Xero updates

Hubdoc

From 18th March Hubdoc will be included for free with Xero business plan subscriptions. Hubdoc is a document collection and management software that reads and extracts key information from your  receipts, invoices and emailed invoices and statements and converts it to files that links to your transactions in Xero.  Get in touch to find out more or visit Hubdoc .

Uber

Uber for Business now integrates with Xero where Uber statement data is extracted by Xero and a draft bill created. You need an Uber for Business account and the Uber for Business from the Xero App Marketplace. For more info and how to get started visist the Xero blog

IRD changes – Free seminar & webinar in March

Chamber of Commerce Seminar

The Nelson Tasman Chamber of Commerce is hosting an IRD seminar at NMIT on the 12th March on the IRD’s business transformation and further changes to be implemented in April. This includes changes to payroll, Kiwisaver and Student Loan accounts in myIR.

It will be a great opportunity to learn more about the changes and how to get ready and to ask IRD representatives any questions you may have. It is open to both members and non-members and is free to attend.

Follow this link to find out more and to register

IRD Webinar

IRD are also running a webinar suitable for Employers and Not-for-Profit organisations on Wednesday the 18th March. This webinar will help you prepare for the upcoming changes.

To find out more and to register click here

Residential Loss Ring-fencing

From the 19/20 year onwards losses from a residential rental property can no longer be offset against other income such as salary, wages or other business income.

The loss from one rental property can be offset against other residential rental income if you choose to use the portfolio basis (if you own more than one property the rules can be applied to all your affected properties as a single portfolio).

If you have unused losses at the end of the year they will need to be carried forward and can be used to offset future income from residential rentals including taxable income on sale if the bright line rules are triggered and depreciation recovered (if you owned the property before 2010). In some situations, any remaining losses can be released from the ring fencing rules, but more often than not they will need to be carried forward until the day you receive surplus residential rental income again to offset the losses carried forward against.

Certain properties are excluded from the ring-fencing rules including your main home, farmland, property that the mixed-use asset rules apply to, business and commercial premises, to name a few.

If you are a client of ours holding residential rental property you will hear from us over the next few weeks with more specific information.

If you have any questions, please contact anna@savage.co.nz

Residential rental loss ring-fencing

Many of you will have heard about the ring-fencing of losses made from residential rental properties which applies from 1 April 2019.

Deductions for residential properties are now ring-fenced so they can only be used against income from that property, or sometimes a portfolio of properties.

Deductions that exceed the income from that property/portfolio of properties will need to be carried forward, to offset future income from that property/portfolio of properties.

This means that losses from a rental property, that you in the past would have used to offset against your other income, is no longer available for that purpose. They can only be used to offset future profits from that property/portfolio of properties.  

The rules apply to all entity structures, ie sole traders, partnerships, trusts, LTCs and ordinary companies.

Family homes, farms, commercial rental and business premises are excluded.

We will send some detailed information including going over different scenarios, to those of our clients who have residential properties in the new year.

Xero & MYOB updates

Xero now integrates with BP fuel card. If you have a BP fuel card you can set up the connection from the BP Customer Portal and when you get your statement from BP it will automatically create a draft bill in Xero. Pretty handy if you are allocating fuel costs and it will automatically match to the  bank feed.

Have you heard about Hubdoc? It’s a Xero connected app that:

  • Captures data – upload bills and receipts from any device
  • Automates data entry – key data is extracted from the uploaded document and synced to Xero as accurately coded transactions with the source doc attached
  • One-click reconciliation – the transaction is matched to the bank feed for a one click reconciliation
  • Your source documents can be easily to access from anywhere

MYOB has a new integration with Bunnings, if you have an account with Bunnings you can now get your invoices from Bunnings directly to MYOB, no more entering every bill!

 

Inland Revenue to probe hospitality sector for businesses hiding cash sales

First published in Stuff 4th October 2019

This serves as a word of warning to anyone who owns a business where cash is regularly received as payment for goods and services

Four members of the Thai restaurant family have been sentenced to prison or home detention after a $2.3 million tax evasion case brought by Inland Revenue, and another was convicted but discharged.

They were also been ordered to pay more than $2.2 million in reparations by the High Court in Wellington over tax evasion carried out through 21 “Thai House Express” restaurants around the country.

The five – Boonrouen Thongskul, Sirirat Kampeng, Anchalee Minwong, Chanaratt Thongskul and Anuchit Tongskul – originally denied the charges but entered guilty please five weeks into the trial that had been expected to last ten weeks.

They were accused of having been part of co-ordinated tax evasion effort over a seven-year period which involved not reporting cash sales to the taxman, and distributing the cash directly to family members.

The charges related to the filing of 366 false income tax, GST and personal tax returns evasion relating to their own tax affairs and those of their 11 companies.

“Once they’d heard much of the Crown evidence against them, these five entered guilty pleas in relation to the GST and income tax returns of the businesses for which they were responsible, and their own income tax return,” said Inland Revenue spokesperson Richard Philp.

“By their guilty pleas the brothers and sisters acknowledged they knew their returns were false and were a deliberate ploy to evade tax. Cash sales were deliberately suppressed to pay less tax.

“An aggravating feature of the offending for Chanaratt Thongskul and Anuchit Tongskul was that their declared income was low enough to qualify for Working for Families Tax Credits in some of the years charged.

“The case followed an extensive investigation into the family group with searches of private properties disclosing business records, luxury goods and cash in some instances.

“The general allegation was that the family distributed the cash amongst themselves, as part of a deliberate practice of not reporting or recording cash sales and diverting the cash to private use.

“This is not trivial tax evasion. At one point in the trial the cash deposited in personal bank accounts was said to be more than $9 million. For these five defendants the sum is more than $5.2 million.”

