COVID-19 Payment review
The Inland Revenue have nearly completed the applications for the COVID-19 Support Payment and are now reviewing the accounts of a sample of their customers who received one or more of the following:
The review is to make sure customers met the relevant eligibility criteria and have used the payments in line with the terms and conditions. If the IRD find you were ineligible or have not used the payments in line with the terms and conditions, they may act to recover these.
To check the eligibility criteria visit the website by clicking the link.
The message here is to ensure to send your expenses reconciliation to your accountant.
Hidden Economy real estate campaign
Inland Revenue started the campaign because a number of real estate agents appeared to be:
The message here is do not claim personal expenses and common errors that real estate agents make.
If you have questions about any of these issues please do not hesitate to get in touch with us here at Apex Accountancy.
Managing Your Cash Flow
They often say cash flow is king and well there quite right. It’s nice to have profit but cash flow is what will make or break your business. With the Pandemic causing chaos in the business world managing your cash flow is now more important than ever.
First off, cashflow often gets confused for profit, yet it’s a little bit different.
Profit – cash left over once your expenses from your sales revenue has been taken out.
Cashflow – Cash that flows in and out of your business and not into your pocket. Cash flow is used to cover your expenses, both current and future. It’s what grows your business.
What’s the secret to managing your cashflow?
Books – Make sure your records are up to date. Record all your cash flow information regularly. This is a big must as you need to know if you have more expenses than income or if you have enough cashflow happening to buy supplies. Setting up your bookkeeping and taking care of it regularly means you can check your not only your cash flow but your complete financial state at any time.
Cash flow forecast – Sounds intimidating I know. Simply put this an estimation of the amount of money you expect to flow in and out of your business. By forecasting your cash flow you have the chance to identify any potential or current issues before they turn into major ones.
What a forecast can tell you:
Don’t Forget the Tax Man – Tax sneaks up on you if you are not prepared. Make sure you work this into your forecast.
Customers - Useful to have for every business. Invoices, a necessary customer payment prompt. Having a strategy will help make creating and sending invoices easier. Set up a system that works for you. How? Here are a few pointers:
Keep it separate – Don’t mix your personal and business finances together. Tempting I know. This will make it much harder to work out what your cash flow is. Also gives you a false cash flow forecast. Set up your pay properly so you can pay yourself, any excess cash can then be identified easier and used to grow your business.
Set up a cash reserve - Is there a certain time of year where you struggle to pay bills? Save for that rainy day. Start building up a cash reserve now, so you're prepared. Yes, it may mean cutting back a bit for now on what you may pay yourself, but it will be worth it to have that cash reserve.
Bonus too, if any unexpected events arise, for example COVID, you will have a little bit of cash to help you out. Plus watching the cash reserve grow will help build your confidence and strengthen finances.
Need an extra hand?
Business stuff can be complex, so if in doubt ask us for help that’s why we’re here.
Employers and employees need to work together to protect New Zealand and keep each other safe during the global COVID-19 pandemic. This means that normal obligations to keep in regular contact and to act in good faith are more important than ever.
Regular employment law still applies to all employment relationships – regardless of the circumstances that we find ourselves in. This includes:
When COVID-19 traffic light settings change, employers and employees should first discuss whether the employee can work normally, how much work is available, and how to work safely at home or at their usual place of work.
If the employee cannot work normally (e.g. their normal number of hours), the employer and employee should discuss what options are available. This page outlines some of those options.
Employee entitlements to leave and pay
It can be difficult to navigate a complex and rapidly changing situation such as with COVID-19. One of the key challenges is working out employee entitlements to leave when the worker cannot go to the workplace or work from home.
If a worker is sick with COVID-19, or required to self-isolate under Ministry of Health guidelines for COVID-19, the first consideration for an employer should be to look after people, contain COVID-19 and protect public health.
Employers should not require or knowingly allow workers to come to a workplace when they are sick with COVID-19 or required to self-isolate (as a suspected case, a close contact, or on return from overseas) under public health guidelines for COVID-19. If they do, they are likely to be in breach of their duties under the Health and Safety at Work Act.
The following table provides guidance to employers and employees about these entitlements.
In all options in this table, the employer and employee should seek first to reach agreement in good faith on what approach will be taken.
* If the employer is receiving a wage subsidy or Leave Support Scheme payment, all named employees must receive a minimum payment depending on their circumstances. For employment advice , talk to your employment lawyer.
There are many options set out in this table and the implications of those options may vary depending on people’s individual circumstances. Parties are strongly encouraged to seek advice to ensure that the options chosen are the best options in the circumstances available.
Contractors and self-employed people
Contractor arrangements are not covered by this guidance. Businesses and contractors can agree to any payment arrangements they wish to.
This article has been extracted from the Employment Law website. For more information please click here.
Xmas time! Time to dust off that Xmas Tree and deck the halls for that end of year Xmas work party.
Stock up on those employer Xmas gift hampers!!
Woah, hold up, before you get too excited with the festive season, do you know what entertainment expenses and Xmas gifts you can claim back on, and which ones may incur FBT.
There are 3 main types of entertainment expenses that your Xmas staff party, employee gift hamper and even client gifts can fall into.
Affected by the move to Alert Level 4 on 17 August 2021 and The Current Protection Framework (Traffic Light System)?
Wage subsidy August 2021 is available throughout New Zealand to support you in paying your employees two weeks’ worth of wages. Also available if you are self-employed.
What you need to know:
You need to meet the eligibility criteria and meet certain obligations. This involves completing a revenue decline test to show your business has and currently is being affected by the continuation of Alert Levels and traffic light systems, from 17 August 2021. For more information head over to here to Work and Income.
Your business needs to meet the eligibility criteria as outlined below and agree to meet the obligations in the declaration to be able to get a COVID-19 Wage Subsidy August 2021. It's available to all New Zealand businesses and self-employed people that meet eligibility criteria.
The full eligibility details and obligations are set-out in the declaration, which you must read and agree to when you apply for the COVID-19 Wage Subsidy August 2021.
Your business may be able to get the COVID-19 Resurgence Support payment from Inland Revenue. It's to help with fixed costs like rent. You can get this as well as the COVID-19 Wage Subsidy August 2021
The Resurgence Support Payment (RSP) is a payment to help support viable and ongoing businesses or organisations due to a COVID-19 alert level increase to level 2 or higher. If your business or organisation is facing a reduction in revenue due to an alert level increase, you may be eligible for the RSP.
Applications for the alert level increase announced on 17 August will open at 8am on 24 August.
Your dream business is up and running, money is coming in. Problem is how do you pay yourself for all that hard work? Too much, and you won’t have enough to cover business expenses, taxes and overheads, too little and you won’t have enough to cover personal expenses…so what’s the right balance?
What are the current guidelines?
At present residential investment property owners can claim interest on loans related to the property as a claimed expense. Thereby reducing the amount of tax needed to be paid.
What are the pROposed changes?
While the government is still in consultation on the precise details of the proposed change, what we do know from 1st October 2021 the proposal is set to restrict and eventually, overtime, remove the interest deductions on residential property income.
Brought any residential properties this year?
If so and it was brought on or after March 27th 2021, you may be subject to the newly proposed extended Bright-Line test.
What is the New Zealand’s Bright-Line Test?
Anyone who sells a residential investment property within 10 years of being purchased may have to pay income tax on any financial gain from the sale. This income is classed as personal income and would be taxed as per the marginal tax rate.
This also applies to NZ tax residents who buy overseas residential properties.
Cristina Canard is the principal accountant at Apex Accountancy Ltd. Cristina keeps up to date with all the relevant tax changes in New Zealand.