| December 2011 |
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Seasons Greetings……. from everyone here at Withers Tsang & Co. We would like to take this opportunity to thank you for your support this year and wish you a very joyous festive season and a Prosperous 2012! Our office will close at 2.00 pm Thursday 22 December 2011. Our usual office hours will resume Monday 16 January 2012 at 8.30am.
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In this issue, WT… talks about:
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| WT… on business | ||
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Following the Reserve Bank announcement on 8 December keeping the official cash rate at 2.5%, it is a timely reminder for business owners to keep up with the market development. Despite the minor credit downgrade on some of our main trading banks by Standard & Poor on 2 December, banks are actively pursuing new loans by offering very competitive interest rates particularly for the short & medium term fixed rates. You should certainly contact your lenders and mortgage brokers to determine what kind of special interest rates they can offer you.
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Please remember to complete all the IRD paperwork before you go away on your holidays, many of these will be due on Sunday, 15 January 2012. You should also setup internet payments ahead of time so that you will not incur any late filing or payment penalty. For those who employ staff, PAYE for period ended 31 December 2011 will be due on Sunday, 15 January 2012 (for the fortnightly PAYE clients) or Friday, 20 January 2012 (for the monthly PAYE clients). For those who are GST registered, your October/November 2011 GST return will be due on Sunday, 15 January 2012. If you are liable for FBT, your return & payment are due on Friday, 20 January 2012. If you are a provisional taxpayer, the 2nd instalment for the 2012 provisional tax is due on Sunday, 15 January 2012. You would have received our payment reminders by now. If you have not received yours, please contact our office immediately.
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| WT… on tax | ||
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Do you have friends or relatives who are coming home for the “summer barbeque”? In fact, do you know anyone who is thinking of coming home or migrating to NZ? Do them a favour. Remind them they may qualify for Transitional Residents Tax Exemption (TR exemption). The TR exemption will exempt them from paying tax on passive income earned and retained overseas for the next 4 years post their arrival. This is a golden tax planning opportunity available only to Kiwis who have been away from NZ for more than 10 years or are first time migrants. Ask them to contact Stephen Tsang or one of our senior accountants.
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In light of the extra money allocated by the Government, we have seen a major increase in IRD audit and review activities. Some of the targeted areas are:
Property Compliance By the time you receive a review request from IRD, they would have already cross matched sales records retained by Land Transfer Office and City Council. It is a timely reminder to keep your paperwork. In particular, any correspondence or documents that can substantiate your intent at the time of purchase so that you can justify to IRD that you are not a property trader.
Overseas income/investments There is an inference that in order to retain and possess overseas credit cards, there must be income earned or funds kept overseas. IRD is also continuing their pursuit for Foreign Investments such as Foreign Life Insurance Policies, Foreign Superannuation Policies, Foreign Share and Unit Trusts investments. We are aware that IRD does not necessarily share the same views or interpretation presented by some of these fund promoters/advisors about the tax implication of their products particularly if they are based overseas. We strongly recommend that you do not handle these IRD reviews or investigations yourself. In particular, please refrain from ringing IRD as they record all phone conversations and it could be taken out of context. If you receive any of these review requests, please contact one of our senior accountants in the first instance.
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| WT… on trust | ||
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Since the abolition of the gift duty from 1 October this year, many clients are starting to consider whether they should continue with their existing gifting program or gift away the entire lump sum. Before reaching that decision, some of the factors you should consider:
We recommend that you should review your trust affairs with your trust lawyer first before coming in to see us. You should certainly review this before continuing with your current gifting regime.
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Before you decide whether to gift or not to gift, you have to first ascertain what is owed to you by the trust as Debt (e.g. the deposit on the house) and what is owed as Advances (e.g. the loan repayments). In either case, you have to clearly quantify the amount involved. How are you going to do this if you have not kept any financial statements for the trust? Clients often misunderstand that because the trust only owns a private non income earning asset that and is not required to file any income tax return, they do not have to prepare any financial statements and certainly do not want to incur the costs in doing so. Many clients do not realise that, as trustees, they are required to readily account for the assets & liability of a trust at any given one time. So if you have not instructed us to prepare financial statements for your private trust, it is not too late for us to catch up and reconstruct the financial statements for you as part of your trust review. Please contact one of our senior accountants.
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| Withers Tsang & Co Ltd. | |||
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