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Does the new 39% tax rate affect you?

New Zealanders earning over $180,000 a year will now pay a 39% tax rate, which came into effect on 1 April 2021. If this includes you, are you aware of how your tax obligations change when it comes to shares, property, FBT, superannuation tax, or trusts?

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Good communication = repeat customers = more profit

Did you know customer retention is faster and, on average, costs up to seven times less than customer acquisition? If you’re looking to improve your bottom line by turning your current customers into lifetime customers, here’s the best way to communicate with them.

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Directors: Know your role

If you’re a director, make sure you’re up to speed on both company law and the accepted code of behaviour required for the job. If you ignore the underlying principles of ‘good faith’ and ‘duty of care’ you could be fined up to $200,000 or face jail time.

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Sick leave entitlement increased

From 24 July 2021, the minimum sick leave entitlement increased from 5 to 10 days per year. If you are an employer, please ensure your payroll systems and processes are updated to reflect this change.

Employees get the extra 5 sick days based on their next entitlement date that occurs on or after 24 July 2021.

If you are employing new staff or creating new employment agreements (contracts), make sure that the sick leave entitlement is 10 days.

Other key aspects of minimum sick leave rights remain the same:

  • Employees can still accumulate up to 20 days of unused sick leave. This means employees can now carry over up to 10 days of unused sick leave each year instead of 15.
  • The employer and employee can agree to more sick leave rights than the legal minimums. For example, give unlimited sick leave, or the option to accrue all unused sick leave.
  • Employees who have already agreed to 10 or more days of sick leave per year in their employment agreement will see no change.

If you have any questions about this change, please contact us.

TAX UPDATES

Travel Expenses

IRD have recently issued a new Interpretation Statement regarding the treatment of meal expenses. The directive from this is that food is in the private or domestic category and therefore is not tax deductible. This has occurred after a recent IRD court case in which IRD argued that food and drink is a necessity for survival and

that it is the taxpayer’s choice to purchase their food, rather than pack their own meal or drink. This also extends to eating in a restaurant, instead of preparing a meal in a motel. This includes lunches, snacks and coffees purchased on the road.

Meals with customers/clients can still be claimed – please refer to the entertainment section below.

Logbooks

IRD are in the process of reviewing Real Estate Agents at present and one area that they have concentrated on is if there is a current logbook in place. The rules for logbooks on vehicles that can be used on a personal basis are:

Keep a logbook for at least 90 days that records:

  • the start date and the vehicle’s odometer reading on that day
  • the date, distance and reason for each business journey
  • the end date of the 90-day period, and the vehicle’s odometer reading on that day
  • details of the vehicle, make and registration number.

From this you calculate the business proportion and apply this to all expenses relating to that vehicle.

The logbook needs to be done every three years.
If you have any specific questions about this, please get in touch.

Entertainment Expenses

You can claim a deduction for entertainment expenditure. The general rule is that 50% of it is deductible but it is important that the following information is kept to support your expense deduction:

  • record of dates of entertainment and expenses incurred
  • the names of the individuals who the entertainment related to
  • the business they represent (if any) and the position they hold
  • the reason for the entertainment
  • all invoices/receipts to support the deduction

You also cannot claim entertainment expenses for family and friends as there must be a clear link to earning your income.

There are some instances where a full 100% claim for entertainment expenses is allowed but this is quite specific, so please contact our office if you want to discuss this further.

Disclaimer: This publication has been carefully prepared, but it has been written in general terms only. The publication should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.

 

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