Covid-19 update – 14.04.20

Well it continues to be an interesting time we are working our way through. The great news is that the Covid-19 lockdown appears to be having a positive effect by controlling the spread of this illness.

While all the signs are good we still have a long way to go, firstly to get through the immediate crisis and then a very long road to economic recovery. We are expecting some of the lockdown restrictions to be eased but not expecting them to be lifted totally for a few months yet.

Today’s Government Announcement re Level 3

The Government has announced general conditions for operating under Level 3 restrictions when they do drop the Covid Threat Level from Level 4 to Level 3.

It appears there will still be strict restrictions on who can open for business and how those businesses operate. The key point is the social distancing 2 meter ‘bubble’ must be retained. We’re uncertain how this will effect Savage & Savage and whether or not we are able to operate from our offices. We are expecting to not be able to operate from the office however we do want to get back as soon as we can and will be seeing if the detail in Level 3 lockdown rules allow us to. Watch this space.

Planning

With that in mind business owners need to start thinking about what their business is going to look like post Covid-19. Some of the things to consider are when will your business be able to be up and running again? Will your business clients still be in business? How will your general customer base have changed? What will your cash flow look like for the next two years? How many staff will you need? What is your tax liability for the next two years? And many other things.

There are many things to consider and every business owner is going to have to do some serious thinking and planning. We can help you with your cashflow forecasting for the next few years so we are happy to offer our clients an hour of time from either Anna or Libby, at no charge, to discuss what you need to think about when preparing a cashflow.  If you’d like us to prepare your cashflow for you we will give you an hours’ free time when preparing it.

Recent tax changes announced

The Government has announced some changes to various taxes and payments, in particular tax carry back changes (tax losses carried forward). When we get exact details about the implementation of these changes we will share those with you but in the meantime you will need to do some panning, both for your cashflow and future tax purposes.

So we can accurately estimate your future tax liabilities it’s important we have the most up-to-date information as possible so please don’t delay sending your annual accounts information to us. By having your tax position for 2020 established we can then look at forecasting 2021 for the loss carry back if you have one. The tax relief measures will be easier to use if books are up to date.

Attached is a factsheet from the Beehive – Supporting small and medium sized enterprises during the COVID-19 crisis. This is a summary of the latest support measures being rolled out by the government.

Annual Accounts

We operate on a first in – first out basis unless there are urgent business needs like refinancing business sale etc so the sooner you get your information to us the sooner we can get your annual accounts finished.

Tax payment relief

When it comes to IRD payment arrangements your tax position needs to be established first, this goes for all tax types. It’s better to get in contact with us to request an IRD payment arrangement rather than just not paying – even though IRD will be lenient and write off interest and penalties it is much better to have a formal arrangement in place.

Payment of our invoices

We understand these are difficult times financially for many businesses and we don’t want this to be a barrier to us doing work for you so if you would like to make an arrangement to pay your account with us over a period of time please contact Neil at neil@savage.co.nz . We want to make sure we help all of our clients as much as we can.

Please continue to think about your safety if you are out and about.

We’re working on how we will operate under Covid-19 Level 3 restrictions when they come into place, hopefully in the not too distant future.

Agreements for Sale & Purchase of Property

The Agreement for Sale and Purchase of Property that’s used for the vast majority of property transactions is the Real Estate Institute of New Zealand / Auckland District Law Society (REINZ/ADLS) Agreement for Sale and Purchase and the form is reviewed regularly to ensure it remains an effective agreement as times change. Changes take into account things like allowing for electronic (emailed) forms as well as forms sent by fax or posted and also various changes required as a result of law changes.

The latest update happened late last year and the current version of the agreement is now the 10th edition of the REINZ/ADLS Agreement for Sale and Purchase. (click this link for more detail)

The most significant change, and one that may catch buyers out, relates to using a finance clause to withdraw from a purchase offer. People who want to withdraw from a housing deal due to being declined finance now have to prove they are unable to get the money.

If a finance condition is inserted but money can’t be secured to settle the agreement the purchaser’s word was generally enough for them to pull out of a contract. But under the changes that took effect on 6th December 2019 purchasers must provide evidence, generally by providing a letter or email from the bank.

