Winter 2021 Newsletter McIsaacs Ltd

NEWSLETTERS

    CLIENT NEWSLETTER – WINTER 2021

    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.

    We are half way through the calendar year, if you haven't forwarded us your financial records for the year ended 31 March 2021, please consider collating this information over the winter months. Our client annual checklists can be found here.

    If you have any queries about this, please contact us.

    Government addresses housing affordability

    On 23rd March 2021 the Government announced that it would make a number of changes to the taxation of residential property to address housing affordability. Legislation has been enacted implementing some of the announced changes, whilst the balance are to be consulted upon before further legislation is drafted.  Legislated changes - The bright-line test taxes the sale of residential property if it is sold within a prescribed period of time, subject to specific exclusions such as for the family home and farmland......Click here to read more

    Employment Recovery

    Over a year on from NZ's level four lockdown, businesses and communities alike have experienced their fair share of highs and lows. Many have had to rapidly adapt to the Covid-19 induced restrictions. For some, they have benefited from unpredictable productivity gains, meanwhile others have struggled to regain pre-pandemic momentum. Employment levels slumped to an eight year low in September 2020, with over 150,000 unemployed people. So nearly six months on, how does the job market stack up now? .....Click here to read more

    Penalising R&M

    Classifying expenditure as either deductible repairs and maintenance (R&M) or non-deductible capital expenditure is not clear cut. It is a question of fact and no two situations are the same. But it is advantageous from a tax perspective to classify as much expenditure as possible as R&M, which gives rise to the risk of pushing 'the line' too far. There isn't a rigid test to be applied, but the courts have identified a two-stage approach for determining the nature of the expenditure and whether it comprises R&M: .....Click here to read more

    Business interruption due to Covid-19

    The onset of the Covid-19 pandemic had an immediate impact on businesses nationwide. Lockdowns and the border closure have caused massive disruption. For many this was temporary, for some, permanent. Inland Revenue has released a draft Interpretation Statement "Income tax and GST – deductions for businesses disrupted by Covid-19 pandemic". The statement sets out Inland Revenue's 'draft' view on to what extent businesses can claim tax deductions for expenditure incurred whilst impacted by Covid-19......Click here to read more

    Fair market salary reminder

    There is a general need for a business to pay associated employees a fair market salary for their personal service. Given the implementation of a 39% personal marginal income tax rate on income over $180,000 from 1 April 2021, Inland Revenue's scrutiny of such salaries is expected to increase. This has been confirmed through Inland Revenue issuing two related documents in March 2021 in quick succession, namely: ......Click here to read more 

    Accountancy Insurance - a solution to alleviate tax audit concerns

    One of the strongest trends in IRD investigations is the better use of data analytics to target specific industries and players within such, with a campaign approach to compliance driven off the back of that. This will continue as IRD strengthens its data analytics capability and continues to deepen their access to data across multiple direct and indirect sources. ......Click here to read more 

    Tax loss carry forward rules

     During the early days of the COVID-19 pandemic, the Government advised that New Zealand's rules relating to carrying forward tax losses would be relaxed. The expectation being the economic effect of the pandemic would see a number of businesses requiring new capital investment, but acknowledging that tax losses should not be forfeited as a result. This change has now been passed into law. Historically, in order to carry forward a tax loss amount  ......Click here to read more 

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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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