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Useful tips for Small Business

General update by IBBZ Accounting on latest tax news, business growth and technology tips.
FEB
15
0

GST: zero-rating of services related to land

GST:  zero-rating of services related to land

 GST:  zero-rating of services related to land

Legislation

As amended, section 11A(1)(k) land related services provided to non-residents outside New Zealand at the time the services are performed are eligible for zero-rating, if they are:
• not directly in connection with land in New Zealand or
• not in connection with land in New Zealand and intend to enable or assist a change in physical condition, ownership or other legal status of that land or
• directly in connection to land outside New Zealand

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FEB
03
0

Comprehensive Capital Gains Tax is being introduced in New Zealand

Comprehensive Capital Gains Tax is being introduced in New Zealand

On 01 Feb 2019 Tax working group headed by sir Michal Cullen has recommended the Government to introduce capital gain tax. The formal report is due to be released to the public on 21 Feb 2019. The government may consider the introduction from 01 April 2021


It is expected the scheme will be broad based with very little and no exemptions, excluding family home.


Sir Michael Cullen is the same person who was behind the introduction of GST in New Zealand. The GST scheme is a broad based with very little exemptions, almost everything in New Zealand attract GST. It makes New Zealand GST unique in the world. New Zealand is the only country in the world who has broad based consumption tax with no exemptions not even on essential items. GST collects significant revenue for the government.

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OCT
14
0

What are the tax rules for rental income earned by CFC?

What are the tax rules for rental income earned by CFC?

New Zealand Tax Rules for Controlled Foreign Corporation CFC Income

 

A New Zealand tax resident may have a controlled foreign corporation, which is involved in business of rental. Different tax rules apply for such corporations.

The CFC rules were reformed in around 2009 to make New Zealand businesses compete globally and provide certain exemptions to them. If CFC is in a business of rental this can add some complexities in calculating the exemptions.

General rule of thumb is rental income is attributable income. However, certain exemptions are provided in the legislation.

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SEP
17
0

Speculation Tax – New Zealand New Tax on Real Estate

Speculation Tax – New Zealand New Tax on Real Estate

Do you own or are looking to own residential real estate in New Zealand? Learn more about new tax on real estate


Speculation Tax – New Zealand New Tax on Real Estate

If you own or looking to own residential real estate, you should know about speculation tax. You should also be aware of the Government tax policy to address New Zealand housing affordability.

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APR
26
0

Ring Fencing Rental losses: another nail in the coffin of residential rental investment.

Ring Fencing Rental losses: another nail in the coffin of residential rental investment.

Why ring fencing rental losses are being introduced

 

Auckland residential market has been hot topic for several years. It has been going in only one direction upwards. The Government has been trying to make changes in tax policies since 2010. Firstly, they abolished LAQC, and depreciation on building, then introduced bright line test. Currently the bright line test has been extended to 5 years from April 2018 onwards, and Ring fencing of rental losses are being introduced from April 2019.

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APR
06
0

Modifying the 63-day rule on employee remuneration Section EA 4 of the Income Tax Act 2007

Modifying the 63-day rule on employee remuneration Section EA 4 of the Income Tax Act 2007

What is 63-day rule

A person is allowed a deduction for the amount spent on employing people. Payment related to employment could be in the form of wage and salary or payment of leaves. Section EA 4 says payment must be made within 63 days after the end of the income year. Any payment not made within 63 days after the of the income year, becomes income of the person for tax purposes. It means deduction is not allowed for the unpaid portion.

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MAR
15
0

Financial Hardship Provisions do not apply when Inland Revenue bankrupt taxpayer for the recovery of Tax Debt

Financial Hardship Provisions do not apply when Inland Revenue bankrupt taxpayer for the recovery of Tax Debt

Financial Hardship

In the recent tax case of Singh v The commissioner of Inland Revenue [2017] NZCA 506, the court of appeal held the Commissioner can ignore sections 176, 177, 177c of the Tax Administration Act 1994 when pursuing bankruptcy due to non-payment of tax.

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AUG
13
0

How much money do I need for retirement?

How much money do I need for retirement?

Each person has a different lifestyle. To maintain a good lifestyle lot of financial planners, go with $100k a year for a couple, means $50k for one person. However, this has been a very traditional approach this approach is suited for industrial age era not for modern time (information age)

Traditional approach is you work till 65, keep making small savings in your retirement funds. By the time you retire you should have about $500k in your investments. These investments will give you a yield of about 5%, so you will get about $25k a year. You will also be eligible for Super, may be one investment property so roughly you will get about $50k a year.

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AUG
13
0

Proposed Solutions to RWT for Small Businesses

Proposed Solutions to RWT for Small Businesses

RWT on dividends between companies

With amendments being made to sections RE 2(5), this now limits the definition of “resident passive income”. This section excludes fully imputed dividends paid to a corporate shareholder if the paying company chooses to exclude the dividend from the definition.

This will allow a company to opt out of withholding RWT on a fully imputed dividend paid to another company.

The above amendments were needed because of company tax rate being lowered from 33% to 28%. Dividends were effectively overtaxed by the amount of RWT withheld.

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AUG
13
0

Know the Difference Between a Contractor and Employee

Know the Difference Between a Contractor and Employee

You need to be careful when deciding between employee or contractor. The mistake of paying someone as a contractor if they really fall under the category of an employee can be very expensive. This can be a trap that can cause you serious problems later.

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  3241 Hits