting, or have a no-obligation chat – we’re happy to help.     

Thanks, and have a great month,
Virginia and the team at Vision Accounting

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Contact Us

Tel: (09) 415 0319
Email: admin@visionaccounting.co.nz
Web: www.visionaccounting.co.nz
Physical Address:
106A Bush Road, Albany, Auckland
(When posting documents please use the PO Box address, as there is no mail delivery to our street address. Thank you.)
Postal Address:
PO Box 303 157
North Harbour
Auckland 0751