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Welcome to the Vision Accounting e-newsletter for September 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 the March 2017 financial year end.

What’s very important?

I was sent a very apt newsletter by John Camilleri, of Excellence in People Management who is an employment specialist, about the 90-day trial period.
Below is an excerpt of it, but please follow the link if you like to read more for those of you who are employers, as it is an extremely important matter to get right. If in doubt, please contact John on 021 074 4610 for assistance.

90-day trial periods – the devil’s in the detail!

The 90-day trial period has been part of NZ's employment landscape for a few years already and it has been used by countless employers to end the employment of new recruits who would not have worked out for one reason or another. Thankfully there are some who have done this successfully and without any repercussions. However, there are many others who have found out the hard way that dismissing someone is never simple, even when they thought they were meant to be protected by the Law itself!

The 90-day Trial Period provision states, in sections 67A and 67B of the Employment Relations Act, that if an employer dismisses an employee within the first 90 days of employment, the employee cannot raise a personal grievance for unfair dismissal, although they can still raise a grievance on other grounds such as discrimination or unfair disadvantage. In a nutshell this means that the employer would not need to go through the same process when dismissing someone on a trial period as they would for anyone else. The employer could essentially dismiss the employee in a manner and for reasons that would not be seen as 'fair' for any other employee. 

Some of the Members of the Employment Relations Authority have made it very clear that they do not like this provision and are looking at every minute detail to be able to find in favour of an employee who challenges a 90-day trial dismissal. They see it as a means for the employer to by-pass good faith and natural justice and have expressly said that if an employer wishes to make use of their legislated right to deprive an employee of the right to take a Personal Grievance for unfair dismissal, then that employer would be well advised to ensure that they follow that same Legislation to the letter! The devil really is in the detail and new details seem to come up every time a 90-day trial case is brought in front of the Authority.  

Click here for some important tips to be aware of when using the 90-day trial period.
We all know that recruiting and inducting a new employee and then training them to perform to an acceptable level is very expensive and time consuming. As an employer you should always aim to get this right and make good use of those initial weeks of employment to build trust and faith in the new employment relationship and to clearly convey your likes and dis-likes and your targets and expectations to your new team member.

Just like a using a parachute, the 90-day trial period should only be necessary to use as a last resort - always be certain to have one but also make really sure that all your knots are tied properly and your lines are strong enough if you really wish to trust it

What you need to know

Do you pay yourself from your business?

Do you take regular cash drawings from your business profits to meet personal living costs? You need to be aware of how your personal drawings sit with your tax position.

Sole traders

Sole traders complete an IR3 tax return at the end of the year. This tax return Includes all business income and expenses. However, drawings are not a deductible business expense. It’s much easier to track this if the cash drawings are taken regularly such as weekly, fortnightly or monthly.
Record your drawings for personal use in a cash book or with accounting software. Make sure you do your forward planning so there is enough money in the business to cover the bills after you take your drawings, and always put funds aside for your personal tax out of those drawings taken.


Partnerships are largely in the same position as sole traders: you can take regular drawings from the business profits. These are not deductible so are not included as a deductible expense in the end-of-year partnership return. The split of profits to the partners at the end of the year does not take into account any drawings taken from the profits.

There is the option for a partner to be paid a salary or wage if there is a written contract of service and this might suit you and the business better. PAYE would be deducted from your salary or wage like a regular employee. This salary or wage is then claimed as a deductible expense in the partnership’s end-of-year return.


If your business entity is a company, you have more options. Shareholder-employees can:
  • draw money from the company periodically throughout the year. These drawings are recorded in the shareholder current account as a loan to the shareholder. At the end of the tax year, the company calculates a salary amount from the company profits and credits the current account with this amount. You must pay income tax on this, declared on your IR3 Individual income tax return. The salary is a deductible expense to the company, not the drawings taken. The shareholder should set aside funds for the tax to pay on this salary.
  • be paid a regular salary or wage, whether monthly, fortnightly or weekly. PAYE is deducted as for a regular employee provided you have an individual employment contract with the company. The company can claim this salary as a deductible expense in its end-of-year return.
  • receive dividends from the company profits, after the tax on those profits has been paid
The company can pay directors and management fees from its profits. These may be included as deductible expenses in the company’s end-of-year tax return.

What has recently been proposed at the IRD

Tax changes for LTCs: watch this space

Proposals to change the rules governing look-through companies (LTCs) and closely held companies are currently going through parliamentary hearings and consultations. If passed, the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Bill is expected to take start taking effect from the 2017 tax year.

The proposed changes are part of the moves to simplify tax, however, there are some proposals which have a significant favourable effect. One such proposal is the removal of the loss limitation deduction in most cases (that is, where LTC losses are effectively limited to the amount the owner has at risk economically).

Another proposal affects situations where companies are liquidated and distributions of capital gains are made to shareholders. Currently, distributions of tainted capital gains (arising through a transaction with an associated party) involved in the transaction giving rise to the capital gain, are taxable. The new proposal is to exclude genuine capital gains from this by only taxing those distributed capital gains where the purchaser is a company and the shareholders of the company disposing of the asset retain an interest in the asset of at least 85% after the disposal.

If you would like more detail on how these proposals may affect you, please contact us.

Sharing news from my clients -
with my clients


Advertising made easy

If you are advertising your business or service but find the fragmentation of media difficult to grasp, the people to talk to are Brian or Susan at Interact Advertising.
They specialize in media strategy, planning and negotiating - all at no cost to you. They can also create your advertisements. Brian and Susan have years of experience in advertising and can work with you or your team to find
the right solution be it TV, radio, magazine, newspaper, outdoor or online.
A no obligation discussion will quickly demonstrate how they can help.
Call today on LL: 09 488 0558  Mob:021 618 458 or email  

MailChimp E-Newsletters

And as it is Outbox’s 10th anniversary this month, I would also like to share this news with my clients. Lindsey Carroll from Outbox is the brains behind the seamless operation of our monthly newsletter.

Outbox's Top 10 Reasons to use MailChimp
for your e-newsletters

Any credible marketing communications expert or business coach will tell you how important it is to maintain regular contact with your database. Customers, associates, suppliers, prospects – they should all receive updates about you and your industry.
Outbox helps many clients achieve this through periodic e-newsletters. We always recommend MailChimp for this purpose, and here (in no particular order) are our Top 10 reasons for doing so.
  1. It's easy to see who has opened your e-mail and how many times. This means you can quickly see who's engaging with you the most and prioritise them for follow up through your sales pipeline.
  2. It'll help you write more interesting content. By checking the "click rate" on articles you can see what's appealing to your readers – and what's not.
  3. It can help you to track your sales. If you link your Shopify, Magneto, Big Commerce or Woo Commerce to MailChimp you can use advanced e-commerce responders to monitor your customers' progress. If they abandon their shopping cart, you can send them an autoresponder to help close the deal.

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


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
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

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Vision Accounting Solutions Ltd · PO Box 303 157 · North Harbour · Auckland, . 0751 · New Zealand

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