March 24, 2021
As your balance date approaches you will soon receive our blue forms asking you for information. Depending on your business type this will include debtors, creditors, work in progress, stock and cash on hand.
The reason we send these out now rather than later in the year, when we are preparing your annual accounts, is that it can be difficult to remember these details months after the end of the financial year.
Below are some helpful hints for gathering your records for the 2021 financial year
- Put together a file of invoices for assets purchased during the year
- More frequently suppliers are sending documents electronically, you can forward these emails to your accountant as you receive them who will store them for year end.
- It is harder for us to access bank information direct from banks on your behalf, please supply closing bank statements, loan statements and interest certificates. If you didn’t receive a paper copy these can be obtained from internet banking.
March 24, 2021
The sale or purchase of a farm is always a significant transaction.
The scale and complexity of farming operations today creates multiple issues, from GST to asset value allocations. Experience shows that sale and purchase agreements are often signed before seeking the right advice.
From the 1st July 2021 there are new rules that apply to the allocation of the total price across land, buildings, development expenditure and supplementary feed. Under the new rules both the vendor and purchaser need to treat the allocation of values the same.
The vendor has two months to set the price and advise the purchaser and Inland Revenue. If this notification is not made, then the buyer has two months to set these prices and advise the vendor and Inland Revenue.
The best approach is to have these values specified before signing the agreement as the allocation of values can have implications for Income Tax.
Make sure you speak to your accountant and other advisors before entering into any agreement to sell or purchase a property. There is generally only one opportunity to structure these transactions that benefits all parties.
March 24, 2021
Xero is making Multi-Factor Authentication mandatory for all Xero users. This is to add an extra layer of security, to help avoid hackers and protect your data.
Most of you that log into Xero, should have seen this come up when you login, and for now you have been able to opt to “sort it later”. This is becoming mandatory as of 1 June 2021, so you will no longer have the option to skip this.
If you have a smart phone (Apple or Android), this is nice and simple to set up using the Xero Authenticator App. If you do not have a smart phone, this is still mandatory, and you will have to authenticate using an authenticator software on your computer.
It is simple to set up by following along the prompts from Xero. Xero will also ask you to provide a back up email, in case you ever get locked out, but as not everyone has two email addresses, you have the option to choose three security questions.
If you get stuck, please call the office and we can point you in the right direction.
March 24, 2021
There are certain accounting entries that need to be made before the end of the financial year in order to be counted for 2021.
Where customers have not paid you and you are not able to recover these outstanding accounts receivable these balances need to be written off as a bad debt in your accounting software prior to year-end.
Stock on Hand
A count of your stock on hand needs to be completed on (or close to) your balance date. If obsolete stock is identified during the process this also needs to be written off in your accounting software before the end of the financial year.
If stock is recorded manually, make a note of those items that are obsolete, and need written off.
March 24, 2021
With the end of your financial year fast approaching, we need to consider if incurring costs now will be beneficial to your income tax position.
There are some real opportunities and at the same time some myths around spending before the end of the month.
What you need to consider?
Stockpile Consumables on farm but no more than $58,000 on hand
Consumables are fencing materials, drenches, fertiliser, fuel, supplementary “bought in” feed, water supply materials, chemicals, etc.
If you have a total of $58,000 (excluding GST) of consumables on hand or less before your balance date you can claim all of them as an expense and decrease your profit for the tax year.
You are required to have these consumables on farm rather than booked up at the store.
Make sure you don’t have in total more than $58,000 worth of various items otherwise this doesn’t apply, and you have to carry the total value of the consumables forward to the next season.
So, if you don’t have many consumables on hand and you will need these items in the coming months, buy some and have them on hand by balance date.
Assets under $1,000
As part of the tax changes made in response to Covid-19, assets purchased from 17 March 2020 to 16 March 2021 with a value of less than $5,000 (GST exclusive) were fully deductible in the year of purchase.
As it is now after 16 March 2021, we are now able to claim assets up to $1,000 GST exclusive when they are purchased for income tax.
These would have usually been depreciated over a few years but now you can claim them all upfront in the year you bought them.
Examples could be: phones, laptops, trailers, calfaterias, implements, motorbikes, tools etc
A Common Myth
Don’t buy large capital assets before balance date just for income tax reasons.
A common myth is that if you buy big items such as a tractor just before balance date it will help reduce your tax.
Depreciation is calculated monthly so in reality you will get one month’s worth of depreciation which won’t help much at all. If you trade your old tractor in on the purchase of the new tractor there could be income arising from depreciation recovered so it could actually increase your profit rather than decreasing it.
In summary don’t buy big assets just to reduce tax just before balance date, it doesn’t really make a difference.
If you have any questions please do not hesitate to contact the office.
December 18, 2019
As Christmas is near, it’s time to set the record straight on some of the most commonly misunderstood aspects of employment law that apply to the festive season.
We’ve made it easy for you with a five-point quick guide. It is focused on minimum legal employment rights. However, parties can agree to rights above the minimums and these should be written in the employment agreement.
1. Is closing down a workplace for a specific period lawful?
Yes. Employers may close down a workplace if the process is managed lawfully.
An employer may have a regular closedown once a year and this is common over the Christmas/New Year period. Employees, who are entitled to annual holidays at the time of a closedown, are required to take annual holidays or other leave arrangements. The closedown can apply to part or all of the business, but employees must be given at least 14 days’ notice.
Whether employees should be paid depends on a number of factors, including whether they have built up enough annual holidays, or if agreed, they can take annual holidays in advance or unpaid leave.
2. Should employees working a public holiday always get time and a half, plus an alternative day off?
No. Employees working on a public holiday should always be paid time and a half.
However, they only get an alternative holiday (a paid ‘day in lieu’) if the public holiday they worked was a day that they normally worked, (i.e., an ‘otherwise working day’ for them), unless the employee only works on public holidays. Therefore, not all employees working public holidays are entitled to an alternative day off.
When a public holiday falls on a Saturday or Sunday, and this is a day the employee does not normally work, then an employee’s public holiday might be moved to the following Monday (or in some cases Tuesday).
For example, an employee who normally works weekends is required to work on Christmas Day this year, Wednesday 25 December. As this is not a normal working day for them, they don’t get an alternative holiday, but still get paid time and a half. However, if the Wednesday was their normal working day, they would also get an alternative holiday.
3. Can employers refuse a request when their employees ask to take their annual holidays?
Yes. Employers and employees should try to work out annual holiday arrangements that are acceptable for both parties. For example, an employee might request to take two of their four weeks’ annual holidays over the Christmas break for an extended family holiday.
Employees may need to take holidays for important and legitimate personal, family and community responsibilities and employers must give their employees the opportunity to take at least two of the four weeks’ annual holidays continuously. This rule is to ensure staff are given an extended opportunity for rest and recreation at least once a year.
However, an employer also has the right to run their business as well, eg to ensure that they have enough staff to continue to operate. The key point here is that the employer must have fair and reasonable grounds to refuse a request to take annual holidays at the requested time.
On those occasions when both parties can’t reach agreement about the timing of employees’ annual holidays, then the employer can decide the dates, providing they are being fair and reasonable. However, the employee must be given at least 14 days’ notice to take annual holidays on those specified dates.
4. Do employers have to provide their employees with annual holidays in advance?
No. Employees don’t have a minimum legal right to take annual holidays in advance before they complete one year of work. If an employer provides this, it is at their discretion.
All employees become entitled to at least four weeks’ annual holidays after 12 months of continuous employment.
However, it is also common for some employers to allow their staff to take annual holidays in advance, even when they haven’t “accrued” enough days. “Accrued” is like a balance that staff have accumulated since they started working for a business. However, there is no legal requirement for an employer to provide annual holidays in advance.
5. Can employees cash-up all their annual holidays during their employment?
No. Employees can ask to be paid out up to one week’s worth of annual holidays per year for each entitlement year, but the employer can say no to the request. If the employer agrees, employees must not cash-up more than one week’s worth of annual holidays per year for each four weeks’ holiday.
For example, an employee might want extra money for Christmas gifts and expenses and want to cash-up some of their annual holidays’ balance. The employee must have completed 12 months’ employment and make the request in writing. The employer must reply in writing and doesn’t have to give a reason for their decision.
An employer can also opt out of having to consider such cash-up requests by stating this in a workplace policy or employment contract.
Also, an employer cannot force an employee to cash up a portion of their annual holidays, if the employer has not been given a written request from the employee. In this case, the employee can keep both the cash up money and still take the portion of annual holidays cashed up as paid holidays. The employer may also face a penalty.
March 20, 2019
For those clients using Cashmanager RURAL software, you may be aware that the desktop software has become redundant and will no longer be supported. The Cashmanager RURAL Online software is also going to become redundant at some point in the near future and will be replaced with Cash Manager’s new product called Cash Manager Focus.
Our preferred farming software is a Xero+Figured combination so when your subscription comes up for renewal, before you renew, we would like to have the opportunity to discuss and show you this alternative software combination.
Please give us a call and we can arrange a demonstration of the Xero+Figured software for you.
March 20, 2019
We are excited to announce we are now a Hubdoc Certified Advance Partner.
Hubdoc is an online product that lets you store and organise all your financial documents in one place quickly and painlessly with a click of your mouse or a snap of your smart phone.
If you are tired of the piles of paperwork scattered across the office or folders of invoices and receipts clogging up your office space, and would like an easy to use simple solution then Hubdoc may be the answer you have been looking for.
When you connect your accounts, your recurring bills and statements will automatically be retrieved by Hubdoc and will be added to your secure account in the cloud.
Hubdoc uses OCR (Optical Character Recognition) technology to analyse your receipts (and other scanned documents) for useable data and automatically files them in your own electronic filing cabinet.
When you upload your receipts we convert that data into digital files you can view, download or print from anywhere, anytime you connect to the internet.
You can grant your accountant access to your account and there will be no more requests for copies of invoices.
If you would like to more know, give us a call or watch this space for more details coming shortly.
March 20, 2019
Although running your own business has its attractions, being in business can leave you feeling lonely and isolated. About 70% of the 400,000 small businesses in New Zealand are operated by just one person. If you are one of these people, this leaves the financial decisions, planning for the future, and the stress of long hours and day-to-day tasks all falling on you, leading to a feeling of isolation.
Research has shown that when business owners feel isolated, the decisions they make can have a negative effect on finances, relationships, and wellbeing both mental and physical. It is vitally important for you to be able to share burdens, bounce ideas around, have the motivation to move forward and feel connected on a business and personal level. The feeling of isolation will prevent you from being able to do this. Your business’s most important asset is you, or more specifically, your ability to make good decisions and work effectively, so it is essential that you protect this asset and make it as strong as possible. How can you do this?
As social beings, we need regular connection with others and building this into your routine is often the first step in being better in your business. This may be as simple as going to your favourite café for your morning break and making a connection there. Another way to keep connected is by attending networking events. Although you may not normally do this type of thing, these events are a great way to connect with others in a similar situation and will help to remind you of why you are in business.
A formal way to stay connected is to have a business mentor or coach that you meet with on a regular, scheduled basis. The formality of these meetings helps focus you on what is important and gives you goals with set dates to achieve these by. Because this gives you accountability, your motivation is improved and you are able to celebrate your successes with somebody who cares about your business.
It is always important to remember why you went into business in the beginning. I would be surprised if the original motivation was to work long hours, not take holidays, argue with loved ones about money and feel alone and isolated. Reach out to your trusted advisors, your banker, accountant, business associates, local community and loved ones to build the connections and support that you need to stay sane in business.
March 20, 2019
If you have residential rentals you may be aware there are some new legislation changes coming in the new financial year. These changes limit your ability to offset any residential rental losses against other forms of income (this is called ring-fencing). Therefore, if you have any significant repairs and maintenance plans for your residential rentals, it would be tax advantageous to get in quick and do these repairs before 31 March 2019, if you think they may result in a rental loss. Click here to view the previous newsletter for more information