McLEAN AND CO. Chartered Accountants

Accounting                               Taxation                                   Business Advice and Development Assistance                                        

 P.O. Box 10 , Clive         133 Main Rd, Clive           Tel. (06) 8700952          Fax. (06) 8700955 

Email murray@mcleanandco.co.nz                                  Website www.mcleanandco.co.nz

 
EMAIL NEWSLETTER  APRIL 2013
 

Welcome again to the McLean and Co. Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  

 

NEW CLIENTS

We are happy to accept new clients.  We would be happy to assist colleagues and acquaintances as new clients.

 

INDEX

  1. Office Closure

  2. KiwiSaver and Home Buying

  3. ACC Rate for 2014 Year

  4. Keeping of Tax Records

 

OFFICE CLOSURE

The Office will be closed from Monday 29th April, 2013 and re-open Monday 13th May, 2013, with the exception of one day, Monday 6th May, 2013, when it will be open.

 

KIWISAVER AND HOME BUYING

FIRST HOME SAVINGS WITHDRAWL

KiwiSaver can be used to help you buy a home. Once you've been a KiwiSaver for three years, you may be able to withdraw your savings excluding the government contributions (the government provides $1000 lump sum when you join KiwiSaver, plus tax credits of up to $521 a year) to put towards buying your first home.

FIRST HOME DEPOSIT SUBSIDY

Once you've been contributing to KiwiSaver (or another approved savings scheme) for at least three years, you may be entitled to the first home deposit subsidy of up to $5000.

To get the subsidy, you'll have to meet a household income test, buy a house that's under a certain value , and intend to live in the house for six months or more. The cap is currently $400,000 for higher priced areas such as Auckland Cty and $300,000 for the rest of New Zealand. This is to stop people from using the subsidy to buy homes they can't afford. The deposit subsidy will not have to be paid back unless you do not live in the house for at least 6 months after purchase.

You can apply for the deposit subsidy if you have belonged and have regularly contributed to a KiwiSaver scheme, complying fund or exempt employer scheme for at least three years.

The subsidy is $1,000 for each year of contribution to the scheme:

  • 3 years of contributing = $3,000 (the minimum you can get)
  • 4 years of contributing = $4,000
  • 5 years of contributing = $5,000 (the maximum you can get)

You can buy a property with other people who may or may not also qualify for a deposit subsidy.

Housing New Zealand administers the deposit subsidy on behalf of the government.

You may receive the deposit subsidy only once, and it is paid directly to your solicitor on settlement day. You need to submit an application to Housing New Zealand for the deposit subsidy at least four weeks prior to the settlement date. The subsidy cannot be paid out after settlement date has occurred, so please ensure that you apply within the stipulated timeframes.

It will take 5 working days to assess an application for the deposit subsidy, providing you include all the required supporting documentation. If you are eligible, Housing New Zealand  will give you a letter to confirm the deposit subsidy is available. You can take this to the bank as it counts towards the total finance you have available to buy your first home. Housing New Zealand  will also send legal documents to your solicitor which you will need to sign and return to us no later than five working days prior to settlement date. Once Housing New Zealand  receive these documents, we will arrange to pay the subsidy into your solicitor’s trust account on the day of settlement.

Alternatively, you are able to apply for a KiwiSaver deposit subsidy pre-approval, if you have not yet found a house to purchase. A pre-approval is valid for 180 days and cannot be extended. At the end of the 180 days if you have still not purchased a property, you will need to make a new application for a further pre-approval.

A pre-approval means that you are free to house hunt with the knowledge that, providing the house you eventually buy meets the house price cap criteria and that nothing has changed from when you made your application, you will be eligible for the subsidy.

If you have a pre-approval, all that you are required to do is to send Housing New Zealand your signed agreement for sale and purchase, no later than two weeks prior to settlement date. Please note that it is not essential that the agreement for sale and purchase is unconditional, but it must be signed by both the vendor and the purchaser.

If you have previously owned property, you may still be eligible for the deposit subsidy. The same application process is followed; however there is an additional section in the form (Section E, page 6) that has to be completed by those who have previously owned property, but no longer currently have a share in property.

 

ACC RATE FOR 2014 TAX YEAR

The ACC levies have been set by Cabinet for the 2013-14 tax year. These levy rates will be formalised when they're passed into Regulation.

There is no change in the ACC levy rate for the 2014 tax year. The earners' levy is set at $1.70 (GST inclusive).

The minimum liable earnings for self-employed workers increases from $27,040 to $28,080.

The maximum liable earnings will increase for:

  • self-employed people under the Work and Earners' Accounts from $111,669 to $113,167
  • employees, private domestic workers and earners under the Work Account and the Earners' Account from $113,768 to $116,089
  • employees and private domestic workers for calculating the residual portion of the Work Account from $111,669 to $113,167.

 

KEEPING OF TAX RECORDS

As a general rule, the Inland Revenue Department can reassess you for up to 4 years.   However, if they believe that your tax return is fraudulent, or misleading, or it has left out income, you can be reassessed at any time and there is no limit to how far back the IRD can go. Similar rules apply to GST.

You have an obligation to keep records for 7 years (the IRD can give notice increasing this to 10 years) but you need to ask, if in your situation, you should be keeping records indefinitely. If therefore  is the appropriate course of action to keep your records for this minimum period of time. 

However, due to the fact that IRD can reassess your tax position at any time and there is no time limit as to how far they can review your records, you may want to consider keeping them for a longer period if:

  • you are of the belief that you left anything out of your tax returns (either deliberately or because you thought no tax was payable)
  • you provided information that may be misleading (e.g estimating figures rather than providing actuals)

 

 

McLEAN AND CO KNOWLEDGE CENTRE AND ARTICLES ABOUT TAXATION AND BUSINESS IN GENERAL PRESS HERE FOR BUSINESS STARTUP KNOWLEDGE CENTRE PRESS HERE
FOR INFORMATION ABOUT COMPANY INCORPORATION PRESS HERE FOR PREVIOUS MONTH EMAIL NEWSLETTERS PRESS HERE

FOR PROPERTY INVESTMENT AND TAX INFORMATION PRESS HERE

FOR FRANCHISE INVESTMENT AND TAX INFORMATION PRESS HERE

The information provided in this email newsletter is for informational purposes only.   McLean and Co. accept no responsibility for the opinions and information expressed in the information provided and it is provided "as is" without warranty of any kind.    The user assumes the entire risk as to the accuracy and use of this document.   Readers are asked to seek professional advice pertaining to their own circumstances.    The McLean and Co. email newsletter may be copied and distributed subject to the following conditions:
  • All text must be copied without modification and all pages must be included.
  • This document must not be distributed for profit.    

 

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