McLEAN AND CO.

EMAIL NEWSLETTER FEBRUARY 2002                                       

 

Welcome to the first edition of the email newsletter produced by McLean and Co, Chartered Accountants, Clive, Hawkes Bay and provided to clients and interested parties.

In some cases this email newsletter is being sent without your prior consent, and your email address has been acquired from published media.    If you do not wish to receive future editions of this Newsletter, click on the Unsubscribe below and arrangements will be made so that you will not receive it again.   Also, you can advise changes of an email address below.   You can also unsubscribe or advise change of email contact details on the website www.mcleanandco.co.nz .    Any emails that are returned to the publisher due to incorrect address will be ceased for forwarding of future editions.

McLean and Co. has installed Norton Antivirus software to minimise risk of virus transmission in the provision of this service.

It is the intention to produce subsequent email newsletters on a regular basis and to include in their content:

current taxation pronouncements

useful taxation information

useful business information and advice 

McLean and Co. is a home based chartered accountancy practice based in Clive, Hawkes Bay.    Readers are invited to peruse the practice website www.mcleanandco.co.nz,  which 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.  

 

INDEX

  1. Relevant Business and Taxation Articles

  2. Business Survival

  3. Entertainment

  4. Increase in the minimum wage rates

  5. End of Year Tax Bill- if you cant pay it

  6. ACC moves to Single Billing

  7. ACC Classification for Partners

  8. Back Claiming of Rebates

  9. Use the Right Word

 

RELEVANT BUSINESS AND TAXATION ARTICLES

The McLean and Co. website contains an extensive number of articles prepared by McLean and Co. relating to taxation and business matters.    Here are a selection that will be of interest:

Analysis and Interpretation of Accounts                                      www.mcleanandco.co.nz//page71.htm

Comparison between Sole Trader, Partnership and Company     www.mcleanandco.co.nz//Page7.htm

Improving Cashflow                                                                      www.mcleanandco.co.nz//Page36.htm

Are You an Entrepreneur?                                                           www.mcleanandco.co.nz//Page39.htm

 

BUSINESS SURVIVAL

Your chances of surviving in business are said to be double if you have regular accounting reports.    The bigger your business the more often you need to analyse its profit.    By monitoring the progress of the business, you can correct adverse trends early.

 

ENTERTAINMENT

Having trouble deciding which expenses are 50% deductible and which are 100%.   It pays to check the detail in IRD Publication IR268.   Here are a few guidelines:

50% Deductible

Presents to customers which are food and drink

Entertaining customers or staff at your office

The corporate box at a sports venue

Travelling expenses incurred getting to and from a staff party

Food and drink when out of town entertaining a client

All business lunches for clients

100%Deductible

All expenditure incurred overseas

Food and drink for your staff either as normal morning or afternoon teas or working lunches

Food and drink for employees while travelling overseas.

 

INCREASE IN THE MINIMUM WAGE RATES

The government has increased the adult minimim wage rate by 3.9% to $8.00 an hour in a move it says is in line with annual wage growth.    This rate rises 30 cents from the current $7.70 an hour.    The youth minimum wage rate, applying to 16 and 17 year olds, will increase from $5.40 to $6.40.    The larger increase in youth rates reflects an earlier decision to increase the youth minimum wage rate from 70% to 80% of the adult rate.

It's estimated that the increase in the adult minimum wage will affect 5,500 adult workers while the increase in the youth minimum wage rates is estimated to affect about 6,900 16 and 17 year olds.

These changes will come into effect from on 18 March 2002.

 

END OF YEAR TAX BILL- IF YOU CANT PAY IT

Remember, the final day to pay your end-of-year tax bill is 7 February 2002, or if you have a tax agent and an extension of time, 7 April 2002.    Every year some taxpayers are charged late payment penalties because they havent been able to pay their full tax bill by the due date.   If you think paying your end-of-year tax bill might be a problem, the following are some simple ways to plan ahead and pay by the due date:

you can arrange automatic payments by phoning INFO express on 0800 257 773 and ordering an Automatic Payment Authority (IR586) form.     Simply fill it on and give it to your bank.   Remember, to avoid a late filing penalty, your tax bill needs to be completely paid off before the due date.

you can make payments at any time, right up to the due date, by posting a cheque to P.O. Box 39050, Wellington Mail Centre.    Ensure that you attach a pay in slip or a note with your payment and include your IRD number, the tax type and the period you want the payment credited to.

pay in person, by cash or cheque only, at any branch of Westpac Trust.

you may be able to pay your tax bill by arranging an automatic deduction from your wages.   Your wages will need the payee details information on the IR586 form procured from IRD.

