McLEAN AND CO. Chartered Accountants

Accounting                               Taxation                                   Business Advice and Development Assistance                                        

 P.O. Box 10 , Clive         133 Main Rd, Clive           Tel. (06) 8700952          Fax. (06) 8700955 

Email                                  Website


Welcome again to the McLean and Co. Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  



We are happy to accept new clients.  We would be happy to assist colleagues and acquaintances as new clients.



  1. IRD Compliance Focus 2011/2012.

  2. ACC Introduces Experience Rating

  3. Claiming Investor Losses

  4. 10 Reasons why you are not Rich



IRD have recently released its compliance focus for 2011/ 2012.  Here are the areas they will be looking into with particular interest:

  • Diversion of personal income

  • Complex financing

  • Loss generation and usage

  • Misuse of charities

  • False information and fraudulent claims

  • The hidden (cash) economy

  • Record keeping

  • Serious crime and cross border transactions

  • Income from property

  • Resident withholding tax rates advised to banks etc.

  • Non-resident contractors



ACC has launched a new way of charging businesses levies that will more fairly reflect their safety record and claims history.

From 1 April 2011 ACC will implement experience rating. This is a system which recognises and rewards those business owners with good claims experience. It also encourages businesses to improve their workplace safety, which will make them better places to work.

Under experience rating, a company’s Work levy will be adjusted to more fairly reflect the company’s own safety record, not just that of the industry as a whole. Historically, a business’s Work levy was based solely on injury rates within its industry. This meant employers paid the same Work levy as others in the same industry, despite differences in their safety records.

ACC General Manager Insurance and Prevention Services, Dr Keith McLea, says experience rating is a fairer way to work out the levies that businesses pay to cover injuries to their employees.

“Work levies are important because they fund the cost of treatment and rehabilitation for people who get hurt at work. It makes sense that businesses with fewer injuries, and those which help injured employees get back to work, are rewarded for their efforts. Experience rating is similar to how your insurance company recognises your claims history on your car insurance policy”.

In addition to introducing experience rating, this year ACC has also increased the number of levy risk groups. Levy risk groups are how ACC groups businesses and self-employed people to set their base levy rate.

“These changes will enable us to more accurately and fairly group businesses with similar levels of risk, and reduce businesses cross-subsidising each other within an industry. For some businesses, this may result in an increase or decrease in the base levy rate. Experience rating will then be considered on top of this, so businesses with a good claims experience will still have that recognised,” said Dr McLea.

Experience rating will be applied in one of two ways, depending on the amount a business pays in ACC Work levies annually.

For larger businesses paying ACC levies of $10,000 or more, their Work levies will now be calculated to take into account:

  • the number of claims made by employees for work-related injuries (with medical costs of $500 or more) over the three-year experience period;
  • the length of time employees receive weekly compensation; and
  • any fatal injury claim.

This information is then compared with other employers in similar industries, with similar injury risk, known as ‘levy risk groups’. If an employer’s performance is better than their peers, then their Work levy may be lower. However, if the performance is not as good, the Work levy may be higher. Levies can increase or decrease by up to 50 percent.

Smaller businesses with levies of less than $10,000, that meet the eligibility criteria, will receive a no-claims discount of 10 percent provided they’ve had no weekly compensation or fatal injury claims over the previous three years. There is no change for businesses generating between one and 70 weekly compensation days paid; however, a loading of 10 percent will be applied for businesses that generated more than 70 weekly compensation days paid or any fatal injury claim.

Dr McLea said businesses can work towards lowering their future levies straight away.

“Experience rating starts on 1 April, so what you do right now matters. If you can improve workplace safety now, and reduce your claims, it will have a direct impact on the levies you pay later,” he said.

Most businesses will receive invoices for levies calculated under the new system later this year.

The aim of the experience rating and no-claims discount programmes is to encourage businesses to put a greater emphasis on injury prevention and injury management in the workplace.

“Experience rating is all about getting people safely back to work after an accidental work injury and encouraging better workplace safety. That’s good for employers, it’s good for ACC, and most importantly of all, it’s good for the employees,” said Dr McLea.

Background information

Approx. 6,670 larger businesses are affected by the introduction of the experience rating programme from 1 April, 2011.

Approx. 259,600 smaller businesses are affected by the introduction of the ‘no claims’ discount programme.

Experience rating is a mandatory change, however there are eligibility rules.

ACC will look at three years’ worth of claims history to determine a business’s discount or loading.

