McLEAN AND CO. Chartered Accountants

Accounting          Taxation         Business Advice and Development Assistance           Audits                             

 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.  Any feedback would be welcomed.

McLean and Co. is a home based chartered accountancy practice based in Clive, Hawkes Bay.    Readers are invited to peruse the practice website lists services provided, gives contact details and indicates how to become a client, contains an extensive base of articles on business and taxation matters,  and has links to other websites that may assist your business.    Being a small firm itself,   McLean and Co. strives to provide a personal and professional service largely to a self employed person and small business client base.  Enquiries are welcomed.



We are happy to accept new clients.  Please contact ourselves at the contact points highlighted above if we can assist you in your accounting and taxation requirements. Our website lists information required for this in the following link:



  1. Season Greetings to All Readers

  2. Removal of 5 Cent Coins from Circulation- Effect on GST Invoices

  3. Record Keeping Duties of a Trustee

  4. Partnership Agreements- why Written Agreements are Important and What to Put in them

  5. SWOT Analysis for Small Businesses



This being the last email newsletter for 2006, McLean and Co would like to wish all readers a Merry Xmas and all the best for the New Year.



5 cent coins were removed from circulation  from 31 July 2006 .  This means that for cash transactions retailers will be rounding prices to the nearest 10 cents.  An issue has been identified where a supplier issues an invoice and then the recipient pays in cash in respect of that invoice.  In some circumstances this will mean, as a result of rounding, the amount of tax charged in a transaction may alter.  If a tax invoice has previously been issued, section 25(3) of the Goods and Services Tax Act 1985 would require that a debit or credit note be issued in respect of this adjustment.

For example: A person receives a monthly statement/tax invoice from a retailer in respect of supplies for the amount of $25.85 (inclusive of GST). If they were to pay this account with cash the supplier will need to adjust the consideration up or down to either $25.80 or $25.90 (depending on their rounding policy.)  The GST included in the transaction at $25.85 is $2.87. At $25.80 it is also $2.87.  However at $25.90 the amount of GST increases to $2.88.

In the above example, because rounding up would mean the amount of GST changes section 25(3) would require the supplier to issue a Debit Note showing the change to the consideration.    However, section 25(3B) provides the Commissioner with a discretion to not require a Credit or Debit Note to be issued where the Commissioner is satisfied there are or will be sufficient other records available to establish the particulars of any supply (or class of supply) and that it would be impractical to require a credit or debit note to be issued.

It has been determined that, under the terms of section 25(3B), a Debit or Credit Note need not be issued where the consideration for a transaction changes due to the effects of rounding necessitated by the withdrawal of 5 cent coins from circulation.  This is because usual practice is to show the effects of rounding on the receipt issued by the supplier.

While a Debit or Credit Note need not be issued as a result of rounding, the adjusted amount of tax is to be included in the appropriate GST return.   In the example above, the supplier needs to include output tax of $2.88.




A number of Acts regulate the administration and record keeping of a trustee. The key points of this resposibility are:

trustees have a duty of efficient management and must ensure that assets are managed in an efficient and economic manner.  This means trustees must take all necessary precautions such as those that would be taken by a prudent business person managing affairs of his or her own
trustees must keep and render to the beneficiaries a full and proper record of their administration of the trust assets, including appropriate accounting records and financial statements.  These records are the direct responsibility of trustees along with tax returns and all documentation (including bank statements, invoices etc)-  all of which must be kept for a period of seven years.   Note that records relating to the management of the trust, such as resolutions, deeds and the like, should be retained for the life of the trust (up to 80 years)
a trustee also has the duty to act personally in managing the trust's affairs.   This means trustees generally cannot delegate their powers and discretions. 


Some of the important steps trustees can take to protect themselves against liability include:

familiarising themselves with the trust deed and other relevant documents, as well as all the trust's assets and any liabilities that may be attached to them
seeking beneficiary approval of proposed or current record keeping procedures and ensuring records and accounts are kept
regularly reviewing the financial performance and position of the trust to ensure it is satisfactory
meeting formally at least once a year to review investment portfolios, strategies and distribution issues, and to consider and approve the trust's accounts and balance sheet.
meeting during the year to discuss major decisions such as the sale or purchase of a significant asset. These decisions must be recorded in resolutions of the trustee minute book (including where meetings are held and resolutions approved over the phone, and minutes from the meeting should be circulated and signed off by trustees as a record
meeting on other occasions depending on the nature and extent of the trust deed
having separate trust bank accounts to ensure that personal and trust funds do not become mixed up.
ensuring the trust financial accounts are prepared by a professional person and take other professional advice when necessary e.g. investment advice.




If you go into business with a partner, either in an actual partnership structure or a company structure (where the ‘partner’ would actually be a fellow shareholder), there is a temptation to rely on an informal or verbal agreement about the nature of the business partnership. This temptation is particularly strong when the proposed partner is a close friend, family member, or lifestyle partner.

However, relying on an informal agreement can turn into a nightmare. We can never guarantee how our relationships will turn out. We hope for the best, but life brings many twists that can result in unexpected changes to relationships.

The simple business rule to follow is: in business, be businesslike.

This means putting aside all emotional reasons in favour of good business sense. It is also means clarifying the partnership agreement in writing to avoid any future “But you said . . .” or “But you promised . . .” type accusations and disputes.


Have A Written Agreement

If you’re going into a business partnership with another person, always have an agreement in writing. It is important that each party has a clear idea about what is expected of the other and what each will contribute to the partnership.

