Newsletters

1. New rules for GST and Provisional Tax.

You may have noticed that IRD have alrady changed the due dates for lodging GST returns. This has been done in preparation for the new rules coming into effect on 1 April 2008. A summary of these rules is set out below.

• From 1/4/08 if you are registered for both GST and a Provisional Taxpayer, you will be able to align your GST and Provisional Tax Payments with certain provisos.
  
  
• The new option for paying Provisional Tax is called the "Ratio Option".
  
  
• You can still, however, choose the 'old' standard or estimation option.
  
  
• If you only pay Provisional Tax and not GST, or you choose the 'old' option, then your payment dates are changing:
  
  With a standard balance date (31 March);
  

  28 August (was 7 July);
  15 January (was 7 November);
  7 May (was 7 March).
  

  With a non-standard balance date;
  
            the 28th of the following months after                   balance date:
  
            5th month:
            9th month;
            13th month.
  
  
• If you pay both Provisional Tax and GST, your tax due dates will be as follows:
  
  you have chosen the standard option and you pay GST one or two monthly, dates will be as above, but if you pay GST six monthly the due dates are:
  
  

  28 October;
  7 May.
  
  

  if you have chosen the new ratio option and you pay GST one or two monthly, Provsional Tax is payable in 6 instalments;
  

  28 June;
  28 August:
  28 October;
  15 January:
  28 February;
  7 May.
  

  but, if you pay GST six monthly the ratio option is not available.
  
  (PLEASE CONTACT US IF YOU HAVE A NON-STANDARD BALANCE DATE AND YOU HAVE CHOSEN THE RATIO OPTION).
  
  
• So, what is the new ratio option? It is based on a percentage of your GST taxable supplies. This option will not suit all businesses.
  
  You can use this option if:-
  
  a) you've been in business and GST registered for all of the previous income year, and part of the income year prior to that:
  b) your residual income tax (RIT) for the previous year is greater than $2,500-00 and not more than $150,000-00:
  c) you file your GST returns monthly or two monthly:
  d) your business is not a partnership:
  e) your ratio % is between 0 and 100 (IRD will advise this)
  
  IRD will calculate your ratio percentage as follows:
  
             RIT from previous year             100
             __________________     X      ___
             GST taxable supplies
             previous year                              1
  
  To calculate your provisional tax payments under the ration method:-
  
  GST two (one) monthly taxable supplies X ratio %
  
  

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2. Charities Commission

Do you operate as a charity? Have you received taxation exemption from IRD? Have you registered with the Charities Commission? Please read on! The Charities Act 2005 was passed in April 2005 and established the Charities Commission.

• Why Register?
  Registration is voluntary. However, only charities registered with the Commission will be eligible for tax-exempt status.
  
  
  
• Who can Register?
  If the entity is:
  

  established and maintained for charitable purposes;
  
  not for private profit of any individual or group;
  
  has a name that complies with the Charities Act;
  
  all officers of the entity are qualified to be officers.
  

• What is "charitable purpose"?
  
  Advances education;
  Advances religion;
  Relieves poverty; or
  Is otherwise beneficial to the community.
  
  
• Registration Requirements.
  
  Submit  a copy of rules or constitution;
  Provide information about activities;
  Register the officers of the organisation.
  
  Once registered:
  
  File an annual return within 6 months of balance date;
  Notify Commission within 3 months of any changes to the organisation.
  
  
• When to Register?
  
  The register opened on 1 February 2007. Existing charities have until 1 July 2008 to register before their tax exemption is affected.
  
  

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3. Kiwi Saver for the Self-Employed.

IRD have now produced a booklet explaining Kiwi Saver for the self-employed. Some of the pertinent points are summarised below;

• How to Join?
  
  If self employed you need to contact your chosen scheme provider directly (they will advise IRD that you have joined):
  
  Agree with your provider how much and in what intervals you will contribute;
  
  A list of scheme providers is available at www.kiwisaver.govt.nz/interact/sevices/kiwisaver/localprovider.
  
  
• Getting Financial Advice?
  
  Have a look at www.sorted.org.nz which gives free advice on whether or not to join.

Or contact us.

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3. New Company Tax Rates:

With effect from 1 April 2008 the company tax rate will be reduced from 33% to 30%. Also, as you are aware, the Government has hinted that there will be some movement in personal tax rates next year???? Please talk to us about your tax planning issues.

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And just to close ..............

• Eagles may soar, but weasels don't get sucked into jet engines;
  
  
• If at first you don't succeed, try management;
  
  
• Hang in there - retirement is only thirty years away!
  
  

CHAT TO YOU NEXT TIME.

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