McLEAN AND CO.

Accounting                    Taxation                      Business Advice and Development Assistance                              P.O. Box 10 , Clive        133 Main Rd, Clive          Tel. (06) 8700952         Fax. (06) 8700955 

Email murray@mcleanandco.co.nz                                  Website www.mcleanandco.co.nz

 
 
EMAIL NEWSLETTER  JANUARY 2004
 

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 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.  Enquiries are welcomed.

 

 

 

NEW CLIENTS

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:

www.mcleanandco.co.nz/Documentationrequired.htm

 

INDEX

  1. Relevant Business Articles-    Back Claiming of Rebates, Cutting Costs in Your Business, Tax Audits- What is IRD Finding?, Provisional Tax- General, Partnerships- Allocation of Profits.

  2. 2003 Tax Year Payment Reminder

  3. Fringe Benefit Tax Review

  4. GST Adjustments for Entertainment Expenses

  5. Various Employment Related Matters- Current Minimum Wage by Law, Minimum Wage Exemptions, Board and Lodging, Enforcing the Minimum Wage, Equal Pay- By Law,  Wages by Agreement, Wages and Time Records, Recovering Money Owed by your Employer, Business in Receivership and Wages Owing, Personal Liability

 

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:

Back Claiming of Rebates                           www.mcleanandco.co.nz/Page57.htm

Cutting Costs in your Business                   www.mcleanandco.co.nz/Page80.htm

Tax Audits- what is IRD Finding                 www.mcleanandco.co.nz/Page93.htm

Provisional Tax- General                             www.mcleanandco.co.nz/Page22.htm

Partnerships- Allocation of Profits              www.mcleanandco.co.nz/Page31.htm

 

2003 TAX YEAR PAYMENT REMINDER

The 7th February 2004 is the due date for customers who have an end of year income tax amount to pay, family assistance overpayments (both over $20.00) or a student loan payment (over $5.00), due.

For customers with a tax agent and an extension of time arrangement, the due date is the 7th April 2004.

There are two issues concerning payment dates.

As the 7th February is a Saturday and the preceding Friday is Waitangi Day, IRD will accept all payments received on or postmarked 9th February as on time. This has been done to take into account possible postal delays.

However, those who wish to negotiate an instalment arrangement will need to contact IRD  on, or before, the 5th February to avoid additional late filing penalties.

Further information on how to make your payment.

 

FRINGE BENEFIT TAX REVIEW

The government's recently released discussion document contains a number of proposals aimed at improving the workability of the FBT rules through a combination of making them more consistent and reducing compliance costs. The proposed key changes are:

A reduced rate on motor vehicle fringe benefit tax, from 24% to 20% of the vehicle's cost.
Vehicle owners will have the option of calculating the benefit on the basis of the vehicle's depreciated book value, at a rate of 36%.
Aligning the treatment of leased vehicles with that of owned vehicles.
Carparks being subject to FBT irrespective of whether they are considered to be on or off the employer's premises. The document discusses options on how car parks might be valued and a threshold under which many carparks would remain untaxed.
The multi-rate calculation would be retained but streamlined by options such as an Inland Revenue multi-rate calculator.
Raising the minimum value thresholds that have to be exceeded before minor benefits are taxable. The employee-related exemption would be increased from $75 to $200 per quarter, while the employer-related exemption would be increased from $450 to $2,000 per quarter.
Several new exemptions are proposed, including for the private use of business tools such as cellphones and laptops that have been provided to employees primarily for business purposes.
The exemption that charities have from FBT would be retained but an anti-avoidance rule is suggested.

You can view the details of the government's proposals under the menu heading "Organisation info". Select "Tax Policy" which will take you to IRD "Policy Advice Division Page". You will find the "Discussion Document" link under the heading "Publications".

Submissions on proposals close on 27 February 2004. IRD encourage you to have your say.

 

GST ADJUSTMENTS FOR ENTERTAINMENT EXPENSES

If you have entertainment expenses, you need to make a GST adjustment on the non-deductible portion of your entertainment expenses once a year. When this adjustment is required depends on whether a tax agent prepares your income tax return.

If a tax agent doesn't prepare your income tax return, the GST adjustment is made in the GST return that covers the date your income tax return is due or filed, whichever is the earlier date.

If a tax agent does prepare and file your return, the GST adjustment is made in the GST return which covers the earlier of:

the date your income tax return is filed, or
31 March after the due date for your income tax return.

For more information, see page 71 of the IRD GST Guide (IR 375) or page 18 of the IRD Entertainment Expenses (IR 268) booklet. You can get these from the IRD website or order one by phoning IRD INFOexpress on 0800 257 773.

 

VARIOUS EMPLOYMENT RELATED MATTERS

CURRENT MINIMUM WAGE BY LAW

All employees aged 16 years or more must be paid the statutory minimum wage.

Minimum wage rates for all employees aged 16 and over, as well as the age when the adult rate applies, take effect from 24 March 2003 as follows:

the minimum wage for youths is $6.80 per hour, $54.40 for an
8-hour day, and $272 for a 40-hour week.