This is a significant change to the sale and purchase agreement with significant implications for prospective purchasers who rely on a finance clause as a ‘get out of jail’ card, if purchasers can’t provide evidence they were unable to obtain finance they could be forced to proceed with the purchase or face other legal action by the vendor.

In the older form you could specify a lender in a finance clause in the Sale & Purchase Agreement, this option has been removed in the new form. The new clause in the fine print in the REINZ/ADLS 10th edition form removes the reference to a particular lender. It now requires a purchaser to provide evidence, if required by the vendor, that they had taken reasonable steps to obtain finance on satisfactory terms.

Along similar lines to the changes to the Finance clause is the Building Inspection Report clause that many prospective buyers obtain, in the updated agreement if you cancel the agreement because of an unsatisfactory building inspection report you are required to share the report with the vendor. This removes another ‘get-out-of-jail’ option some people have used in the past.

Other changes include an optional toxicology report condition, a new process to resolve compensation if there are disputes between vendors and purchasers and fixtures and chattels have been removed and replaced with new definitions and warranties.

GST clauses have been revised, the time-frame for deposits being released has been clarified, references to fax machines are removed, tenancy documents must now be provided by the vendor on the settlement date and various other changes to language and formatting have been made.

It has always been essential buyers take legal advice before signing any sort of property sale and purchase agreement rather than relying on standard Further Clauses inserted by real estate sales people, this change makes it even more important.

The bottom line is to make sure you deal with a reputable Real Estate Agency so you are given good advice and don’t sign any agreement for the sale and purchase of real estate before you have taken legal advice.

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!

 

Sari Hodgson Awarded FCA Status

Each year the Council of Chartered Accountants Australia and New Zealand recognises outstanding achievement in the profession of accountancy by awarding Fellowships to its members.

Fellowships, are awarded to members who are nominated by their peers for outstanding career achievement or contribution to the profession.

The 2019 awards are to be formally announced in a few days but we are able to share some fantastic news with you – Sari Hodgson, Director of Savage & Savage Limited, has been made a Fellow of CA ANZ this year.

The founder of Savage & Savage Chartered Accountants, Mr Noel Savage, was himself an FCA and Sari says she is proud to follow in her father’s footsteps. “I am also delighted to be able to help our clients succeed in business as well as contributing to our community whenever I can.”

Sari is a Past President of the Nelson Tasman Chamber of Commerce, was the Chair of the Bishop Suter Art Gallery Trust and guided the organisation through the process of changing from a private trust to a Council Controlled Organisation. Sari has been the Chair of the School of Business Advisory Committee at NMIT for more than fifteen years. She has also written several books aimed at helping small to medium businesses. She is a Rotary Paul Harris Fellow. She also supports many community organisations through Savage & Savage.

 

FELLOWSHIP CRITERIA
The member must have demonstrated excellence through:

1. Outstanding achievement in the profession of accountancy through his
or her career
And/or
2. Outstanding contribution to the profession of accountancy through
a. Service and participation with distinction to CA ANZ, ICAA or NZICA
or other organisations within the profession; and/or
b. Services to the community or business; and/or
c. Teaching, research and or writing within the field of accounting that
reflects positively on the profession.
The member may be nominated under criteria one, any part of criteria
two or a combination of these criteria.

Diving deep into Marlborough’s booming seafood industry

Think Marlborough, and you might immediately think “wine”. Boasting some of the best-known and oldest vineyards in the country, the viticulture industry looms large in the region. But dwell on the stats for a moment, and it becomes obvious just how important a part the seafood industry plays in Marlborough’s economic successes as well.

Blenheim-based Crombie Lockwood Group Broking Manager, David Wing, is keen to remind those beyond the region that, away from the picture postcard vineyards of the Wairau Valley, there is another globally recognised industry doing the hard yards in Marlborough and contributing in a big way to New Zealand’s economy: aquaculture.

“It sometimes gets lost amidst the good news stories about our wine production, but the history of, current successes and future potential for aquaculture in Marlborough really are of deep significance to the country as a whole,” says David.

“Marlborough aquaculture is a major contributor to both the wider national seafood industry and New Zealand’s GDP. Our local wild capture and aquiculture producers account for around 60 percent of the seafood industry’s contribution to the national GDP. And seafood as a stand-alone category accounts for 11 percent of New Zealand’s GDP.

