Welcome to our March Better Business newsletter
Welcome to our latest Better Business newsletter. In this issue:
What does Capital Gains Tax Mean for You?
The Tax Working Group's Final Report has now been released with recommendations covering a wide-range of changes to the New Zealand tax system.
The question most are considering is, what could a new capital gains tax mean for you? The proposals have suggested the following:
What will be taxed?
- Capital gains tax would include all gains on sale of land, shares, business assets and intangible assets such as goodwill.
- Assets would be valued from when the asset enters the tax base which will generally be when the rules come into force (proposed 1 April 2021) when a person migrates bringing assets with them (transitional residency would apply) or when a person changes their use of their asset (i.e. no longer meets the excluded asset criteria).
- The family home (the "excluded home") and personal assets such as cars, paintings, jewellery and household appliances will not be taxed. This does not include a holiday home.
- If you use your home for both home and business, potentially some apportionment could apply.
How and when will the tax apply?
- Tax would be imposed when the asset is sold, and at the seller's marginal tax rate. Expenses such as improvement costs would be able to be offset. Expenditure which is currently non-deductible would remain non-deductible e.g. interest and rates relating to a holiday home.
- Tax would be imposed on a realisation basis. A deferral from capital gains via "rollover relief" would be available for some events such as death, but this may depend on the type of asset and its use before and after the event. The report also discusses business restructures, small business rollover (replacing business assets) and the sale of closely held businesses upon retirement.
Capital gains tax would apply to all taxpayers, and though there is a large focus on the impact to property owners, the impacts to capital gains on the sale of shares and business assets should also be considered. As the recommendation is for a broad capital gains tax (rather than a more narrowly-focused regime) most owners will be caught.
Restructuring of ownership may occur for personal and commercial reasons (e.g. succession planning). With a capital gains tax, this has the potential to cause more issues more often, so restructuring should be treated with even more caution under a new regime. This may mean some taxpayers look to bring forward restructuring that is likely to occur in the future.
The Government's full response is to be reported in April, however, it is understood that it is intended to pass legislation to implement policy changes before the next election. This gives little time for officials to draft legislation and consult with the public. However, as promised, any new capital gains tax would not take effect until 1 April 2021. We will monitor, closely, how the politicians and in particular, the coalition parties approach the proposals and what eventually is settled on as policy to take to the electorate.
Are you prepared for Pay Day Filing?
Inland Revenue is introducing Pay Day Filing from 1 April 2019, which will change how you pay employees.
The changes which will now require information to be filed with Inland Revenue each time you pay your employees. This will replace the current Employer Deductions (IR345) and Employer Schedule (IR348) returns. You will be able to pay day file via either your payroll software, online using Mr IR or using a paper return (if your annual PAYE is less than $50,000).
Please note: if your PAYE is greater than $50,000 per annum, you must file electronically within two working days of each pay day.
Courtney Adams recently held a webinar for our Training Accounting clients, and we thought there may be some useful information that you should be aware of. To order a FREE copy of this webinar and the slides please contact Training or call (03) 479 4849.
Our staff will also be available to answer any questions you may have about the changes.
How do you get your team motivated and energized again?
For any business, it is critical that your team is performing at this highest level. Because the key to performance is motivation, we have developed this unique webinar on Motivation and Energy. Drawing on the latest research, this webinar will explain what really motivates your team and how you can influence their performance.
Because we know that you time is limited, this is a short, sharp 45-minute webinar full of ideas and examples you can use.
- What is motivation and energy?
- How it relates to performance
- The 9 key motivators
- Importance of delivery.
Lisa Sintmaartensdyk is a Human Resource Consultant on our Polson Higgs team. She has a Bachelor of Commerce from the University of Otago and has worked nationally and internationally in differing HR Roles. Whilst working in Wellington, she gained experience in both the Government sector and Corporate sectors, including a role at NZ Rugby.
Karen Philip is our Human Resources Manager and has 24 years of experience in generalist HR roles in a variety of contexts. These have covered all aspects of the employment relationship: recruitment, professional and performance development, disputes, negotiations, remuneration and health and safety.
If you are interested in purchasing a copy of this webinar please visit our Webinar Recordings page.
Supporting The Community
Dunedin Fringe Festival
We are very proud of our support of the Dunedin Fringe Festival, which is now it its 12th year! The hugely popular Polson Higgs Opening Night Showcase kicked off the Festival, with energy and style. A dazzling selection of performers gave snippets of their Fringe events as a taster of what is on offer throughout the 11 day Festival.
Polson Higgs Supporting Charitable Organisations
Polson Higgs is also very proud of the support we have given our communities through our Supporting Charitable Organisations initiative. The support and services we offer is free or subsidised accounting/advisory services. Our team assist across many areas, including: accounting, strategic and business planning, budgeting, HR, IT, tax advice and governance. We offer up to $40,000 of assistance to charities over a 12-month period.
We recently helped Otago Field Days, this is what they had to say:
"Please accept our thanks for the great work that Courtney Adams did for us in preparing the Charities Services report and sorting out our accounting procedures. We are enjoying using Xero!" Maria, Otago Field Days.
Our team can help you with a wide-range of services, including:
- Strategic and business planning
- FBT/GST/PAYE advice
- Governance assistance
- HR policies, strategies and organisational review
- Recruitment advice
- IT projects, review and implementation
- Investment advice.
We will again be seeking applications for another round of support later and we encourage any charity to apply. To be eligible you will need to register with the Charities Commission and be able to provide your registration number as proof that your organisation is registered or be able to provide proof of your tax-exempt status. Further details are available on our website.