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

 
 
EMAIL NEWSLETTER  NOVEMBER 2007
 
 

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

 

NEW CLIENTS

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

 

INDEX

  1. Advising McLean and Co. if you Wish McLean and Co. to give Personal Financial Information

  2. Processing of Gross Earnings on PAYE Returns for Self Employed Businesses you Employ

  3. Keeping a Vehicle Log Book

  4. Records you Need to Keep Relating to Employees

  5. Employees Opting into Kiwisaver

 

 

PLEASE ADVISE US IF YOU GIVE OUR NAME TO THIRD PARTIES WHO ARE LIKELY TO RING US FOR FINANCIAL INFORMATION ABOUT YOURSELVES

We frequently get calls from the likes of finance brokers and credit card companies requesting financial information about clients.   We are happy to do so to assist our clients  These are usually legitimate calls from these third parties in response to clients applying for loan finance, hire purchase agreements, credit cards and the like.  However we adopt a policy that we do not disclose any client's financial information to any third parties unless we have specific approval by the client to give that information- from our point of view if the call is not legitimate and we provide personal information we could face significant consequences.  If we do not have this approval we refuse to give the information to the third party, which may cause some holdups in requirements of clients.   It is requested and suggested that if clients give our name to such financiers as a referral or source of information in support of such an Application (which usually means that the third party will ring us to obtain personal financial information) that we are contacted immediately by clients and given approval to release any personal financial information that may be required in support of the Application.

 

PROCESSING OF PAYE RETURNS IN RELATION TO SELF EMPLOYED CONTRACTORS YOU EMPLOY AND DEDUCT WITHHOLDING TAX FROM

We have noted cases where processing is not correct in relation to the above.

If you utilise the services of persons/ firms who are in business in their own right (and thus are responsible to pay their own ACC Levies) and you deduct Withholding Payments from these entities and therefore have to pay this to IRD in your PAYE Schedules the following month, you should complete Employer Monthly Schedules as follows:

We have noted cases where only the figures are processed to the column "Gross Earnings and/ or Withholding Payments".   In such cases you will be charged for ACC Levies in relation to these Earnings.

 

 

KEEPING A VEHICLE LOGBOOK

A vehicle logbook is a record of:

  • the date travelled
  • the reason for the trip
  • whether the trip is for business or private
  • the distance travelled.

A vehicle logbook must be kept for each individual motor vehicle to work out the amount of business use as opposed to the amount of  private use per vehicle. This percentage is then the basis on which to claim a set percentage of all motor vehicle expenses against your business income when calculating the business profit.

The vehicle logbook must be kept for at least three months every three years to work out the business share of the running costs. You can use the result of your three months’ recording to claim the business share of your vehicle expenses over the next three years, provided your business use of the vehicle doesn’t change by more than 20%.

You should still keep records of the total vehicle running costs and record the total distance travelled for the income tax year.

If you don’t keep a vehicle logbook you may claim up to 25% of the vehicle running costs as a business expense. However you could be asked by Inland Revenue to substantiate the percentage claimed.

Remember, you need to be diligent when recording what is business use and what is private. Inland Revenue have determined that in normal circumstances travel between home and work is private.

 

 

RECORDS YOU NEED TO KEEP RELATING TO EMPLOYEES

As an employer, you are responsible for making tax deductions from payments you make to people who work for you.   You may also have to make other deductions such as student loan repayments, KiwiSaver deductions and Child Support..  You need to keep a record of all the income earned and the deductions you make from employee's wages.

 

What to do if a new Employee starts working for you?

All your new employees must complete a Tax Code Declaration (IR330) when they start working for you.    If they fail to do so you must deduct tax at the no-declaration rate.   The only other time an employee needs to complete an IR330 is if they want to change their tax code.

Each time a new employee starts working , the employer must provide IRD with the following details on the Employer Monthly Schedule (IR348):

  • name
  • IRD Number
  • tax code
  • start date

 

When the Employee stops working for the Employer

At that stage employers should record the finish date on their wage records and on the Employer Monthly Schedule (IR348). IRD will then remove the employee's preprinted details on the IR348.

 

 

EMPLOYEES OPTING INTO KIWISAVER

There are two ways existing employees can opt into KiwiSaver, as follows:

  • register direct with a KiwiSaver scheme provider- the scheme provider will then send to IRD the employee information and IRD will send to the employer a letter showing the employees name, IRD Number and the KiwiSaver deduction rate the employee has chosen-  the employer should than commence deducting employee contributions at the rate indicated from the employees salary or wages.
  • the employee completes a KS2 form and hands this to the employer- the employer then completes a KS1 (KiwiSaver Employee Details Form) and sends this to IRD- the employer can then start making KiwiSaver deductions from the employee's wage or salary at the nominated rate from their next pay- this is the method when the employee is agreeable to using a standard provider scheme of the employer, or will accept a default scheme allocated by IRD. 

 

 

 

McLEAN AND CO KNOWLEDGE CENTRE AND ARTICLES ABOUT TAXATION AND BUSINESS IN GENERAL PRESS HERE FOR BUSINESS STARTUP KNOWLEDGE CENTRE PRESS HERE
FOR INFORMATION ABOUT COMPANY INCORPORATION PRESS HERE FOR PREVIOUS MONTH EMAIL NEWSLETTERS PRESS HERE

FOR PROPERTY INVESTMENT AND TAX INFORMATION PRESS HERE

FOR FRANCHISE INVESTMENT AND TAX INFORMATION PRESS HERE

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.