“Where mussels and salmon are concerned, Marlborough now has the highest marine farming output of any region in the country.”

The numbers are certainly impressive. Taken together, marine farming, wild capture and processing jobs account for 3.7 percent of Marlborough’s total labour force. The combined industry accounts for approximately six percent of Marlborough’s regional GDP.

The headline acts are undoubtably mussel and salmon farming. Mussels are New Zealand’s largest marine farming product by volume and value; of the annual tonnage produced, Marlborough’s output has accounted for between 60 and 70 percent of total ‘greenweight’ tonnage in recent years.

Not far behind mussels in the production and export stakes sits salmon. While Atlantic salmon is the predominant product on the world stage, New Zealand’s King salmon is free from the sea lice that has challenged this species in foreign waters, meaning that New Zealand is the dominant King salmon supplier internationally. And, as a rarer species on the global stage, king salmon farmed in New Zealand commands a higher price-per-ton than its Atlantic counterpart.

Marlborough accounts for the lion’s share of New Zealand farmed salmon, with operations on Stewart Island, in Akaroa Harbour in Canterbury, and in the Central Otago freshwater hydro-canals near Lake Ohau accounting for the remainder of national production.

The marine service industry – boat building, surveying and repair, equipment servicing and retail – is also a sub-economy in itself, helping to keep both local marine operators and Marlborough’s economy buoyant.

For Crombie Lockwood, involvement at every step of the way is a given. David says his team offers specialist underwriting services for fishing boat operators, along with insuring both farmed produce and wild capture seafood from the water to the processing plant, and even when in transit as fresh or frozen goods. Factory infrastructure and office space also need comprehensive coverage.

Vessels range in sizes, but all represent major investments to the many operators in the region.

“The future looks positive for the seafood industry in Marlborough, as internationally aquiculture is very much a growth sector,” continues David.

“Demand currently outstrips supply for mussels, salmon and other seafood stocks, which means high prices in most categories. Aquaculture New Zealand’s latest export stats [for the 12 months to May 2019] show that total mussel exports were up five percent on the previous period, amounting to over $300m in export revenue.”

Risks? David says that, while warmer water temperatures in recent years have contributed to higher fish mortality rates in some bays of the Marlborough Sounds, fish husbandry has begun to adapt to a changing climate; lowering stock density which in turn is helping reduce mortality rates and improve the quality of fish.

The bigger risk to the industry lies in the future consenting process and what knock-on effects limitations on new consents will have for the aquaculture industry.

Currently around two percent of the Marlborough Sounds is consented for marine farming (approximately 3000 hectares in a total of 150,000 hectares). After rapid expansion in the 1980’s and 1990’s, the total area farmed – primarily in Pelorus Sound, Admiralty Bay and at Port Underwood – has remained relatively unchanged in recent years after a moratorium was applied to new marine farms in the Sounds in 1996.

“The big risk for the local industry is that an estimated 56 percent of marine farms in Marlborough have consents that either expire or come due for renewal by 2025,” says David.

“The consenting process has been very carefully managed in recent times and, it’s fair to say, the process and operational guidelines aren’t getting any easier for operators. Mussel farms have their critics regardless of how much money they bring into the region.

“Possible changes of status for marine farming under legislation have increased uncertainty around how financially viable some operations will be in the future.”

Changes in the way the Sounds are zoned for industry could potentially cost aquaculture millions in future decades. Fewer farms or less tonnage of product being exported will of course have a direct impact on household wages and the overall economy in the region.

“The industry will carry on. But a lot of people are waiting to see what happens,” David concludes.

“It’s an industry set up for volume production. But it’s also a very well-managed industry, with some talented, globally recognised local operators at the heart of it. The wine industry remains vital to Marlborough’s successes, but I believe aquaculture is just as much the lifeblood of our community as well.”

 

The Nelson Ark

At Savage & Savage we are a dog-friendly office, you are welcome to bring your well behaved dog with you when you come to see us.

Our staff love cuddles with furry friends and because we love dogs we support The Ark. We have a collection jar on our front counter for the month of August to help this fantastic organisation do what they do.

And they do a lot, they re-home dogs and The Ark provides a wonderful education opportunity for at risk youth, they work with dogs to help these young people find a positive aspect to their lives.

