EMAIL NEWSLETTER
JULY 2013
Welcome
again to the McLean
and Co. Newsletter
in which we discuss current taxation and business matters. We trust
you find it informative.
We
are happy to accept new clients. We would be happy to assist colleagues
and acquaintances as new clients.
INDEX
-
Parental Leave Payments to Increase in July 2013
-
Do You Need to Register for GST?
-
Renting Out Your Home- Tax Obligations
-
Trial Periods- the First Ninety Days
PARENTAL
LEAVE PAYMENTS TO INCREASE IN JULY 2013
Families
with new born babies can expect an increase in parental leave payments from 1
July this year.
The
maximum amount of parental leave payment for eligible employees will
increase from $475.16 to $488.17 a week. The minimum amount of parental leave payment
for self-employed persons will also increase, from $135.00 to $137.50 a
week.
Under the Parental Leave and Employment
Protection Act 1987, parents eligible for the scheme are entitled to up to
14 weeks paid leave at a rate calculated on the basis of their average
weekly earnings.
The maximum rate is reviewed every year to
account for any increase in average weekly earnings.
DO YOU NEED TO REGISTER FOR GST?
The end of the tax year is a good time to review your GST status and
check whether you need to register.
You must register for GST if you carry out any taxable activities and
your total turnover at any point:
- was over $60,000 for the last 12 months
- is reasonably expected to go over $60,000 for the next 12 months, or
your monthly average is over $5,000 (if your monthly turnover is more than
$5,000 and it’s expected to be maintained at that level all year, you’ll
need to register for GST
- was or will be $60,000 or less, but you include GST in your prices,
eg, taxi drivers who have included GST in their taxi fares.
You’re required to register for GST within 21 days of any of these
situations applying to you. IRD rely on you to take this action yourself and
may charge penalties if you don’t register and they find out through
routine checks.
If you have an annual turnover of $60,000 or less, you can register for
GST if you want to.
RENTING OUT YOUR HOME- TAX
OBLIGATIONS
People planning to rent out their homes or rooms during major events are
being reminded to make sure they understand their tax obligations.
Quoting statements from IRD-
- "We know accommodation is at a premium during some big events, and
people can see it as a chance to make some extra money."
- "There is nothing wrong with renting out your home or some rooms, but
people just need to be aware of tax obligations. Any rental income is taxable
and should be returned in the tax return for the income year in which it's
derived."
- "We are certainly aware a lot of people wanted to rent out their homes
during the Rugby World Cup for example, and we'd advise them to talk to their
tax advisor about their particular circumstances."
- "The vast majority of people do the right thing and declare the right
income, and I'd suggest anyone who is thinking of not doing that thinks again.
They don't want to be caught in the position of making a false return and facing
penalties and interest."
- "Our aim is to make sure people understand their tax obligations in the
first place and how they comply with them, so we don't get to that point."
Inland Revenue uses a number of techniques to identify people
earning income from additional sources. These include the use of third party
information.
TRIAL PERIODS- THE FIRST NINETY DAYS
All employers in New Zealand can use trial periods for the first 90 days
of a new employee’s employment. Using a trial period allows the employer
to terminate an employee within this period without the employee being able
to take personal grievance action for unjustified dismissal.
Arguably, making sure you get the recruitment process right in the first
place is a far better option than the trial period as a ‘testing’ period
in which to determine the suitability of your new employees. That being
said, trial periods can be very useful when you new employee doesn’t work
out in quite the way you had hoped and planned.
If you have a trial period clause in your agreement or intend to
introduce one, here are a few considerations which you should be aware of:
- You can’t include a trial period for an employee who has previously
worked for you
- The employee should be given employment agreement containing the
written trial period provision and are made aware of the trial period
provision, before they start employment. They must be given the
opportunity to take advice on the employment agreement, so it is not
good practice at all, to present them with the employment agreement on
their start day and ask them to sign it.
- Make sure the employment agreement with the trial period clause, is
signed before the employee starts
- If you do decide to dismiss an employee during the trial period, the
employee should be given notice of termination (or payment in lieu, as
per the trial period provision)
If you do decide to dismiss an employee within the trial period, you are
not required to give an employee access to information regarding the
decision to dismiss or provide the opportunity for them to comment before
the decision is made. Nor do you need to provide an employee with written
reasons for termination where requested following termination.
However, in the employment relationship, the duty of good faith applies
and the case law to date suggests that because of this, if requested at the
time, a reason for termination must be given.
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
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