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McLEAN AND CO.
GST from 1 October, 2010
GST Transitional Returns
Working for Families Tax Credits from 1 October, 2010
FAKE / SCAM IRD EMAILS
A warning has been issued about a fake email which claims to be from the Inland Revenue Department telling recipients they are owed money from a tax refund. A number of clients have contacted our office regarding these.
The email, from the address firstname.lastname@example.org with the subject line "Tax Refund", tells recipients they are owed an amount, and asks them to click on the link www.ird.govt.nz/tax/refunds to receive their refunds.
They are then diverted to a website pretending to be the IRD's which asks for their credit card details.
The email ends with the incorrect name for the department - it is signed "regards, Inland Revenue Service".
You are warned to ignore the email and never to reveal personal bank details or passwords. Contacting the person who sent the email would send a signal to fraudsters that the email address was valid which could pose further risks.
IRD have advised: "We simply don't send people emails that offer people refunds, it's not at all the way that Inland Revenue conducts its business."
From that date you should adher to the following basis calculations relating to GST:
|The GST Exclusive Figure- say||$100.00|
|Plus GST - at 15%||15.00|
|FULL CHARGE TO YOUR CUSTOMER- BEING THE GST INCLUSIVE AMOUNT||115.00|
This is the figure that clients preparing Manual CashBooks will need to be totally aware of in the process of calculting GST on a total amount inclusive of GST (previously you would have divided by 9). Calculate this by applying the following formula:
To confirm this in the above calculation:
|Multiply 115.00 by 3||$345.00|
|Divide $345.00 by 23||15.00|
|THUS THE FIGURE OF $15.00 (BEING THE GST ONCOST AS PER THE PREVIOUS TABLE) IS CALCULATED.|
GST TRANSITIONAL RETURNS
You'll need to use the new 15% rate from your next return onwards, if:
If you are due to file a:
you'll need to use the:
IRD will be sending you new returns that will help you through the transitional period. You'll then go back to using your normal GST return. The returns will be printed with a red stripe to distinguish them from normal GST returns.
The GST transitional return is divided into two parts to account for the change in the GST rate.
In Part 1 you record your sales and income, and purchases and expenses, plus any adjustments (including the rate change adjustment), from the start of your return period until 30 September 2010.
The GST calculation is at 12.5%, meaning your GST-inclusive sales and income, and purchases and expenses will be divided by nine (9) to find the GST component.
In Part 2 you record your sales and income, purchases and expenses, and any adjustments from 1 October 2010 until the end of your return period.
The GST calculation is at the new GST rate of 15%, so your GST-inclusive sales and income, and purchases and expenses will be calculated by multiplying by 3 then dividing by 23 to find the GST component.
You'll need to add together the:
The difference between these two amounts will determine whether you have GST to pay, or a GST refund.
You will need to:
If you normally file a GST and provisional tax return you will receive a GST transitional and provisional tax return (GST104B).
The return has 3 pages:
The provisional tax calculation will not be tailored to your filing provisional payment method. You will need to complete the same boxes as your normal return.
PERSONAL INCOME TAX RATES FROM 1 OCTOBER, 2010
The table below shows the tax rates that will be used during the 2010 - 11 income year.
|Income range||Tax rates 1 April to 30 September 2010*||Tax rates 1 October 2010 to 31 March 2011*|
|$0 - $14,000||12.5%||10.5%|
|$14,001 - $48,000||21%||17.5%|
|$48,001 - $70,000||33%||30%|
*These rates exclude ACC earners' levy.
You'll need to start using the new rates to calculate the correct amount of PAYE to deduct from your employees' salaries and wages for pay periods ending on or after 1 October 2010.
IRD have advised that PAYE Tables to be used from 1 October, 2010 will be issued to all Employers in September 2010. The Online Calculator on the IRD website ( www.ird.govt.nz ) will also be updated an incorporate the new PAYE Deduction Amounts from 1 October 2010.
The secondary tax rate will reduce from 1 October 2010 to align with the new personal income tax rates. The new PAYE tables effective from your employee's first pay period ending on or after 1 October 2010 will include the new secondary tax rates.
The current ACC Earners' Levy is 2% (GST-inclusive). It increases to 2.04% on 1 October 2010 due to an increase in the GST rate on that date. This increase have been incorporated into the updated PAYE tables and calculators.
Employees who are affected by the change will be issued with a new certificate by IRD, which they'll give you prior to 1 October 2010. The new certificate will include the new tax rates and thresholds.
The tax rate will drop from 21% to 17.5% for both casual agricultural employees and election day workers. This is effective from their first pay period that ends on or after 1 October 2010.
WORKING FOR FAMILIES TAX CREDITS FROM 1 OCTOBER, 2010
Working for Families Tax Credits entitlements are increasing from 1 October 2010.
If you're paid weekly or fortnightly you'll get an updated notice of entitlement in September 2010. This will tell you how much your new payments will be after 1 October 2010.
If you receive your Working for Families Tax Credits entitlements annually as a lump sum, your entitlement for the current year will be worked out using an average of the current and new entitlement amounts.
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If we can assist further, please email McLean and Co as follows: