Newsletter

CORE VALUES

27 NOVEMBER 2009

This month it was my turn to do the director’s editorial. For a moment I wondered what I could share with you that was topical and relevant to everyone.

My thoughts eventually turned to a recent conversation I had with a fellow passenger whilst on an international flight.

During the flight our conversation turned to discussing the traits and core values of successful people. My fellow passenger, a highly successful businessman, commented that in his view successful people had certain core values that could be classified as 3Ps, 3Vs and 3Hs and I would like to share these values with you.

Passion
A person must have enough hunger so that the mind is always restless to achieve what one desires. If there is no passion then there will be no advancement.

Patience
Having hunger and passion is one thing but one must also be willing to wait and seize on the right opportunity at the right time. In business it may even mean several failures before you strike the right formula. You must learn to persevere.

Prudence
One must also be cautious and be willing to take advice so as to be in a position to make sound judgments on practical matters.

Values
A person must also have certain values in which they believe. This will ensure continuity in ones ideas and help differentiate ones character.

Vision
One must have a clear vision set in concrete so that every step is taken towards achieving this goal. Incorporating change in attitude is a fundamental part of vision.

Vitality
One must have energy and exuberance to do things in life. The “Up and Go” attitude – be it mental, physical or emotional vitality.

Happiness
Both as individuals and as a planet, happiness is our ultimate reason for living. Happiness is really all there is and all there ever will be; all else is only a means to happiness.

Health
Health controls almost everything that is related to your body and soul. Arguably this value is the most important of all but it is often one that is overlooked.

Hope
Hope comes with us and is inside us. Without “hope” humankind would have died a long time ago.

I found my fellow passengers comments thought provoking so decided to share them with you by making them the basis of the director’s commentary.

If you have any thoughts or comments on these core values or would like to discuss any of the other topics included in this edition please feel free to contact me or any of the other Directors, we also welcome any comments or feedback you may have.

Kind regards

Sungesh Singh
Director

MANAGE YOUR CASHFLOW

With the Christmas period fast approaching there is one commodity that businesses can ill afford to see in short supply – CASH.

One of the common problems encountered with clients who experience cashflow difficulties is that they only address the issue when it has become just that, an issue, it’s far better to proactively manage your cashflows so that the problem does not arise in the first place.

While managing cashflow should be a continuous process for all businesses there are several reasons why the festive period in particular can see businesses struggle with their cashflow. These include slow trading conditions in January/February and meeting tax commitments that are due in January including provisional tax, GST, FBT and PAYE payments.

We have found the following to be practical steps that can be put in place to help ensure that a business generates positive cashflows:

• Make sure financial accounts are current and accurate, as the saying goes you can’t manage what you can’t measure. A lack of up to date accounts is a common reason why businesses experience cashflow difficulties
• Perform daily bankings
• Invoice as soon as possible, follow up with a strict collection process
• Reduce drawings taken from the business, draw only what you need. Don’t use your business as a personal bank account
• Negotiate longer payment terms with suppliers
• Reduce the amount of cash tied up in stock/inventories
• Regularly use cashflow models to predict future cashflows
• Monitor monthly profit results and forecast your cash position on a monthly basis.

This is not an exhaustive list of areas where a business’s cashflow can be improved, it does however identify some common solutions to focus on when seeking to improve cashflow.

To assist businesses to improve their profitability and cashflow we have prepared a checklist if you would like to receive one of these please contact us.

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TAX POOLING – SAVING YOU CASH

If you’ve underpaid your provisional tax with the result that the IRD is charging you use-of-money-interest (UOMI), tax pooling may be a way to save you money.

Tax pooling was approved by the IRD in 2003 and allows taxpayers to pool tax payments, offsetting tax underpayments against tax overpayments within the same pool, thereby reducing UOMI exposure.

How it Works

If you are late paying your provisional tax or your terminal tax the IRD will charge you UOMI, if on the other hand you overpay your provisional tax or terminal tax the IRD pays you interest on the overpayment; currently the IRD charges UOMI at 8.91% and pays interest at 1.82%.

Tax pooling is administered by a commercial intermediary, such as Tax Management New Zealand (TMNZ), the intermediary forms a tax pool comprising tax payers who have overpaid their tax and tax payers who have underpaid their tax, the intermediary then offsets the tax overpayments against the tax underpayments. The intermediary charges the taxpayer who has underpaid their tax UOMI at a lower rate than the IRD charges (currently 6.32%).

Large corporates who pay their tax through TMNZ can also get a better rate of interest on tax overpayments than IRD currently offers.

Tax pooling is generally applied to provisional and terminal tax payments though in special circumstances it can also be applied to GST and FBT payments.

Some tax intermediaries also offer tax finance to fund taxpayers’ future tax obligations. One such offer is 3 to 12 months finance at rates between 6% to 7%. These arrangements apply where the tax instalment due is not less than $5,000.

If in today’s economic climate you are looking to better manage your cashflows, tax pooling and/or tax financing may help you to achieve this objective. UHY Haines Norton has first hand experience of tax pooling and has access to tax pooling intermediaries. We can also quickly calculate the savings to you of using tax pooling. Interested, please contact your UHY Haines Norton representative.

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CLINICAL SUCCESS FOR UHY HAINES NORTON CLIENT, BELTAS™ CLINICAL RESEARCH

In 2003 UHY Haines Norton client Gerard Dunne founded BELTAS™ Limited to manage and monitor clinical trials and studies in hospitals and clinics throughout New Zealand, Australia and Europe. BELTAS™ has been an exporter from its first year of operation, with clients based predominantly in the United States and Australia.

