Grace Team Ltd - Chartered Accountants

March 2011

IMPORTANT TAX DATES

28 March 2011 - Feb GST return and payments due
31 March 2011 - 2010 tax return must be filed. If you still have your 2010 tax returns please sign & return ASAP to Graceteam.
7 April 2011 - 2010 income tax due
9 May 2011 - final instalment of provisional tax for March balance date
9 May 2011 - March GST return and payment due
31 May 2011 - FBT return to 31 March due (annual and quarterly) including payment.

TAX RATE CHANGE:

The company tax rate will fall from 30 percent to 28 percent from the 2011/12 income year.

31st MARCH – FAST APPROACHING

Once again it is time for business owners to start preparing for the year end. We will be sending out the year end questionnaires by the end of March.

LAQC COMPANIES

If you have an LAQC you should have received paperwork from Graceteam in regard to the changes that come into law on 1st April 2011. If you have an LAQC and have not received this information, please contact us. We are reviewing the options for each company and will advise you of the recommended changes required.

EMPLOYERS – PLEASE NOTE
PAYE - NON-PAYMENT PENALTIES

IRD have implemented non-payment penalties which apply to employers who file their employer monthly schedule (EMS) but do not pay the amount payable on the schedule. The penalties will be applied on a monthly basis until:

the outstanding amount is paid, or
the employer enters into an installment arrangement, or
the total non-payment penalties charged reach 150% of the amount outstanding when the first non-payment penalty was charged.

IRD will issue a letter to any employer where payment has not been made advising that a penalty may be imposed. One month after this letter, penalties of 10% will be charged on any unpaid tax. If payment is made or the employer enters into an instalment arrangement the last penalty imposed will reduce to 5%.

Non-payment penalties are in addition to shortfall penalties, late payment penalties and use-of-money interest.

REMOVAL OF BUILDING DEPRECIATION

From the 2011/2012 year a zero rate of depreciation is set for all buildings with an expected life of 50 or more years. While this change was well signalled for the residential sector, the inclusion of commercial buildings was not.

The loss of the depreciation deduction affects all building types with estimated lives of 50 years or more. Generally any loss incurred on the sale of a building is a non-deductible capital loss. This has not changed even with the removal of depreciation.

For buildings which have been depreciated under the "old" rules, the depreciation can still be recovered (income) in the year of sale, where the building is sold for an amount greater than it’s written down value.

There are particular building types that the IRD has held in the past as having an estimated useful life of less than 50 years. These include dairy sheds, concrete bunkers and other agricultural buildings. A question mark remains around special purpose buildings, and those with little or no market (thus little chance of resale) which may no longer as of right be depreciated.

However building owners are able to apply to the Department for a provisional depreciation rate for buildings expected to have a useful life of less than 50 years.
The loss of this deduction begins in the 2011/2012 income year. For taxpayers with March balance dates, this will be from 1 April 2011.

ACC MAKING IT FAIRER FOR SAFE WORKPLACES

From 1st April 2011 ACC is introducing experience rating – a system of modifying a business’s ACC work levy based on its claims history. Experience rating can reward those business owners with safer workplaces, and encourages a focus on improving workplace safety and making New Zealand businesses better places to work.
To find out more about experience rating go to www.acc.co.nz

WORKING FOR FAMILIES TAX CREDIT CHANGES

The definition of family income for Working for Families Tax Credits has been amended to include passive income including Trust income from trading and investment activities and the net income of any company controlled by a trust. If you receive Working for Families Tax Credits during the year please ensure you are aware of the changes and how they impact you so you don’t end up with a large bill at year end. If you wish to discuss the changes please contact us at Graceteam.

TO THOSE EMPLOYING FOREIGN NATIONALS:

Immigration New Zealand is reminding employers about the importance of checking that job applicants are entitled to work for them. Employers can use a free online tool Visa View to check information such as a passport number and surname against Immigration's database for (in most cases) a quick online "yes" or "no" as to whether a person is entitled to work here, together with any specific work conditions that may apply to the individual.
If you employ foreign nationals it may be a good idea to sign up for this service – go to Immigration New Zealand website for more information:

INTERNET SCAM… [Notification from the IRD]

We have been advised of an overseas phishing scam which is operating out of India.
It has been reported that a customer received a call from a man in regards to a tax reclaim. The man advised the customer they have a refund and to claim they must call a telephone number (which incidentally is not a valid NZ telephone number) with bank account details and quote "reclaim approval" and a code.

As this is an overseas phishing scam IRD can not prevent this from happening.
If you receive any of these calls please do not supply any personal details, IRD numbers or bank details. If you have please contact us immediately so we can advise IRD so monitoring of your account can be initiated. If you have provided banking information, you should contact their bank immediately.

More information is available on Inland Revenue website

Additionally, the Ministry of Consumer Affairs, Scamwatch website has the latest on scams. Remember, forewarned is forearmed.