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  SEPTEMBER 2008
 
 

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 acquaintances as new clients.

 

INDEX

  1. New Tax Rates from 1/10/2008

  2. Quotes and Estimates

 

 

NEW TAX RATES FROM 1/10/2008

The low income rebate has been removed from the 2008/09 tax year and a new bottom tax rate of 12.5% on income up to $14,000 introduced. Income thresholds for the 21%, 33% and 39% rates also increase.

Current rates New rates from 1 October 2008
Income to $9,500 15%* Income to $14,000 12.5%
$9,501 - $38,000 21%* $14,001 - $40,000 21%
$38,001 - $60,000 33% $40,001 - $70,000 33%
$60,001 and over 39% $70,001 and over 39%

*Includes the low income rebate. The statutory rate on income under $38,000 is 19.5%. The low income rebate gave an effective rate of 15% for income under $9,500 and 21% for income between $9,501 and $38,000.

 

Estimates of Reduced Tax

The table below gives an estimate of the reduction in tax deducted on a weekly basis from 1 October 2008.

If your annual taxable income is... then the estimated reduction in tax deducted weekly is...
$20,000 $11.92
$25,000 $11.92
$30,000 $11.92
$35,000 $11.92
$40,000 $16.54
$45,000 $16.54
$50,000 $16.54
$55,000 $16.54
$60,000 $16.54
$65,000 $22.31
$70,000 $28.08
$75,000 $28.08
$80,000 and over $28.08

Employers

You should have received  new PAYE tables from IRD

The new PAYE rates come into effect from 1 October 2008. This means you need to start using them to calculate the correct amount of PAYE to deduct from employees' salary and wages for pay periods ending on or after 1 October 2008.

 

Working for Families Tax Credits

From 1 October 2008 the Family Tax Credit rates and income abatement threshold will increase to take account of inflation.

If you receive your Working for Families Tax Credits weekly or fortnightly, you'll automatically receive the new rates from your first payment after 1 October 2008. The table below shows the existing weekly Family Tax Credit rates and the new rates that apply from 1 October 2008.

Age / number of children Current 1 April 2008 New rate 1 October 2008
First child if under 16 $82.00 $86.29
First child if 16 or over $95.00 $99.96
Subsequent child rate if under 13 $57.00 $59.98
Subsequent child rate if 13 to 15 $65.00 $68.40
Subsequent child rate if 16 or over $85.00 $89.44

If you receive your Working for Families Tax Credits in a lump sum after the end of the tax year, IRD willl use an average (composite) of the old and new rates to work out your correct entitlement. The table below shows the existing annual Family Tax Credit annual rates and the new average (composite) rates that apply for the 2008/09 income year.

Age / number of children Current 1 April 2008 New composite rate for 2008 / 09
First child if under 16 $4,264 $4,376
First child if 16 or over $4,940 $5,069
Subsequent child rate if under 13 $2,964 $3,042
Subsequent child rate if 13 to 15 $3,380 $3,469
Subsequent child rate if 16 or over $4,420 $4,536

The income abatement threshold increases from $35,000 to $36,827 from 1 October 2008. Because the threshold change is mid-year, a composite threshold of $35,914 will apply for the 2008/09 income year.

 

QUOTES AND ESTIMATES

An estimate is a price the seller thinks the work will cost, based on their past experience in that kind of work. It is not a firm offer to do the job for that price.

A quote is an offer to do a job for a certain price.

Estimates

Estimates are useful if you have never had to buy that type of service or product before and you want a ballpark figure of how much you are likely to be charged eg, getting a tap washer replaced or having a driveway laid.

The seller must use reasonable skill to provide the estimated price so that your decision to use the seller is based on sound information,

If you get an estimate and you decide to use that particular seller, make it clear before the work starts that you want to be informed if the final price is going to be hiqher than the estimate. If you can, get their agreement to do this in writing. Asking to be informed of cost increases will give you the opportunity to cancel the work before it costs you more than expected.

