e3 Business Accountants, Christchurch, New Zealand

We promise your annual accounts delivered at a fixed price and on a fixed day. If you have any business query or problem, email me for a free of cost response. Jamie Tulloch Managing Director

BUSINESS TIP
Selling or Buying a Business
I have recently been involved in carrying out several Due Diligence roles for clients looking to buy businesses. In most cases, the quality of information presented by the vendor and/or their accountant and business broker has been poor. When a business owner decides to sell, whether it’s motivated by poor results, creditor pressure, time of life, health or just being worn out, the proceeds from the sale are often the owner’s retirement nest egg. Why are these businesses presented in such a shoddy way that the potential real value of these businesses may never be realised?

Compare in contrast how much effort goes into presenting a house for sale. Most houses taken to market a fully prepared, thoroughly cleaned, lawns mowed, garden done, paint touched up, every light bulb working, flowers in vases, muffins in the oven and so on.

If you want to maximise the sale value of your business – and if you’re reading this as a newsletter subscriber and not an E3 client – then please contact me. We know how to maximise the Goodwill value of a business. What we do may double the Goodwill value and the miracle at work here – our fees are tax deductible and your Goodwill received is tax-free!

TAX TIP ONE

IRD not limited by usual time bar

There are no time limits on the IRD reassessing tax returns when the taxpayer has been fraudulent or has failed to include income of a particular nature or from a particular source in their tax return.

Just because one or a zillion years have passed since filing your tax return, if fraud has been involved, then the IRD have the law on their side when it comes to reassessing your tax returns.

TAX TIP TWO

Tax avoidance

Even experienced tax advisors can be caught out. A literal interpretation of the law may seem that your advisor has taken the correct tax position. However, tax laws should be interpreted as what was “intended” to be achieved by the law and what was “intended” by parliament when it passed the law.  

So, just because there appears to be a loophole in the wording of any tax law, it is the intention that is most important to fully comprehend, not just the literal words.

If you do personally seek advice from the IRD (we don’t recommend this), take notes of whom you spoke to, date and time and details of the conversation. The IRD are not tax advisors and their comments should not be taken as the final word. The IRD are generally very helpful but they are there to administer the tax law, not interpret it.

TRUSTEE TIP

Beware of enduring trustee liability

There are more and more cases of family trust trustees being sued by beneficiaries and third parties. If you are a trustee, you must fully understand your exposure to claims and your liabilities and duties as a trustee.

If you are a trustee, spend some time reading through the trust document. Is your liability limited in any way? For every document you sign, make sure you know exactly what it means. If in doubt, get professional advice.

As a trustee, you must act prudently and wisely in the interests of all beneficiaries. If, at a later date, a beneficiary may feel aggrieved, then you will be the target. And the “later date” may be many, many years down the track.

FBT TIP

Time to review employee use of company vehicles
The end of the financial year is an opportune time to review personal use of company vehicles. If you restrict the use to eliminate or minimise FBT, then make sure your employees sign an acknowledgment of your motor vehicle policy. Personal use of company vehicles is hard to keep below the radar, especially when they are sign written.