At the High Court in Wellington today Chanaratt Thongskul was sentenced to two years and eight months in prison and ordered to pay $900,000 in reparation.

Sirirat Kampeng was sentenced to 12 months home detention and ordered to pay $600,000 in reparation.

Anchalee Minwong was sentenced to 10 months home detention with $400,000 in reparations.

Anuchit Tongskul was sentenced to nine months home detention and must pay $300,000 in reparations.

Boonruen Thongskul was convicted and discharged with $5000 in reparation to pay.

Moving on from cheques

IRD recently announced their decision to no longer accept cheque payments for any form of tax from 1st March 2020. We will be in touch with those who for one reason or another (ie no rural broadband) can’t pay online to help you identify other payment methods.

Here’s what IRD had to say in their news release:

Cheque usage continues to decline every year. Last year cheques only accounted for 5% of payments to Inland Revenue and some people who used cheques also used other payment methods.
From 1 March 2020, Inland Revenue will no longer be accepting cheques if customers have an alternative payment option available. This includes post-dated cheques (cheques dated after 1 March 2020).

Around 90% of the cheques we receive come from clients of tax agents. If you or your clients use cheques you will be instrumental in the transition to alternative payment methods. There’s plenty of time before next March for people to explore their options and find a convenient and secure way that works for them.

There are many different ways to pay – electronically or in person.

Ways to pay

Here’s a summary of payment options:

  • myIR: You can pay by direct debit and make debit card and credit card payments securely through myIR online services. Visit our website (ird.govt.nz) and login or register for myIR.
  • Online banking: You may be able to make payments using online banking. Contact your bank for more information.
  • Credit or debit card via our website: Use your credit or debit card to make online payments through our website. Visit ird.govt.nz/pay.
  • In person at Westpac: Pay by EFTPOS or cash at a Westpac branch or Smart ATM.
  • Money transfer: If you are overseas you can pay us using a money transfer service. Search for “make a payment” on our website for more information.

Charges may apply for some payment options.

We are soon going to start contacting cheque payers (and their tax agents) to let them know about this change and alternative ways to pay.

In the meantime, if you would like more information visit our website at ird.govt.nz/pay.

Supporting Volunteer Service Abroad

A tax specialist we work with, Geoff Falloon from BizRescue is taking six months out of his busy business to work as a volunteer with VSA

He is taking up a role as Finance Systems Trainer/Mentor with Kokonut Pacific SI, a social enterprise promoting rural livelihoods in the Solomon Islands.He will be developing a financial processes manual and training staff to manage and maintain the financial systems.

The Solomon Islands ranks among the 30 poorest countries in the world. Some of you will have read about the subject of sustainable development goals. This role addresses (in a small way) three of the sustainable development goals being the alleviation of poverty and hunger and promoting work and economic growth.

VSA works in partnership with MFAT which covers a significant portion of the work but VSA is required to cover 10% of the in-country costs for each volunteer. VSA therefore asks volunteers to raise $1,000 each – a small portion of the assignment cost – to help pay it forward for future volunteers.

If this is something you would like to contribute towards simply follow this link https://give.everydayhero.com/nz/geoff-and-carol-in-honiara and click the “Give Now” button at the bottom. All contributions are welcomed.

Ring-Fencing Residential Property Deductions

The proposed changes to residential property losses will once they are enacted likely to apply from 1 April 2019. The changes mean that residential property deductions can only be offset again residential property income, therefore losses from residential property cannot be used to offset other income.

The losses will need to be carried forward and utilised when the investment makes a profit. The ring-fencing can be applied on a property-by-property basis or on a portfolio basis. It will apply to all properties where the income is taxable in NZ and to all types of entities. The ring-fencing will work similarly to the ring-fencing of mixed use assets.

Payday Filing Q&A

What’s changing?

You need to file employment information more frequently

 

When does it start?

1 April 2019

You can switch early, but most software and paper returns are not available until 1 April 2019

 

What is payday info?

Employment information, similar to the current employer monthly schedule

 

When do I file it?

Payday info is due within 2 working days of paying staff if you file electronically (software or myIR). We would recommend filing when processing pays. Information can be amended if need be.

Payday info is due within 10 working days of paying staff if you file via paper (to allow time for the post)

Regional holidays are considered working days

Change over period: you will need to file the March 2019 employer monthly schedule on the 20th of April, while filing payday information for April during April.

 

When do I pay it?

Payment is still due on the 20th of the following month as before (or 5th and 20th of the month if applicable)

Penalties for late filing and late payment applies just like now

 

How do I file it?

Software

Most payroll software will enable you to file your payday info directly from the software at the click of a button much like the GST returns. It will simply add a step to your payroll process.

myIR

If you are currently filing through myIR (file transfer or onscreen), you will need to log in each payday after you’ve prepared the pays and enter the information. It will work similar to how it works now but moved to the My Business section.

Paper

If you are filing paper returns, you can either switch to online filing through myIR or continue filing papers returns (only available to Employers with less than $50,000 PAYE and ESCT per year). Paper returns can be filed on payday basis or twice monthly. A separate form required for new employee details.

Schedular Payments

Schedular payments:

  • Can file as part of regular payroll or
  • Twice monthly (periods covering 1-15th month and 16th-end of month)

Other Info

If you don’t pay anyone in the pay period, Nil returns are not required

If you have a myIR account you can amend previously filed returns online.

Possible to file in advance

 

What other information do I need to file?

Additional information now required to be filed for new employees, separately to payday information, on or before the new employee’s first payday. There will be a new tab in the My Business section under Payroll called Employees to provide this information.

  • date of birth (if it’s been given to you)
  • start and end date of employment
  • KiwiSaver status
  • Contact detail