TAX TIP: PROVINCIAL HOLIDAYS
Watch For New Payment Dates
Taxpayers need to keep a close eye on Inland Revenue decisions on when it will treat a tax payment as having been received on time. New guidelines could mean some businesses get caught out.
From 1st October this year, it is changing the treatment of provincial anniversary days. Currently provincial anniversary days are considered public holidays and a tax payment is on time if it is received the next working day.
But IRD is stopping this meaning tax payments will need to be with IRD on or before the provincial anniversary day. But the good news - the concession will remain unchanged for weekends and national public holidays.
The other change concerns postal payments, which will require payments by post be received by Inland Revenue on or before the due date to be considered in time. This means people will have to take into account the poor performance of the postal service when putting payments in the mail. The proposals will encourage taxpayers to make payments electronically to ensure they are received in time.
-Thanks Elisa Davis – one of the great CAs at E3
EMPLOYER – EMPLOYEE TIP
Question and Answer – Real Case Study
On 6 January, the father of an employee passed away. This occurred during Christmas closedown period while the employee was on annual leave. As the business was not restarting work until 13 January, the employer did not make any adjustment to his pay and still paid him his annual leave for that week. The employee is now claiming that three days of that week should be treated as bereavement leave and not annual leave.
Is the employee correct and what is the employer's legal requirement to pay?
Yes, the employee is correct. The Holidays Act 2003 has a specific provision dealing with this situation. If an employee who is taking annual leave suffers a bereavement during that leave, the employer must allow the employee to take bereavement leave instead of annual leave.
In this case, because it was the employee's father who passed away, the employee would have been entitled to three days bereavement leave. The employer will need to reinstate three days of his annual leave and record those days as bereavement leave instead.
COMPANY DIRECTOR TIP
Liquidation and Overdue Tax
The Managing Director of three companies didn't pay PAYE to the IRD due to cashflow issues (even after being warned by the IRD). The three companies went into liquidation. The Managing Director was convicted of aiding and abetting three companies that knowing failed to account for PAYE.
The managing director was originally fined $3000 per offence (ie each month the PAYE was not paid) and court costs and required to pay reparation of the outstanding PAYE (amounting to almost $200,000). The courts decided the sentence was too lenient as imprisonment is often a starting point for this type of offending. The Managing Director then received 80 hours community service and 4 months community detention.
Ducking into the liquidator does not make your liabilities disappear.
BORROWING AND TAX DEDUCTION TIP
When Is Interest Not Tax Deductible?
Many times we get to see a loan document covering the borrowing of funds for company business use in the name of an individual director or shareholder. This makes the tax deduction of the loan interest difficult to achieve without creating another loan between the borrower and the company.
If you are borrowing money from any source, see us first to make sure the loan is structured to achieve tax deduction of the interest.
-Thanks again to Elisa Davis CA at E3
DEBT REDUCTION TIP
Give It Your Total Focus
Getting out of debt should feel better than getting into it. Pay close attention to loan balances, interest rates and terms. Burn how much you owe into your mind.
Let paying your debt down occupy your mind. Make chart's. Tale pleasure in seeing the balances go down. Think about how free you'll be without those payments one day.
Make reducing your debt the most purposeful goal of your business.
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After 8 years of repairing every other manufacturers outdoor gear, from alpine packs to zips in sleeping bags and everything in between, Twinneedle now also manufactures our own line of outdoor gear.
See www.twinneedle.co.nz for more info, or pop into
25 Saxon Street, Phillipstown Christchurch. Ph 03 943-4444
Twinneedle: Built from experience.
"There's a fine line between fishing and just standing on the shore like an idiot."
"What's another word for Thesaurus?"
"I intend to live forever. So far, so good."
"I bought some batteries, but they weren't included."
"Do Lipton employees take coffee breaks?"
Ashley is a Chartered Accountant with 20 years practical experience. His passion is to take successful business's and develop them into the "exceptional".
At E3 Business Accountants, Ashley wants you to feel important and wanted.
His motto is simple: "I want you to recognise your future and understand your past."
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Click here to ask me any question about business and I'll do my best to answer it. If I don't know the answer, I'm sure I can point you to someone who can.
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