Once you have an estimate, and the work is likely to cost a lot eg, home renovations or building a fence you should ask for the price to be fixed by getting a quote.

Quotes

If you accept a quote, the seller has to do the work for that price. In most cases, it is best to ask for quotes in writing. Then, if a problem arises you will have a record of what was agreed to.

A written quote should show:

The costs of materials, hourly rate, etc will change over time. It is reasonable to agree that a quote is only good for a set period of time.

 

How do I qet a Quote?

Sometimes it's just a matter of finding out the standard price. But, when a seller has to look at the job to work out the cost, you should get a written quote. For example, plumbers will need to see where the drains are and how much digging is needed to reach them, before they can say how much it will cost to clear a blocked drain. Find out if they charge for making a quote.

 

Quotes Checklist

 

Note about GST

A quote must include GST in the price, or state that GST is not included. If GST is not mentioned you are entitled to assume that it is included in the price given but it is wise to check this with the seller so there is no unnecessary disagreement later.

 

Paying for a Quote

eg, you take your watch to a repairer because it won' go. They say they will look at it. When you return for the watch they say it is not worth repairing and ask you to pay $10 for looking at it.

Some quotes are free. However, it is common practice to charge for a quote, so check this out with the seller. If you have the work done, some sellers will take the price of the quote off the repair bill.

 

Needing Extra Work after Quote Received

eg, you accept a quote to re-line your bathroom in water proof wallboard. When the old lining is removed it is found the timber studs are rotten and must be replaced.

The seller must get your permission to carry out extra work. You always have the right to refuse or accept any extra work suggested by your seller. But when extra work is needed to complete the job, you may have to pay more than the quoted price.

In order to reach an agreed price above your quote, contact others in that industry for information on costing. This will give you some idea of how much more you should expect to pay. If the work is done at a fair and reasonable price, then you should pay the cost.

 

Seller carries out Unauthorised Work

For example, you ask the garage for a Warrant of Fitness for your car. The garage's fee is $25. The garage fits a new tyre and charges you an extra $90. They say you would not have got the warrant without it. Because you did not agree to spend more than $25 the garage should not fit the tyre without your agreement.

You do not have to pay for work you did not agree to, even if the quote is not written down. (Of course, in this case the garage can remove the tyre and give your old one back!)

For more details, see unauthorised work.


What if the Service includes Goods?

For example:

  • replacement parts with repairs
  • carpet and carpet laying
  • curtain fabric plus a measure and making service.

Make sure that the quote you get includes the total cost of any goods supplied, plus the price of the service.

 

When things go wrong

Here are examples of two problems that can happen and what you can do about them.

Charging more than the quote

Write a cheque for the amount of the quote.

Send the cheque to the seller with a note on the back, or a separate note, which says:

This payment is offered on the condition that banking it will be considered full and final settlement of your account no... dated... 

Signed... 

Keep a copy for yourself. If the seller doesn't accept this amount as full payment they can either:

Although the seller may not accept your offer, sometimes it is worth trying to reach a compromise. If you are determined not to pay any extra, you may have to take action through the Disputes Tribunal or Court to sort the matter out.

Sometimes a shop will offer free measuring, making or installation when you buy goods. Compare prices of the same goods in other shops to be sure the cost of the service has not been added to the price of the goods.

High price with no quote or estimate

eg, You ask a mechanic to fix the car's radiator. When you collect the car you receive a bill for $450. You think this is too high for the work that has been done. You can ask the mechanic for an itemised account showing the cost of parts, labour, any other charges and GST. Then ask two or three other garages what they would charge for the same work. Average their prices out this is the amount you should pay for the work done on your car.

The Consumer Guarantees Act says if you buy goods or services and the price is not set or discussed at the time then you only pay a reasonable price. You can work out what is a reasonable price by finding out what other sellers are charging for similar goods.

 

 

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:
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