APART (Animals People And Rehabilitative Training) – What happens when you join a young person going through tough times together with a rescue dog? You get APART. APART is a character education and dog training programme. It provides opportunities to develop compassion, empathy, respect and responsibility. APART provides young people with the opportunity to:

  • learn alternative coping strategies for quality of
  • life learn considerate ways of dealing with problems which may arise during dog training
  • take part in rewarding experiences that grow respect for oneself, others and animals.

If you are able to we would love you to support this outstanding organisation by making a donation next time you are in the office 

If you don’t have cash we can take an electronic payment and pass it on to The Ark.

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.

Excellence in Bed & Breakfast Hosting – Award Winners

Congratulations to our long-term clients Brian and Anthea Harvey who have just been awarded the 2019 Supreme B&B Business of the Year at the recent B&B Awards

The Awards Programme celebrates excellence in hospitality in the bed and breakfast and hosted accommodation sector.  They provide a benchmark of excellence and inspiration to other bed and breakfast hosts along with showcasing the best of New Zealand hospitality within the B&B accommodation sector.  Rayma Jenkins, President, said “the Awards honour, recognise, encourage and reward our members who are the very best bed and breakfast properties in New Zealand.”

Bed & Breakfast Association New Zealand and Vision Insurance are pleased to announce Bellbird Lodge, Kaiteriteri, owned by Anthea & Brian Harvey, has been awarded the 2019 Supreme B&B Business of the Year.  

The Bed & Breakfast Association Award programme is made up of three Awards – Supreme B&B Business of the Year, Emerging B&B Business of the year (open to those who have been operating two years or less) and B&B Host of the year.

Supreme B&B Business of Year winners Brian and Anthea care for and about their guests.  In their words “it is not about what we think the guests want but what they actually want”. 

2019 Emerging B&B Business of the Year Award Winner is Acacia Heights Gardens, Taupo, owned by Heather & David Bridson.

2019 B&B Host of the Year Award Winner is Morepork Riverside Lodge, Paihia, Barb & Paul Linton.

 “The calibre of entries in all categories this year is extremely high, each one deserves the highest praise,” said Rayma.  “A hallmark of a stay in a hosted bed and breakfast is a personalised experience for our guests.  There is no one formula for operating and this is certainly true of our entrants”.

The programme is judged by Tourism Industry Aotearoa’s Chris Roberts and the Association’s President and Vice President.

Other winners were:

Supreme B&B Business of the Year 1st Runner Up – Whakaipo Lodge, Taupo

Supreme B&B Business of the Year 2nd Runner Up – Morepork Riverside Lodge, Paihia

Emerging B&B Business of the Year Highly Commended – Willows Green, Blenheim

Callaghan Innovation’s R&D Student ‘Experience’ Grants

Callaghan Innovation’s R&D Student ‘Experience’ Grants are now open to help you to access fresh skills and talent to drive innovation in your business.

R&D Student ‘Experience’ grants support students and recent graduates, by funding businesses to engage a student in a R&D activity, giving them the work and technical experience, and in exchange a business will receive new talent, capabilities & fresh thinking to assist you with your R&D endeavours. 

Key Things to Know:
Businesses receive $8,460 (excl. GST) to cover 400 hours of a student’s time to work in your business (equivalent of 10 weeks work);

It’s a great way for a business to bring in a student to add some focus, expertise or blue sky thinking to a R&D project;

Applications for the 2019 student ‘experience’ grant are open between 1 May 2019 – 31 August 2019;

The student must be an Undergrad, Masters or Phd student (note,a student is still eligible if they have recently graduated and their final semester is within 6 months of your application); 

The student’s main area of study must be Science, Technology, Engineering, Design, or Business; 
You can apply now, and then recruit the student later;

and The student can come on-board any time after an application is approved and their work (within the business) must be completed by 31 March 2020.

This year the process is more flexible and faster, and applications are assessed as they are submitted for a faster outcome (approx. 2/3 weeks approval time).  Applications are open for the next 4 months so you can secure the talent you need earlier in the year and before students break for summer.  We recommend that you apply now so you can access and recruit the best talent from around NZ.   
Next steps:
For more information on the R&D Experience Grant and to find out if your business is eligible, please contact Mark Maguire on mark.maguire@nelsontasman.nz.  We will assist and guide you through the process, as well as approving your application, so please contact us now.

As the region’s economic development agency, one of our core roles is to connect our clever businesses and people with opportunities to grow and innovate.
 
The Regional Business Partner (RBP) Network is designed to make it easier for NZ businesses to access early-stage support to innovate and grow. This national network is made up of 14 ‘Regional Business Partners’ and is supported by New Zealand Trade and Enterprise (NZTE) and Callaghan Innovation – the government’s business innovation agency. 

The Nelson Regional Development Agency is the ‘Regional Business Partner’ for the top of the south.  We provide information, advice, funding and connections to local businesses seeking support for their growth journey.  

The ‘Cloud’ without a silver lining

Many businesses are turning to the cloud for their IT services. The cloud provides reasonably priced access to the latest software and technology without the need for a business to make significant investments themselves.

There are numerous cloud suppliers including firms like Microsoft, Amazon, Apple, Xero, One Net, Spark etc. The list is huge and ranges from giant companies to quite small, niche operators. It’s estimated that by 2019 83% of data traffic will be cloud based (currently it’s at 65%).

But, while the cloud provides its customers with some huge advantages, there are also inherent risks that need to be considered along the way:

  • Typically cloud service providers will limit their liability through the contract their customer signs. Quite often this limitation will be very tight and will afford the customer little or no rights of recovery against a cloud service provider. In the event that a customer of a cloud provider suffers a loss because of a loss of data/operations then the chances of making a financial recovery from the cloud provider will be limited at best
  • Cloud customers are liable for their data irrespective of where it is stored. A breach of data stored on the cloud will still be the responsibility of the owner of the data and not the cloud provider. So any legal liability, fines, notification costs will be the customer’s irrespective of the cause or location of the data breach
  • Cloud service providers give customers access to the most up-to-date security. However; the weakest links in all IT systems are the operators. No matter what the level of security there is no software-based answer to human error such as sending e-mails to wrong addresses, inadvertently disclosing confidential information or passwords, etc.
  • In the event of a data breach caused by the cloud provider’s customer’s actions i.e. the negligence of an employee then the chances are the contract terms will exclude any liability at all on the part of the cloud provider
  • With the limited protection afforded under the cloud service contract it is unlikely that a customer would be able to recover costs incurred by their business if there was a cyber event or data breach

– even if it’s in the cloud. So costs such as business interruption, restoration of data and public relations are not going to be recoverable without resorting to litigation against the cloud provider and perhaps, not even after that

  • The cloud provides access to the latest editions of security tools such as fire walls and anti-virus software. However, the security can only respond to known threats. Hackers are discovering new software weaknesses every day and exploit what are known as zero day vulnerabilities to attack systems before any protection can be deployed. Even with their enhanced security cloud service providers are vulnerable to these attacks
  • Because of the success of the cloud it’s become a target for hackers. So while data in the cloud is often better protected, it is also more exposed because it’s seen as an attractive target for the bad guys
  • There are legal implications of where data is stored. Where a cloud provider hosts their data isn’t always disclosed and is quite often not in New Zealand. A breach of confidential data stored by a

cloud provider could expose their customer to the laws of the country where the data is hosted and these may not be as favourable as NZ laws resulting in extended liability

Most of the Cyber Insurance products in the market extend to cover the Insured for an event or breach on a cloud network. CyberSAFE defines a computer network to “also include a Computer Network that is under the operational control of a Service Provider”.

With CyberSAFE a breach occurring on a cloud based network would be an insured event and, subject to policy terms and conditions, will give the insured access to:

  • Cover for legal liability to third parties
  • Cover for fines & penalties for privacy breaches
  • Defence costs
  • Business Interruption costs
  • Public Relations costs
  • Data restoration/recovery costs
  • Ransom monies

Even if the cloud service provider is liable for the cause of the cyber event/data breach it is extremely unlikely that they will indemnify their client for any costs or liability and, even if they do, it may be for a limited amount and the management of the recovery/defence will be outside of the customer’s control.

Visit: www.crombielockwood.co.nz/cyber-insurance for more on CyberSAFE.

HAMISH KENT
GROUP BROKING MANAGER
+64 3 543 8693 |  +64 27 836 2553 | crombielockwood.co.nz
hamish.kent@crombielockwood.co.nz