March 2011 Newsletter

Newsletter February 2011

MakesCents September 2010 Newsletter

Newsletter November 2010

MakesCents July 2010 Newsletter

Newsletter December 2010

Newsletter December 2011

March 2012 Newsletter

We compile all financial information for all clients in accordance with our Standard Terms of Engagement.

A compilation is limited primarily to the collection, classification and summarisation of financial information supplied by the client. A compilation does not involve the verification of that information. We do not carry out any audits or reviews on financial reports, nor otherwise attempt to verify the accuracy or completeness of the information and therefore, neither we nor any of our employees accept any responsibility for the accuracy of the information from which the financial reports are prepared.

All financial reports are prepared at the request of and for the purpose of our client only and neither we nor any of our employees accept any responsibility on any ground whatsoever, including liability in negligence, to any other person.

I/We give Makes Cents Ltd and their employees permission as my Accountant to access any information held by the Inland Revenue Department of New Zealand or other organisations in order for them to undertake their duties as my Tax Agent to furnish GST, and all tax types. I understand MakesCents Ltd obtains information from IRD by phone, Fax and online. In accordance with the Privacy Act (1993) I authorise any persons or company to give information as may be required in response to credit inquires.

MakesCents Ltd has the right to charge interest on overdue accounts at the rate of 1.5% interest per month.
If the client defaults in payment of invoice when due, the client shall indemnify the seller from and against all cost including collection and legal cost or attempted collection of the defaulted amount calculated on a solicitor and own client basis.

Payment Options

Payment in full now – as per our Terms of Engagement.

Internet banking same day – this can be done at our office at time of sign off.

Automatic payment over three months maximum – case by case basis and to be agreed with by Make$ Cents Ltd.
 
FeeSmart – over six months or twelve months.  There is a one off fee of $50 administration charge and a flat interest rate of 10%.  A great option to help manage cashflow.

At Make$ Cents, we also offer a payment option towards your next end of year account.  This is in the form of a monthly AP to us prior to doing your accounts.

A small deposit may be required before any work commences.

The 2010 Budget has been delivered by the Government and there are some major changes that will affect people in business and those with rental properties.  There are also major changes proposed to the way Qualifying Companies including LAQC companies are treated for tax purposes.

 Hopefully the points below will help clarify things a little for you and alleviate some of the worry.  We will have more detailed information on some of the budget changes in our next newsletter in June in the meantime these points are things you need to understand:

GST Increase to 15%
The increase in GST from 12.5% to 15% takes effect from 1 October 2010.  For those registered for GST you will need to upgrade your software or replace your software.  Those on BankLink will have an upgrade that will make the process simple.  For those of you carrying stock you must make some decisions around your pricing schedules and strategies.

Income Tax Rates
The top personal tax rate has been reduced from 38% to 33% for the year beginning 1 October 2010.  All other personal income tax rates have been cut and the new tax rates are as follows:
  Income less than $14,000  10.5% (down from 12.5%)
  Income $14,001 to $48,000  17.5% (down from 21%)
  Income $48,001 to $70,000  30% (down from 33%)
  Income $70,001 plus   33% (down from 38%)

It is estimated that a person with a taxable income of $50,000 will receive $29 a week in tax cuts and half of that will be taken up by the increase in GST, depending on everyone’s personal circumstances such as the amount of their rent or mortgage payments and how much of their income they save.

The company tax rate has been reduced from 30% to 28% from 1 April 2011.

Working For Families Tax Credits & Trusts
The major change here is that any assets you hold in a family trust will be taken into account when calculating your entitlement to Working For Families Tax Credits.

Depreciation on Rental Properties
The removal of the ability to claim depreciation on buildings of rental properties from the year commencing 1 April 2011, will affect many of our residential rental property clients.

If you are claiming say $4,000 depreciation on the buildings then it may mean a decrease in your total tax refunds of between $800 and $1,500 depending on what your personal maximum tax rate is.  E.g. if you are earning up to $48,000 then you will lose $800 of your refund and if you are earning $100,000 then you will lose $1,500 of your refund.
These lower refunds are per property and not per person so for most the change may mean a lower refund of between $15 and $30 a week so the change is minimal when taken into account with the tax refunds above.

Please note that this change takes affect for the year ended 31 March 2012.

LAQC Companies
If you have shares in a Qualifying Company or an LAQC company now then the only immediate effect will be the depreciation claim on any rental properties owned by the company which will affect your personal tax refunds as above.  The major change proposed to the Qualifying Company which includes LAQC’s is to make them similar to a limited liability partnership.  The changes to the Qualifying Company rules are intended to be implemented from 1 April 2011 but are open for submissions now and so some of the detail may change over the next few months as submissions are considered and the rules and legislation around these entities is passed by Parliament.

The main thing here is if you have shares in a LAQC particularly one that owns rental properties is to not make any rash decisions but talk to us first.  It may not be all as bad as it sounds and the proposed changes may not even affect your tax position.  We are here to help you with your tax within the law by using appropriate structures.

Benchmarking is the process of comparing one’s business performance metrics to industry bests and/or best practices from other similar industries. Dimensions typically measured are sales/turnover, gross profit, occupancy costs, wages and other associated business expenses.  As well as net profit, owner remuneration and staffing levels.

Benchmarking is the submission of your financial data anonymously and then it is measured against the median, the average, and the top and bottom 25% of firms in your industry who have also submitted their financial data.  It helps to clearly identify where your business differs from the norm.

If you would like Makes Cents to do Benchmarking for your particular business, please contact the office for further information and pricing.  Remember, Benchmarking is completely anonymous so your business details do not get published for general viewing.

Do all your employees have written employment contracts as they should?

Shelley Evans is our payroll pro so give her a call and she will be able to help you.

For further information and for us to help you manage the ACC “nightmare”

• how much will you need to borrow?
• will your bank lend you the money?
• where will you find the tenants?
• will you use a property manager?
• does it need work and money spent on it before renting it out?
• will you have to prop it up every week and by how much?
• how much are the rates and insurance?

Remember, first step is to talk to us.  We are here to help.

Contact us on 04 528 6123 or email at contact@makescents.co.nz