TOTALACCOUNTING Chartered Accountants

Accounting                               Taxation                                   Business Advice and Development Assistance                                        

 P.O. Box 10 , Clive         133 Main Rd, Clive           Tel. (06) 8700952          Fax. (06) 8700955 

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

 
EMAIL NEWSLETTER SEPTEMBER 2015
 

Welcome again to the TotalAccounting 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. Changes to Property and IRD Number Rules

  2. Changes to Employee Allowances 

  3. Changes to Vehicle Mileage Rate

  4. Calculating Business Motor Vehicle Use if you're Self Employed

 

CHANGES TO PROPERTY AND IRD NUMBER RULES

A number of property tax rules Government proposed as part of Budget 2015 have just been passed into law and will apply from 1 October 2015.

In brief, here's what's changing from 1 October 2015:

When buying, selling or transferring New Zealand property:

  • unless the property is their main home, New Zealand citizens and residents provide an IRD Number and a Taxpayer Identification Number (equivalent of an IRD Number) from any other countries where they pay tax on their worldwide income
  • offshore people and entities will supply a New Zealand IRD Number and a Taxpayer Identification Number from any country where they have to pay tax on their worldwide income
  • people transferring a property that's in trust will provide an IRD Number for the Trust. An individual trustee's IRD Number can't be accepted
  • people and entities offshore and people with property in trust aren't eligible for the main home exemption, so will supply for a New Zealand IRD Number

People buying, selling or transferring property will provide the information above to their Property Lawyer or Conveyancer.  They may choose to do this by filling in a Land Transfer Statement, which will be available on Land Information New Zealand (LINZ) website.

Some people will be partway through the process of buying, selling or transferring a property on 1 October 2015 when these new rules come into effect.  These new rules will not apply where the:

  • contract is entered into before 1 October 2015, and
  • transfer is registered on or before 1 April 2016

On 1 October 2015 offshore people and entities must have a fully functional New Zealand Bank Account before applying for an IRD Number.  A fully functional Bank Account is one where:

  • you can make deposits and withdrawls
  • the Account holder's identity is verified in line with New Zealand legal requirements

To collect this information, on 1 October IRD will introduce two new IRD Number Application Forms for people who are non-residents and offshore, one for individuals and another for companies, trusts, partnerships and other entities.


CHANGES TO EMPLOYEE ALLOWANCES

There have been changes to the tax treatment of the accommodation, meal and clothing allowances that you may provide your employee(s).

Use the IRD Employee Accommodation and Meals Calculator to help you work out whether employee accommodation and meals you provide are taxable or not.

To find out more about these changes, including if you can retrospectively apply the new rules, visit the IRD "Allowances" section

 

CHANGES TO VEHICLE MILEAGE RATE

IRD has recently concluded a review of the Commissionerís mileage rate and advises the rate for the 2015 income year results in a reduction to the rate to 74 cents (from 77 cents for 2014) per kilometre for both petrol and diesel fuel vehicles.

You can use this rate for up to a maximum of 5,000 km of work-related travel per year.  For distances greater than 5,000 km, you must keep a record of actual vehicle expenses.

The rate applies irrespective of engine size or whether your vehicle is powered by a petrol or diesel engine. The mileage rate does not apply to motor cycles.

 

CALCULATING BUSINESS MOTOR VEHICLE USE IF YOU'RE SELF EMPLOYED

There are three ways you can calculate the proportion of business use of your motor vehicle:

  • actual costs
  • a logbook, or
  • a mileage rate for distances of 5,000 km or less a year.

Actual Costs

If you believe your vehicle costs are higher than the rates given you can use the actual costs option.

You can claim deductions on your actual costs including depreciation loss for the business use of your motor vehicle. If you use this method you must keep accurate records including details of private and work-related expenses. Your records will need to show the reasons for and the distances of journeys for business travel.

Logbook

You can also work out the business use of your vehicle by keeping a logbook for at least 90 consecutive days. After 90 days you can work out the average proportion of business to private use of your vehicle. The logbook term is up to three years, provided variance of business use is less than 20% of the logbook representation.

The logbook must record the:

  • start and end of the 90-day test period
  • vehicle's odometer readings at the start and end of the test period
  • distance of each business journey
  • date of each business journey
  • reason for each business journey, and
  • any other detail that we may require.

You can use your logbook to calculate the deduction for the costs you incur and the amount of depreciation loss for the business use of your motor vehicle.

Default Method

The deduction for costs of using a motor vehicle is limited to the lesser of:

  • the proportion of actual business use of the vehicle, and
  • 25% of the total use of the vehicle

where:

  • actual records showing the proportion of business use haven't been kept, or
  • the period of use if not reflected in the log book, or
  • the mileage rate method can't be used.

 

 

TOTALACCOUNTING 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.   TotalAccounting accepts 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 TotalAccounting 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.    

 

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