CLIENT NEWSLETTER – WINTER 2017

In each article below we have given a short summary of the topic so if you would like to read more please click on the link to our website for the full article and newsletter.

Team Update

Some of you will already have had the pleasure of talking to Josie Taylor who became a Director of McIsaacs Ltd in April 2017. Josie enjoys mentoring clients to upskill their financial literacy with a view to developing accurate financial reporting systems that enable regular business advisory meetings. Families in business holds a particular interest where she has assisted clients with tackling the awkward discussions between generations on business and wealth succession to reduce the risk of family conflict. After 20+ years at a mid tier accounting firm, she is looking forward to working with you and is delighted to be part of the McIsaacs team. 

Sonal Harkisan left our team at the end of April 2017 after working with us off and on for about 10 years. Sonal is now working for a friend that plans to relocate the business to South Auckland closer to where Sonal lives. We wish Sonal all the best for the future and we plan to keep in touch. If you normally communicate with Sonal, please contact Miriam on 09 414 4050.

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Budget 2017

Last month the Government published the 2017 budget. The budget didn't show any tax surprises and most changes apply from 1 April 2018.

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Provisional tax improvements

New legislation enacted in February substantially simplifies obligations under the provisional tax regime.

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The perils of a Permanent Place of Abode (PPOA)

It is important for individuals to correctly determine their residency status for tax purposes, as a New Zealand tax resident is taxed on their 'worldwide income'.

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Beware of paying excessive salaries

It is very common for family owned companies to employ members of the family in the business on a permanent or casual basis. There is no problem with this per se, however income tax rules seek to prevent 'excessive salaries' being paid to family members.

Inland Revenue has recently been focusing on this issue and has been scrutinising the type of work completed, the amount paid, the way in which it was calculated, and what a third party might be paid for the same work.

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Taxation of insurance receipts

New Zealand has taken a battering in recent years from major disasters including earthquakes, fires, cyclones and floods. These have caused business disruptions, devastated lands, and damaged our capital's infrastructure and homes. Where insurance is received, a question often asked is how these receipts should be treated for tax purposes.

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Opportunities for innovation

Businesses that heavily invest in R&D commonly experience cash flow problems. This is because it can take years of sustained R&D before they come up with a marketable product or service that derives a profit. To help overcome this problem and encourage innovation in NZ, the government offers a few support mechanisms.

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Please note: The above E-newsletter notes and the related articles on our website are of a general nature and therefore we urge clients who may be affected by these changes to contact us to discuss your specific circumstances before making any changes or drawing any conclusions.

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