Get legal advice on the agreement so both parties are protected. Also consult business advisers or mentors.

Aim for fairness: a lopsided partnership agreement will only generate resentment that is likely to undermine the productivity a partnership is designed to achieve.

Tip: After reading this article, give your lawyer the basics of what you want covered and ask if you’ve missed anything vital, but don’t let your lawyer try to cover every eventuality in a lengthy ‘legalese’ document. Retain some flexibility and ability to change things if conditions change.


Points to Cover in a Written Agreement

Avoid possible disputes by clarifying these points:
Business name
The name of the business.
Description of the business
Duration of business
Whether the business is for a specified term or ongoing.
Professional advisers- who the Accountant and Lawyer willl be
Bank- which bank the business will be with, who will be authorised to sign cheques
Contribution-What each partner will contribute in terms of money invested, skills, time, and clients or customers (shared or separate), and in what amount.
Responsibilities.  What duties will each partner be responsible for?   For example, one partner may take responsibility for the day-to-day management of the business and the other for marketing and promotion of the business.   Who will be responsible for major business decisions?   Who will plan regular business meetings so all partners can understand what is happening in the other’s area of responsibility.
Cost sharing.  How will the operating and overhead costs of the business be shared?   Who will make expenditure decisions?   What expenditure might each partner be liable for?  For example, one partner (fellow shareholder) in a company might wish to have a new luxury company car every three years, the other might be content with a medium sized car that is changed every five years.   There is potential for conflict and unhappiness unless sorted out in advance.
Profit / Loss.   How will profits or losses be shared?    Will this be in proportion to the equity contributed to the partnership or business by each partner?    Or will there be an adjustment for time, effort and skills contributed?
Who owns what?      Most businesses will generate some form of  intellectual property either in tangible form (such as a patented or developed product) or intangible (such as a software program, a client database, or specialised knowledge and skills).    Who has ownership of this property if the partnership or the company is dissolved?    Ownership is not always clear-cut even in a company situation.    For instance, a patent may be in the name of a person, not the business, although the business may have borne most of the costs of developing the patentable product.
Review process and Arbitration.   It is useful to include a review clause in the partnership agreement (for example, that the partnership should be reviewed annually) and also agreement on an independent arbitrator if the partners reach an impasse. Consider including a time limit on the partnership.    For instance, the partnership will be reviewed after one year and dissolved if it is not meeting the aims of each party.
Disputes.   How will disputes between the partners be resolved, for example, by arbitration?
Transition.   Partnership Agreements should include clauses covering transitional possibilities, such as the procedure if a new partner joins, or an existing partner dies, retires, or wishes to withdraw.    For instance, if you were in business with a shareholding partner who decided to leave the company you may want first option to buy out the partner’s shares in the company rather than have the partner sell them to an outsider.

Check with advisers about insurance for partnership protection. Having insurance means that in the event of death or disability of one of the partners cash is available to allow the business to continue and at the same time settle the estate.


Reasons for Going into a Partnership

The main reason for going into partnership is to create a better result than could be achieved by one party acting alone. For instance, in professional partnerships (such as lawyers, doctors and accountants) the partnership allows each partner to share the overhead costs of business premises and the administrative staff. In a business situation the aim might be to achieve synergies by combining skills, such as marketing skills and financial skills.

Whatever the aims of the partnership, to avoid possible future disputes, it is important to clarify what results each party desires from the partnership.




The new year is a good time to perform a SWOT analysis for any  small business owner. 

 A SWOT simply stands for: Strengths, Weaknesses, Opportunities and Threats. Each area forms a box on a grid and you fill in each section to help formulate a marketing strategy.

Strengths and weaknesses focuses your business to look internally at what your business can do. Many business are great at looking inward but fail to look outside their company. Threats and opportunities are external; focusing on the conditions of the real-world.

This is where a SWOT analysis is helpful. It challenges you to see beyond your company walls to determine what opportunities are open for your company and how to capitalize on your strengths.

While most of your analysis will be subjective, the SWOT can provide multiple benefits to your small business. These benefits can include:

insight into where your business can focus to grow.
understand the industry structure by using a SWOT in your business plan.
focus your advertising and marketing on areas that give you a competitive advantage in the marketplace.
the foresight to see looming threats and react proactively.

To effectively complete a SWOT for your organization, look at the following examples:



Consider your strengths relative to your competitors and from your customers' perspective.  For example, all your competitors may sell using the telephone, whereas you use direct face-to-face selling.  Anything a customer wants that you provide and your competitor doesn't, can be a possible strength.

business location or product exclusivity
an established distribution channel



It is far easier writing down your corporate strengths than weaknesses. Think of objections your customers raise during the sales process.  Think of your competitors' remarks.  Is there any truth to what they say?

limited human resources and staff
high cost of production
products or service similar to competitors'



Your small business is influenced by the external environment, such as: legal, political, technological, and cultural factors.  Consider what can make your business obsolete, and what will replace it.  Threats can become opportunities or vice versa.


government regulation softening
development of new technology
growing trend and customer base



new substitute products emerging
price competition
economic pressure

The SWOT analysis is a quick and simple tool to understand the overall big picture.   I t is the starting point of strategic planning. 

The most important take-away from this exercise is to apply this knowledge to your small business.  Take all necessary actions to reduce the threats to your company and position yourself to take advantage of the opportunities.






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: