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Gift duty abolished

It’s now official. The legislation to abolish gift duty from 1 October 2011 has been enacted. This means that there will be no gift duty payable for gifts made on or after 1 October 2011 and that gift statements will no longer be required to be filed with the IRD for gifts made on or after 1 October 2011. The abolition of gift duty means that you can forgive any remaining amount under your existing gifting programme all at once. Any future property transferred to your trust can be acknowledged and gifted entirely on the same date. Nothing is require it to be lodged with the IRD although legal evidence is still required to be kept in your trust file in the form of deeds of gift as always. It is important to remember that even if you completely forgive your loan to your trust, any creditors may still have the ability to claw back the assets transferred through the following: To read the whole article and get the full story click on Gift Duty abolished Gift Duty Abolished...

Investors can still claim depreciation

The following information was supplied by Valuit, Specialists in property valuation Depreciation – now every reason to claim and no reason not to! Over recent years a couple of things have held many investors back from claiming their full depreciation entitlement, and accountants from recommending it. Uncertainty over what IRD would allow to be separated from the building such as electrical wiring and plumbing AND The thought of having to repay a majority of the depreciation through depreciation recovery when selling. BUT these two hurdles have been removed leaving very little downside to claiming your full depreciation entitlement. Recent Changes summarised Budget – May 2010 As was widely forecast the Government removed the ability for property investors to claim building depreciation in the Budget, commencing April 1 2011, whilst still allowing the depreciation on Chattels and Fit-out. The big benefit is that it removes the risk of being hit with a big depreciation recovery bill when you sell the property. In the past this has seen many investors claim little or no depreciation, but no longer. The chattels and fit-out can in most cases be proven to reduce in value and therefore recovery on these items will be removed or significantly reduced. Interpretation Statement – April 2010 IRD released its Final Interpretation Statement on the “Tax treatment of Residential Rental property for Depreciation purposes”, finally clearing the confusion surrounding what IRD considers to be part of the building for depreciation purposes. While items such as plumbing, partitioning and electrical reticulation are considered part of the building, investors will be able to claim many “fit-out” items that are allowable, such as fences,...

How to reduce your financial year-end stress

March heralds the end of the tax year for the majority of small businesses in New Zealand. The lead-up to the filing deadline in July is an unpleasant experience for many; involving countless late nights wading through unruly piles of receipts, invoices, and statements, trying to make sense of transactions from nine months ago, or even further back. The good news is that it doesn’t have to be this way. Find out how a little bit more attention and discipline can turn your filing chore into and small and relatively easy task. The secret is to avoid procrastinating! On this page: * Keep your accounts in order throughout the year * Lose some of the stress by using technology * Avoid the last minute rush * Draw up a financial year-end plan Keep your accounts in order throughout the year Many businesses tend to avoid anything to do with tax until the deadline looms ominously, glowering with the threat of penalties. Then, under pressure, they tackle the lopsided and untidy piles of paper in the vain hope of trying to remember what happened in their business many months ago, or sometimes even longer than a year ago. The main trick to easing this sort of last minute pressure is to keep your accounts up to date on a monthly basis. If you keep your monthly accounts in order throughout the year, then there’s not too much left to do when you get to year end. It really is that simple. Keeping your accounts up to date has other benefits too. You’ll understand your financial position during the year, be...

End of financial year information

For many of us, 31 March 2011 is the end of our tax year. This list is a summary of common matters that you may need to address. Please speakto your Accounting or Taxation advisor if you have any queries. Note the items that are relevant to you. GENERAL Extension of time arrangements 31 March 2011 is the last day for 2010 tax returns to be filedunder extension of time arrangements (“EOTs”). If your 2010return is not filed in time you risk losing your EOT & may incur a late filing penalty which could be between $50 and $500 GST An adjustment in your GST return for GST for 1/9th of theprevious year’s non-deductible entertainment expendituremust be made in the GST return period in which yourincome tax return is due or filed. This will change for the2011 year with GST increasing to 15%. For most this will be a3/23rds adjustment. Pre-payments Certain pre-paid expenses can be claimed even though theyrelate to the following year. Holiday pay and bonusesEmployee benefits, like holiday pay and bonuses, owing at31 March can be claimed if paid by 2 June. Bonuses must beincurred before 31 March to be claimable. Provisional tax You must elect to be a provisional taxpayer to receive use ofmoney interest on any overpayment. This election must bemade when first furnishing your 2010 tax return. Due date reminders If you have a March balance date any terminal tax for 2010is due 7 April 2011, unless your EOT has been lost. Foremployers, all wages/salaries paid or credited to staff onor before 31 March 2011 must be included in the ir-File forMarch 2011...

April 1 tax changes will help balance economy

WELLINGTON -(Dow Jones)- Finance Minister Bill English said Wednesday that tax changes that will come into effect April 1 will further rebalance New Zealand’s economy towards savings and exports. “Cutting the company tax rate will make New Zealand more competitive and increase incentives for businesses to reinvest earnings back into jobs and growth,” English said. The tax changes include a cut in the company tax rate to 28% from 30%, a cut in the tax rate faced by unit trusts, life insurance policy holders and some other savings vehicles to 28% from 30% and the ending of landlords’ and businesses’ ability to claim depreciation on buildings with an estimated useful life of 50 years or more. He noted that property and tax changes will lead to faster growth and “is one of the best ways we can meet the costs associated with the repair of Christchurch,” after earthquakes in September and February. Last week, the finance minister said the New Zealand government plans to borrow some NZ$10 billion (US$7.2 billion) to rebuild its second largest city, potentially pushing its debt to more than 30% of gross domestic product by June 2014. -By Rebecca Howard, Dow Jones Newswires; +64-4-471-5990; rebecca.howard@ dowjones.com...

LAQC changes

As you should now be aware, LAQC’s will cease to exist on 31 March 2011 although you can elect for your LAQC to become a look-through company (LTC) from 1 April 2011. In the meantime, you need to decide whether  the current shareholding of your LAQC is appropriate.  This is because the shareholding will easy to change before 31 March 2011.  After that date it will become more difficult to change your shareholding under the LTC rules.  So, if you what to change your shareholding, now is the best time to do that. Any loss under an LAQC or LTC is allocated to the shareholders in accordance with the percentage of shares owned.  If there is more than one shareholder, it is generally the shareholder that earns the most income that holds the majority of the shares as their tax refund will be larger because they will be on a higher personal tax rate.  I recommend you do the following: (1)  Decide whether your property or properties will be making a profit or loss in the coming years (2)    Determine which shareholder will be best to receive the profit or loss from the properties.  If the properties are making a loss, then the person earning the most income should hold the majority of the shares.  If the properties are making a profit, then the person earning the least should hold the majority of the shares. (3)    Check the existing shareholding of the company (search for your company at www.companies.govt.nz (4)    Let your accountant know if you think that the shareholding should be changed Advise from Tony Thorne Accountant...