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Vision Accounting

Welcome to the Christmas Vision Accounting e-newsletter for 2014. December is here already and this year seems to have flown by. What a great busy year it’s been for us - and we hope it’s been a successful and prosperous year for all of you.

We would also like to say ‘Thank You’ to all our valued clients for your business this year, and we look forward to continuing to be of service to you in 2015.

For our last newsletter of the year to you – we would like to provide some valuable information to help you through the Christmas and January period. This can be a hard time to manage cashflow, so read on for some great strategies to help you through…

What's Important?

A way to solve Christmas cashflow issues

The period after Christmas can be tough for many small and medium sized businesses.
According to more than half the respondents to a poll conducted by the Employers and Manufacturers Association, January to March is when they tend to experience cashflow constraints.

cashflowIt’s hardly surprising, really. The period after Christmas is traditionally slow business-wise. Consumers are either enjoying their holidays or getting their finances in order following their festive season spending. Earnings will be down if businesses shut during the break. Others may also feel the pinch if they paid staff bonuses prior to the holiday season.

It is, therefore, understandable how having to make a provisional tax payment on 15 January might be a bit problematic for some.

Still, it does not change the fact that Inland Revenue (IRD) expects this payment to be made on time and will charge taxpayers late payment penalties of up to 20 per cent per annum and use of money interest (UOMI) of 8.4 per cent if the tax is not received on the due date.

However, those who wish to free up cash at a time when they need it most have an option.

Tax pooling is IRD approved and can be used to defer provisional tax payments to a time that suits them - without incurring late payment penalties and UOMI.

This method is cheaper than using many other traditional forms of finance - rates at Tax Management NZ (TMNZ) start from below six per cent - and does not affect existing lines of credit.

No credit check or security is required.

The full amount of finance does not need to be paid back if less tax is owed than first thought. The finance arrangement can be easily extended as well.

How it works

Say you wish to defer a $5,000 provisional tax payment for six months.

You would pay TMNZ a one-off, tax-deductible interest amount and TMNZ would arrange the $5,000 provisional tax payment on your behalf. The interest amount is based on the amount of tax financed and the period of maturity, so in this instance would be $145.

The provisional tax payment is held in an IRD account administered by the Guardian Trust. Guardian Trust instructs the IRD to transfer the tax into your IRD account when you repay the $5,000 principal in six months’ time.

IRD treats the $5,000 provisional tax as being paid on time once the transfer is processed.
Visit or phone us if you would like to know more.     

What You Need to Know

Don’t forget – IRD Cheque Policy

IRD have changed their policy on when payments will be considered to have been received on time. Payments made by post are now treated as made on the day Inland Revenue receives them; the date of posting is irrelevant. It's therefore up to you to make sure you post your cheques in good time to reach IRD on time. There's no guarantee that a payment posted on the 18th will reach Inland Revenue by the 20th.

If you’re sending a post-dated cheque, Inland Revenue will not bank it until the date specified. So even though it’s physically received before the due date, it will still be treated as received late if the specified date is after the due date. You can also make payments in person, either at an Inland Revenue office or at a Westpac branch (note Westpac no longer accept cheques for tax payments) as long as you do so before close of business on the due date. Now might be a good time to think about making your payments online, if you don’t already.

This Month’s Top Tips

Party party party

Are you planning a Christmas function for special clients and/or suppliers and business contacts? Be aware that this will come under the entertainment regime for purposes of tax deductibility. Any expenditure on food and drink that your business provides off your business premises will be 50% deductible. This extends to any incidental expenditure on things like hireage of crockery, glassware or utensils, waiting staff, and music or other entertainment provided for the function you're planning.

If you're thinking of a more public event to promote the business during the festive season, expenditure on food, drink and all the necessary incidentals could be fully deductible.  However, be aware that the event can't cater for your VIPs alone. It must be open to the public on the same footing as clients or business contacts. Its primary purpose must be as a marketing event for the business.

If you're planning an event and you're not sure which tax regime it will fall under, please contact us for information.

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
Tel: (09) 415 0319
Postal Address:
PO Box 303 157
North Harbour
Auckland 0751

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.)

'Tis the season to be… on call

Do you have situations where some employees will be on call during a public holiday?  If so, they are usually entitled to a contractual on call payment as well as at least time and a half rates if they are called out. Whether or not they are also entitled to an alternative holiday depends on whether the public holiday falls on what would normally be a working day: If the public holiday does NOT fall on a day the employee would normally work:
  • If the employee is on call and is called out he or she is entitled to at least time and a half for the actual hours worked (your employment agreement may provide for more), plus any contractual on call payment.
  • If the employee is on call and not called out he or she is entitled to any contractual on call payment.
So be aware of your obligations as an employer before the holiday period, and ensure to inform your staff what they are required to work, and entitled to…

Vision Accounting Christmas and January Closure

Our last working day will be Tuesday 23rd December, returning to work on Monday 12th January 2015.

Safe and Happy Holidays

On behalf of all the Vision Accounting Team – we would like to wish you and your families a very happy, safe and fun filled Christmas and New Year.  Enjoy the holiday time with family and friends, and we look forward to working with you in 2015. 
Remember we are in the office until the 23rd December, so here if you need us – just give us a call...
Take care and Merry Christmas everyone...
All the best,
Virginia and the team at Vision Accounting

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