With the 2012 tax year having now ended for most of our clients we would like to remind you what you can do to help ensure that your 2012 accounting and tax fees are minimized.
Here is a checklist which identifies the information we require to ensure that your 2012 accounts and tax returns are processed accurately and efficiently:
- Notify us of any major changes to your business for example purchase or sale of assets, purchase or sale of rental properties, new companies/trusts/partnerships formed, new bank accounts, new loans, new hire purchase or lease agreements etc.
- Complete the client online checklists.
- Make sure your bank account or bank reconciliation balances, particularly if you use a computerised accounting system such as MYOB.
- If your accounts and tax returns are prepared on a cash basis provide a full years bank statements for all bank accounts.
- Provide end of year accounts receivable, accounts payable and stock on hand figures if relevant.
- Provide loan account balances as at balance date and interest paid summaries for the year; these can be obtained from your bank.
- Provide term deposit confirmations as at balance date, confirmations can be obtained from your bank.
- Provide us with interest received certificates for the year for all applicable bank accounts including term deposits, both existing and new deposits. Provide dividend statements received during the year.
- If you have purchased assets that cost more than $500 plus GST provide a summary of purchases and copies of invoices. Provide copies of any new hire purchase/lease agreements.
- If credit cards have been used for both business and personal expenditure clearly identify which expenditure is which. Provide a schedule of business expenses paid from your personal account and personal expenses paid from your business account.
- If you have sold or purchased property during the year include copies of settlement statements and sale and purchase agreements.
- Where using a home office provide full details of the area and home office expenses incurred (typically these include interest on mortgage, insurance, power/gas, rates and repairs and maintenance expenditure).
- If you have income protection/disability insurance provide details of the premiums paid for the year.
- Provide your records in an orderly manner for example in a folder using appropriate folder dividers.
Providing us with the right information in the right format will enable us to complete your accounts and tax returns accurately, efficiently and on a cost effective and timely basis.
Important Tax Changes Taking Effect from 1 April 2012
Two important tax changes came into effect from 1 April 2012 affecting Kiwisaver and Student Loans.
1) From 1 April 2012 employer contributions to Kiwisaver funds are subject to employer superannuation contribution tax (ESCT).
Previously the employer’s contribution to Kiwisaver (2% of employee’s gross wage) was tax exempt.
The tax rate to apply on the employers Kiwisaver contribution is calculated at each employee’s marginal ESCT rate.
2) The following changes to the Student Loan scheme also came into effect from 1 April 2012:
i) Everyone with a student loan will have to use a student loan tax code;
ii) The interest on student loans decreased from 6.60% to 6.40%;
iii) The threshold for significant over-deductions is $40 per month.
Note that the annual repayment threshold has remained at $19,084.
NZ Rate of Inflation
A recent study (Global Investment Returns Yearbook) has reported that New Zealand’s inflation rate over the past 112 years (since 1900) has averaged 3.7% a year. This compares to 3.8% for Australia and 3.0% for the US.
Looking at this another way with an annual inflation rate of 3.7% a $1 today is worth 96 cents in a year’s time; 69 cents in 10 years time; and 16 cents in 50 years time.
ACC Earner Levy
From 1 April 2012 the ACC earner levy is dropping from 2.04% to 1.7% of each employee’s salary. The levy is currently capped at maximum earnings of $111,669 for employees and $110,018 for the self employed though ACC are looking to raise the maximum earnings to $113,768 for employees and $111,669 for the self employed.
The earners levy covers non-work injuries suffered by employees and the self employed.
Minimum Wage Increase
The minimum wage in NZ increased on 1 April 2012 by 50 cents to $13.50 an hour, while training and new entrants’ minimum wages rose 40 cents to $10.80 an hour.