What If Youre Unable To Pay in Full by the Due Date

Phone IRD on the numbers below to discuss making a pre-emptive instalment arrangement.   By contacting IRD early, you will minimise the amount of penalties and interest that will be charged:

Personal Income Tax, Family Assistance and General Enquiries           0800 162 684

Business Income Tax, Student Loan and General Enquiries                  0800 162 685

If you'd like to know more about any of these options, you can order a copy of Debt Options Information Sheet at IRD by phoning INFOexpress on 0800 257 773   (remember to have your IRD Number handy)

 

ACC MOVES TO SINGLE BILLING

From 1 April 2002 ACC will collect Residual Claims Levies directly from clients, taking over the role from IRD.    Customers will now only have to deal with ACC on ACC- related matters.    Residual Claims Levies are charged to employers and self-employed to cover the ongoing cost of treatment and rehabilitation for people injured in work and non-work from 1992 to 1 July 1999, and non-work injuries sustained before 1992.   This change is one resulting from the passing of the Injury Prevention, Rehabilitation and Compensation Act.      This means employers and self-employed business will receive one invoice from ACC for all premiums and levies.     One annual payment only will be required.

With IRD's role in collecting residual claims levies changing on 1 April 2002, ACC will collect all premiums and levies as part of its annual invoicing process for employers and self-employed people.    ACC will collect:

premiums for ACC cover for the current period (eg 1 April 2002-31 March 2003), and

Residual Claims and Earner's Account Levies for the previous period (e.g. 1 April 2001-31 March 2002)

The change means that both premiums and levies will be invoiced at the same time by ACC:    employers from July 2002 and self-employed from November 2002.

What Does this Mean for Employers?

you will not be required to file an IR68A return on 31 May 2002 or future years.

IRD will provide ACC with earnings information from your employer's monthly PAYE schedule.

ACC invoicing for both premiums and levies will begin from July 2002.

What Does this Mean for Self-Employed People?

you will not be required to calculate levies in your 2002 and future years tax.

IRD will provide ACC with relevant earnings data from your return which will allow ACC to calculate your liable earnings.

ACC invoicing for both premiums and levies will begin from November 2002.

You will receive one invoice.

Self-employed people with ACC CoverPlus Extra will receive a separate invoice for residual claims levies from November 2002.

What Does this Mean for Close Companies where Shareholder Remuneration Not Subject to PAYE is Paid

the company will not be required to calculate ACC premiums and levies in 2002 and future year's IR4 company tax returns.

IRD will provide ACC with details of shareholder-employee remuneration not subject to PAYE.

ACC invoicing for both premiums and levies will begin from July 2002.   The company will receive one invoice.

What Stays the Same?

Residual Claims and Earner's Account Levies will continue to be collected in arrears e.g levies for the income year ended 31 March 2002 will be collected during the 2002 calender year.
IRD will still collect the employee Earner premium for salary and wages earners (including Earners Account Levy) through PAYE deductions.
All Residual Claims Levies due on earnings to 31 March 2001 must be paid to IRD.
IRD will manage collection of outstanding levies due for the years up to and including 31 March 2001.    This includes returns that have not been completed or have outstanding issues.
 
ACC CLASSIFICATION FOR PARTNERS
 
IRD has changed the way that individual partners in a partnership are able to classify themselves for residual claims levy purposes.    Previously all partners were required to use the classification that reflected the business activity of the partnership.   From the 2001 income year, individual partners are able to classify themselves according to the activity personally performed for the partnership.
 
 
BACK CLAIMING OF REBATES
 
Readers will remember the unfairness of restricting rebate claims to within six months after balance date.
 
Taxpayers from 2002 and beyond have eight years to make rebate claims.   This means taxpayers who missed out on claims in the 1999-2000 year can make claims in relation to charitable donations and housekeeping or childcare expenses this year.
 
 
USE THE RIGHT WORDS
 
With reference to non-business taxpayers, if you ask IRD for a Personal Tax Summary, you will receive details of your income and your tax and if there is money owing you will have to pay it.
 
If, on the other hand, you ask for a Summary of Earnings plus a Personal Tax Worksheet, you will receive the same information with no obligation to pay the tax if any.
 
Ge careful to ask for the right thing. 

 

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

 CONTACT McLEAN AND CO. BY EMAIL BY CLICKING ON THIS LINK

BACK TO HOME PAGE