In 2011/12, ACC expects to receive approximately 21,000 claims which will require people injured in the workforce to have more than 7 days off work.

The Minister for ACC has declared the Christchurch earthquake an ‘adverse event’ for the purposes of experience rating, meaning that unless the employer materially contributed to the injury, an employer’s experience rating will not be affected by claims resulting from the earthquake on 22 February 2011.



Taxpayers have had recent success with IRD allowing bad debt deductions for finance company losses to be claimed in certain circumstances.  A person can generally claim a deduction for the principle amount of debt investments (i.e. bonds, notes and debentures but not preference shares or other equities) that are in default where:
  • A reasonable prudent person would conclude there is no reasonable likelihood the debt investments will be paid
  • the debt is written off as bad in the income year in the person's records
  • the person is in the business of dealing or holding investments, and
  • the person is not associated with the debtor who is in default

The critical test in most circumstances will be whether or not a person is in “business”. This is not a straightforward question and the following factors will need to be considered: nature and intention of activity; period of activity; scale of operations; volume of transactions; pattern of activity; commitment of money; and commitment of time and effort.

Investors who are not in the business of dealing in or holding debt investments are unable to claim a deduction for the principal amount of the investment. However, they may be able to claim a deduction for interest income that has previously been returned as income but not received by the person and the outstanding interest debt meets the criteria set out above.
Based on some recent cases, the following is indicative criteria to provide some guidance as to what may constitute a “business”:
  • at least several hours per day dedicated to mananging the investments
  • adequate records kept of the investments, setting out when the funds were invested, the amount, interest received and maturity date
  • records from the investment companies detailing the bad investments and the likely chance of recovery
  • annual financial statements prepared, and
  • a reasonable amount of investment activity, with new investments being entered into, investments maturing or being invested each year



(Acknowledgement- Adapted and amended from an Article from

1. Credit Crud

Unwary business operators put purchases that they cannot afford on the "never never" credit card.   Before you buy something, ask yourself if you need it.

If so, what are the alternatives? Investigate second-hand options. Use cash over credit cards whenever possible.

2. Piddling Interest

Many people think they are saving, but they have their money stashed in low-interest transaction accounts. So, capitalise on your cash - invest it in a high-interest account and enjoy the difference.

3. Budget Bedlam

Too many people fail to track expenses.  Most spending can be foreseen.   It is  helpful to draw up a monthly budget that helps you plan how you maximise your regular wage.

4. DIY Disaster

In the frantic small business sphere, it is easy to acquire the habit of wearing too many hats.   The cost of outsourcing a task may seem high, but the money you save by doing it yourself may cost you more by eroding your time to pursue money-making activities that you do well.   Trying to do specialist tasks for which you lack training may even mean that you wind up paying more to fix mistakes you make.

5. Flash before Cash

Many people care too much about having the latest and greatest status symbols.    Flashy office space and furniture may look cool, but the funds they tie up can curb your ability to grow your business.

6. Same Stew

Mistakes can be costly, especially if you repeat them.     Learn from your mistakes so they don't hold you back. Too often, the same mistakes are repeated relentlessly.  Much money is lost through failure to learn what went wrong last time and to adapt.

7. Whatever Attitude

Without enthusiasm for your business, the chances of success are remote.   A strong work ethic goes a long way, buts it passion that leads to success.

8. Dream On

Visuallising goals will fuel success   A vital and often missing part of that process is conviction.   If you only dream of success and lack the belief that you can win it, you will flounder.

9. Vacuum

Going solo and not asking for help when you need it can stifle growth and mean you miss opportunities.   People you might want to recruit include accountants, solicitors, financial planners for  investment advice,  IT personel  for your computer system, business mentors etc.

10. Passion Killer

A final reason that you may fail to get rich, is that you are passionate about an area ,  but lack strategy. Then you wonder why the dollars are not rolling in.  If you want to make money, find a gap in the market and then market that gap.






The information provided in this email newsletter is for informational purposes only.   McLean and Co. accept no responsibility for the opinions and information expressed in the information provided and it is provided "as is" without warranty of any kind.    The user assumes the entire risk as to the accuracy and use of this document.   Readers are asked to seek professional advice pertaining to their own circumstances.    The McLean and Co. email newsletter may be copied and distributed subject to the following conditions:
  • All text must be copied without modification and all pages must be included.
  • This document must not be distributed for profit.    


If we can assist further, please email McLean and Co as follows: