McLEAN AND CO. Chartered Accountants

Accounting          Taxation         Business Advice and Development Assistance           Audits                             

 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  MARCH 2007
 

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

McLean and Co. is a home based chartered accountancy practice based in Clive, Hawkes Bay.    Readers are invited to peruse the practice website www.mcleanandco.co.nz,  which lists services provided, gives contact details and indicates how to become a client, contains an extensive base of articles on business and taxation matters,  and has links to other websites that may assist your business.    Being a small firm itself,   McLean and Co. strives to provide a personal and professional service largely to a self employed person and small business client base.  Enquiries are welcomed.

 

NEW CLIENTS

We are happy to accept new clients.  Please contact ourselves at the contact points highlighted above if we can assist you in your accounting and taxation requirements. Our website lists information required for this in the following link:

www.mcleanandco.co.nz/Documentationrequired.htm

 

INDEX

  1. GST Due Dates and Changes to GST Returns

  2. Use of Money Interest Rates

  3. Work out if you need to do anything at the end of the Tax Year

  4. Four Weeks Holiday Pay for Employees

  5. The Importance of Wills and Powers of Attorney

 

 

GST DUE DATES AND CHANGES TO GST RETURNS  

GST Return and payment due dates will be changing for taxable periods ending on or after 31 March 2007 .   For most months, GST Return and payment dates will fall on the 28th (or the next business day) of the month following the end of the Return period, except for the following periods:

·          30 November- the due date remains 15 January

·          31 March- the due date will be 7 May

This is the first stage of aligning the due dates for GST and Provisional Tax payments.  

As part of this alignment IRD will be changing the GST Returns in a two stage process.  The first stage will occur in April 2007 with the removal of the carbon copy of the Return.

 

 

USE OF MONEY INTEREST RATES

Use of money interest rates charged by IRD increased  from 8 March 2007 .   The rate for tax increased to 14.24%.  The rate for overpaid tax increased to 6.66%.

 

 

WORK OUT IF YOU NEED TO DO ANYTHING AT THE END OF THE TAX YEAR  

 

Most people who earn salary or wages pay the correct amount of tax and don't need to do anything at the end of the tax year (31 March).

However, if you earn income that has no tax deducted, or if you paid too much or not enough tax during the year, you'll need to file a return or get a Personal Tax Summary. These will tell you if you have a tax refund or bill to pay. Use the table below to find out if you need to do anything.

How to find out if you need to do anything

From April, you can check if you need to do anything for the tax year just ended by using our questionnaire Do you need to file an IR3 return or receive a personal tax summary?

If you... then you... Find out more...
  • earned salary or wages only and used the correct tax code

probably paid the right amount of tax and don't need to do anything.

 
  • You can check this by using the Personal tax summary calculator under "Work it out".

earned salary or wages, and

  • received Working for Families Tax Credits (previously family assistance), or
  • think you may have paid too much or too little tax during the year

may need to get a personal tax summary.

Your Personal Tax Smmary will calculate your end-of-year tax square up.
  • earned income that hasn't been taxed (for example rental or self-employed income)
  • earned overseas income
  • run your own business, or
  • received withholding payments

need to file an Individual income tax return (IR3).

Note: If you filed an IR3 last year, IRD will send you one automatically this year.

 
  • are under 15, or under 19 and still at school
  • earned less than $9,880
  • worked for less than a full year or had more than one job

may be eligible for an income tax rebate. This means you may get a refund.
  • paid for childcare, a housekeeper, or made a donation for school fees or to a charity

may be eligible for a rebate. This means you may get a refund.

 

 

FOUR WEEKS HOLIDAY PAY FOR EMPOYEES

The change to four weeks paid leave is being introduced gradually from 1 April 2007. It starts for different people on different dates.

An individual employee’s right to four weeks paid annual holidays will begin on their next anniversary (after 1 April 2007) of the date they started their current job.

So if an employee started work on 3 June, they will be entitled to four weeks holidays on 3 June 2008. If they started work on 3 February, they will be entitled to four weeks holidays on 3 February 2008.

For all employees who receive ’pay as you go’ holiday pay, the payment rises on 1 April 2007 to 8 percent of their pay, up from 6 percent.

The right to four weeks minimum annual holidays applies to all workers, of all ages, in all industries. It is against the law for an employer to give less than the minimum.

If an employee leaves their job after 1 April 2007, but before the next anniversary of starting their current job, they’re entitled to:

  • 8 percent of their gross earnings between their last anniversary date and the day they leave
  • Payment for any unused annual holidays owing from before their last anniversary date.

Employees who already have four or more weeks holidays

The change does not mean that employees who already get four or more weeks annual holidays will automatically get extra holidays. Whether an employee is entitled to another week over and above the new minimum requirement will depend on the wording of their employment agreement.

If the employment agreement says the employee is entitled to a specific number of weeks’ annual holidays – for example, four weeks - the employee wouldn’t be entitled to any additional leave. However, some employment agreements talk about providing one or more ’additional’ weeks holiday, over and above the statutory entitlement. These agreements would have to be looked at carefully to clarify the employee’s entitlement. Employers and employees with this sort of agreement may wish to seek independent advice.
 

 

IMPORTANCE OF WILLS AND POWERS OT ATTORNEY

WILLS

Making a Will may be one of the most important things you do. 

A Will is the only way to ensure that your wishes are carried out.  A Will should detail the distribution of all your property and assets, funeral arrangements and bequests to charitable organisations. 

Having a Will ensures that your family does not suffer any unnecessary delay or expense in settling your affairs after your death.

If you die without a Will (which is called dieing "intestate") the Government, through legislation, will intervene.  A court will determine who will look after any dependent children if a surviving parent is unavailable or unfit and any property will be distributed or held in trust according to a statutory formula set out in the Administration Act 1969. 

Here are some examples of what would happen if you died intestate:

Example 1
You leave a spouse (or defacto partner) and children – You would think that your surviving spouse (or defacto partner) would take all of your property, especially if the children are minors.  This is not the case.  The spouse (or defacto partner) would be entitled to your personal chattels and a statutory amount of $121,500 plus some interest from the residue of your estate.  The remainder would then be divided one-third to your spouse (or defacto partner) and two-thirds to your children.

Example 2
You leave a spouse (or defacto partner), no children, but one or both parents – Again, you would think that your spouse (or defacto partner) would take all of your property.  However, your spouse would take your personal chattels and the prescribed statutory amount.  Any remainder would then be divided two-thirds to your spouse (or defacto partner) and one-third to your parents. 

Example 3
You have no family – In this situation the government would take the estate.

 

POWERS OF ATTORNEY

What if you become mentally incapable and can't look after yourself or make decisions about your own affairs?  Who can make decisions about your welfare, deal with your property, operate your bank accounts or pay your bills?

A Power of Attorney gives someone the authority to act legally on your behalf when you cannot.  There are two types of Power of Attorney:

Ordinary Power of Attorney
You can grant an ordinary Power of Attorney if, for example, you are going overseas and you want someone to manage your bank accounts.  This power will cease to exist in the event that you lack legal capacity.

Enduring Power of Attorney
If you want someone to act for you when you are no longer able to manage your affairs, you will need to arrange an Enduring Power of Attorney.

If you become incapacitated and have not arranged an Enduring Power of Attorney, those wanting to care for you or make legal decisions on your behalf will need to apply for court orders under the Protection of Personal and Property Rights Act 1988.  This takes longer and is more expensive than setting up an Enduring Power of Attorney.

There are two types of Enduring Power of Attorney – one gives the attorney the right to manage your financial affairs and deal with property, and the other the right to make decisions about your personal care and welfare.  Ideally, you should arrange both.

 

 

FOR 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.    

 

If we can assist further, please email McLean and Co as follows:

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