This youth rate applies to those aged 16-17 years .

the minimum wage for adults is $8.50 per hour, $68 for an
8-hour day and $340 for a 40-hour week.

This adult rate applies to those aged 18 or more.

The statutory minimum wage does not apply to:

people who hold an  exemption.
people doing recognised industry training. Here you will be paid the minimum training wage - equivalent to the minimum youth pay rate above. Contact Employment Relations Infoline for more information.

The statutory minimum wage applies even if an employee is paid partly or wholly by commission or by piece rate. It applies to all types of jobs and employees, including homeworkers, casual, temporary and part-time employees.

 

MINIMUM WAGE EXEMPTIONS

An exemption from the minimum wage lets a person work for less than the minimum wage. Labour Inspectors can grant an exemption to a person with a recognised disability that significantly slows his or her work and makes him or her incapable of earning the minimum wage.

 

BOARD AND LODGING

If an employee is provided with board and lodging, a deduction of 15% for board and 5% for lodging can be made.

 

ENFORCING THE MINIMUM WAGE

Any employee who is being paid less than the minimum rate in the Minimum Wage Act can make a complaint to a Labour Inspector.

The Labour Inspector may investigate such a complaint and act to recover any money owing to the employee.

Employees or their representatives can also enforce the minimum wage themselves, by seeking mediation assistance, or, if that fails, going to the Employment Relations Authority.

 

EQUAL PAY- BY LAW

An employer cannot pay men and women different pay rates for doing the same or substantially similar work if the only difference is their sex (Equal Pay Act 1972).

In addition, under the Human Rights Act 1993, an employer cannot discriminate in hiring or firing, training or promoting because of the employee's colour, race, ethnic or national origins, sex (including pregnancy or childbirth status), marital or family status, age, disability, religious or ethical belief, political opinion, employment status, or sexual orientation.

Under the Employment Relations Act, employers cannot discriminate on those same grounds or on the grounds that a person has been involved in union activities, in relation to terms of employment, conditions of work, fringe benefits, opportunities for training, promotion or transfer, dismissal, retirement, or by subjecting an employee to detriment.

 

WAGES- BY AGREEMENT

If there is no collective agreement that covers the situation, employers and employees aged 16 years or more can agree to any rate of pay in their employment agreement, as long as it is equal to, or better than, the statutory minimum wage.

Employers and unions or employees may agree to a range of payments, for example, performance bonuses or different rates of pay for working overtime.

 

WAGES AND TIME RECORDS

Employers must keep wages and time records for each employee, for six years. Employees and their representatives have the right to see these.

These records must include the following information:

  1. the employee's name
  2. the employee's age, if under 20 years
  3. the employee's postal address
  4. the type of work the employee undertakes
  5. the type of employment agreement, individual or collective
  6. the title, expiry date and employee classification in any applicable collective agreement
  7. where payment is calculated by the hour, the hours and days of employment in each pay period
  8. the wages paid each pay day
  9. details of employment relations leave taken
  10. details of annual leave taken
  11. details of statutory holidays worked and days in lieu provided
  12. details of salary deductions, such as PAYE and agreed superannuation contributions.

Employers have obligations to keep holiday records. These may be kept as part of the wages and time records.

RECOVERING MONEY OWED BY YOUR EMPLOYER

If an employer does not pay all wages, allowances or other money that have been agreed to in an employment agreement, the employee (or the employee's union or other representative) can go to the Employment Relations Authority to ask for any money that is owed to the employee (after following the problem-solving procedure). The Authority will hear wages claims dating back six years. (Note that claims arising from events before 2 October 2000 will be dealt with under the provisions of the Employment Contracts Act 1991).

Employees can also ask the Authority to order the employer to comply in future with agreed conditions of employment, including pay rates.

 

BUSINESS IN RECEIVERSHIP AND WAGES OWING

Sometimes a business may go into receivership with wages and holiday pay owing to employees. When a business is in receivership, its debts are ranked in order of priority as set out by law. Wages and holiday pay have a high priority after secured debts such as mortgages.

Employees should take their claim for any outstanding wages or holiday pay to the receiver - that is, the person appointed to manage the employer's business affairs.

Any dispute about whether a claim is valid may need to be decided by the Employment Relations Authority.

 

PERSONAL LIABILITY

If a Labour Inspector is taking a case to the Authority to recover minimum wages or holiday pay from an employer that is a company, the Authority may authorise the action to be brought personally against a director, officer or agent of that company. However, the Authority can only authorise such an action if both:

the director, officer or agent of the company directed or authorised the default in payment, and
the Labour Inspector establishes before the Authority that the money is unlikely to be paid in full, either because the company is in receivership or liquidation, or because there are reasonable grounds for believing that the company does not have enough assets to pay the money in full.

Where an action (that the Authority has authorised) is heard, if it is proved that the director, officer or agent did direct or authorise the default in payment, that person can be held personally liable for the amount owing, as can the company itself and any other director, officer or agent who also directed or authorised the default.

 

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:

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

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