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:

• Resurgence Support Payment (RSP)
• COVID-19 Support Payment (CSP)
• Small Business Cashflow Scheme loan (SBCS).

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.

Inland Revenue started the campaign because a number of real estate agents appeared to be:

• claiming private expenses against their business income and/or claiming expenses without supporting business records
• using net versus gross values when reporting GST
• not including wage subsidy payments received within their annual income tax return.

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:

• Projected starting account balance
• Predicted income
• Estimated outgoings, e.g., bills, salaries, raw materials
• Projected ending account balance
• Any money left over

Don’t Forget the Tax Man – Tax sneaks up on you if you are not prepared. Make sure you work this into your forecast.

• Opening bank balance
• Cash receipts
• Cash payments
• Closing bank balance
• Surpluses and shortfalls in receipts over payments

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:

• Use templates already created for invoices
• Use an online billing software. Have a look at Xero for more info on this
• Link invoices to quotes
• Track all your materials and time on jobs better
• Have a process in place for late payment. Don’t be afraid to chase these up.

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:

• having a written employment agreement for every employee, and doing what that agreement requires 
• keeping each written employment agreement up to date, including documenting any changes that affect rates of pay or hours worked 
• meeting legislative and any relevant contractual requirements for changing employment arrangements    
• complying with all minimum standards legislation and with the Employment Relations Act 2000. 

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.

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.

​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.

​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. 

If so and it was brought on or after March 27th 2021, you may be subject to the newly proposed extended 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.