In 2009 the company was rewarded for its impressive growth by making it onto the 2009 Deloitte Fast 50 which recognises NZ’s fastest growing companies. In fact with revenue growth of 223% over the past 3 years the company made it into the top 30 performing companies – so much for the recession then.

The company has established a niche for itself combining the high quality clinical practices and standards in New Zealand and Australia with the lower costs of operating locally compared to Europe. This combination makes NZ in particular an attractive place to conduct medical trials.

When asked about the company’s success, Managing Director Gerard Dunne commented that focusing on quality was the cornerstone of their success. All the company’s clinical staff are internationally accredited in the clinical research field which ensures that they can deliver quality work and meet client expectations.

Congratulations Gerard and your staff on your success.

Has your business recently received or been nominated for an award or have you been successful in growing your business? If so, let us know, we would love to spread the news about your success.

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THE HOUSE THAT PHIL AND GAIL BUILT

Those of you with a good memory may recall that in our September 2009 newsletter we mentioned that Phil and Gail Leach of PSL Construction Limited won the 2009 Supreme Award at the Registered Master Builders House of the Year awards for the Auckland region for a house they built in Glendowie.

As a result of their success at the Auckland awards they went forward to the Supreme Awards Gala Dinner recently held in Auckland. Could they walk away with the Supreme Award? – You Better Believe It as they took the top prize of 2009 House of the Year at the Registered Master Builders 2009 Awards – awesome and congratulations to Phil and Gail and the rest of your team.

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TAXING MATTERS

Taxing matters provides a summary of topical tax information relating to individuals and business.

IRD Property Compliance Programme

As part of its Property Compliance Programme the IRD is sending out an informational pamphlet to people they have identified as having had an interest in “off the plan” property purchases. The purpose of the correspondence is to alert people of possible tax implications of “off the plan” property transactions.

Provisional Tax

If you are a provisional tax payer you are required to pay instalments of tax throughout the year. You are, or become, a provisional taxpayer if your residual income tax for the previous year exceeds $2,500.

Calculating Provisional Tax

Provisional tax can be calculated using one of three methods, standard (or uplift), estimation or ratio method. The ratio method can only be used if you are registered for GST.

Payment of Provisional Tax

The amount of provisional tax you are required to pay depends on the amount of profit you expect to make and the method you use to calculate your provisional tax instalments.

Under or Overpayment of Provisional Tax

Provisional tax payments are a payment on account, once the tax year is complete a provisional tax payer is required to complete a tax return to establish their actual tax liability for the year, any provisional tax paid is deducted from the tax liability calculated to give the terminal tax to pay or to be refunded.

Provisional Tax Due Dates

If you are registered for GST this will determine when provisional tax payments are required to be paid. If you have a standard 31 March balance date and pay GST six monthly you pay provisional tax by 28 October and 7 May (ie two instalments).

If you have a standard 31 March balance date and pay GST on a two monthly basis then you pay provisional tax by 28 August, 15 January and 7 May (i.e. three instalments). If you have a standard 31 March balance date and are not registered for GST then you pay provisional tax in three instalments by the same three dates.

If you have a standard 31 March balance date and use the ratio method to calculate GST then provisional tax is paid in six instalments.

Voluntary Provisional Tax Payments

As provisional tax payments are payments on account the IRD allows voluntary provisional tax payments to be made at anytime. Making voluntary tax payments reduces the amount of tax that has to be paid at the end of the year and can also reduce use of money interest charged by the IRD.

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UHY HAINES NORTON – SUPPORTING THE COMMUNITY

Waitakere Business Awards

UHY Haines Norton was a proud sponsor at the Westpac Waitakere Business Awards recently held at the The Trusts Stadium, Waitakere.

The Business Awards seek to recognise successful businesses based in West Auckland and were co-hosted by the TV3 reporter Mike McRoberts and the entertainer Jackie Clarke.

UHY Haines Norton sponsored the Best Mid-sized Business Award which was won by The Web Company. We would like to congratulate The Web Company on their success as well as the other award winners and all other finalists – all of whom help to make West Auckland a thriving and successful place to work and live.

West Auckland Hospice

The countdown to Christmas has begun and this year UHY Haines Norton will be sponsoring a christmas tree in the Light up Hospice for Christmas Appeal.

The West Auckland Hospice is holding its Light up Hospice for Christmas Appeal on Sunday 6 December between 7.30pm and 9.30pm at 52 Beach Road, Te Atatu Peninsula.

Greg Ward will be Master of Ceremonies and the evening will feature jazz, face painters and Santa for the children. There will also be a sausage sizzle and Christmas Carols – an event not to be missed.

If you are interested in sponsoring a christmas tree for this occasion please contact Margaret Hudson on 09 834 9752 at West Auckland Hospice.

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STAFF ACHIEVEMENTS

UHY Haines Norton actively supports its staff in completing their professional qualifications and in their continuing professional development. It is with great pleasure therefore that we can announce that two of our staff have recently been admitted to the CA College of the New Zealand Institute of Chartered Accountants.

Congratulations Grace and Shardha on becoming Chartered Accountants – all that hard work has paid off.

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PASS ME ON

If you know someone that would find articles contained in this publication to be of interest please feel free to pass a copy on to them.

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UHY Haines Norton (Auckland) Ltd is a member of UHY Haines Norton, an association of independent firms throughout Australia and New Zealand and a member of UHY, an international association of independent accounting and consulting firms. UHY firms operate in over 180 offices based in more than 60 countries around the world.

Disclaimer

The comments in this publication are for general information purposes only. This publication and the information contained within it is not intended to constitute professional advice. If you wish to receive specific professional advice please contact a UHY Director.