Hello and welcome to our June newsletter.  It's been a pretty soggy start to the winter and it's hard to believe that the year is already half over!  We've turned up the heating in our office and, as always, look forward to seeing you when you pop in with your information or to sign off your accounts. 

As many of you are aware, we have had a pretty tough quarter, courtesy of Inland Revenue and their new system which they chose the worst time of the year in which to introduce.  Its certainly come with some challenges which we will talk about later in this newsletter.

Upcoming tax payments

For those of you who are registered for GST 2 monthly, your GST return for the period ending 31 May is due to be filed with Inland Revenue by 28 June 2019 .    If you haven't already done so, please send us your information ASAP so that we can get your return filed on time. Please call if you need any help or if you are unable to get your information to us.

On 28 August 2019 , both July GST returns and the first instalment of provisional tax for those of you not registered for GST or registered for GST on a 2 monthly basis will be due.  As always, we will send reminder notices to pay this provisional tax 3 weeks before the due date.  Please ensure that we have your correct email address to which to send these notices.

Those of you registered for GST 6 monthly who pay provisional tax: your first instalment isn't due until 28 October 2019 - so don't panic if you don't receive a notice in August.

  KiwiSaver Deadline

Just a reminder that the Government contributes 50 cents for each dollar you contribute to your KiwiSaver account, up to a maximum of $521.43 per year. To receive the full annual Government contribution, you'll need to contribute at least $1,042.86 between 1 July and 30 June each year and meet the eligibility criteria. You'll be able to receive the annual Government contribution from the age of 18 up until you're eligible to make a KiwiSaver retirement withdrawal as long as you live mainly in New Zealand.  If you haven't contributed at least $1,042.86 for the current year, we recommend you make your payment by the end of this week.

ACC Payments

We have become aware that ACC are automatically taking payment in full where taxpayers have previously signed a direct debit form.   Please read your ACC invoice carefully so that you are aware of when payment will be taken.

Request for information from banks

New Zealand banks are warning that some customers could have their accounts frozen if they don't respond to requests for information.

As part of their regulatory obligations, banks are required to undertake due diligence on the foreign tax status of their customers.

To fulfil this duty, all banks have been contacting customers requesting details on their status.  If you've been contacted, it's important that you respond to your bank, regardless of your tax status. If you don't respond, or if your response is incomplete, your bank will be required to freeze or close your accounts.

Ring-fencing of Rental losses

The government is still working through the legislation for ring-fencing rental losses but, regardless of how long this process takes, there is no doubt that it will  be backdated to 1 April 2019.  We were pleased to see that many of you took our advice and got as many property repairs completed before 1 April as you could.  Please be aware that moving forward, if your expenses exceed your income in any one year, the excess expense will be pushed forward for offset against future profits instead of being offset against other income.

We are aware that some of you have, or are considering, selling your rental properties as a result of this legislation.  Please do consider this if you are going to struggle to keep up your mortgage payments moving forward. However, please let us know if you are considering this option so that we can advise as to any tax implications of this.

Wills and Powers of Attorney

Although none of us like to think of this subject, we need to be aware that there is a fine line between life, death and incapacity and we need to plan for this.   A recent conversation at a 21 ^st birthday party revealed that many young people believe that life insurance is a rip-off because most people who take it out stop it before they receive a payment!   Life insurance is usually necessary if you have debt and dependents so please don't listen to the man in the pub and assume that it is a waste of money.   Likewise, please consider keeping your will updated and having power of attorney in place, just in case.   Also keep details of the names of your lawyer and accountant along with your important documents so that people know who to contact when required.   Please note that if you die without a will (intestate) then administering your estate becomes complex and expensive and your assets may not be distributed as you would wish.

Anti Money Laundering (AML) Legislation

Thank you to everyone who has sent or brought in the AML documentation.  For those of you who haven't yet done this, please note that it is a legal requirement for us to do this (just like your bank, lawyer and real estate agent) and that the fact  that you may have been through the procedure with another provider doesn't prevent the requirement for us to also do this. We appreciate your assistance with this matter.

Inland Revenue

As mentioned above, despite protests from every tax agent in the country, Inland Revenue closed down over the Easter/Anzac Day period to transfer all of the income tax and PAYE data onto their new system.  They were under the illusion that it would be a seamless transition over a period when everyone was on holiday and that everything would work perfectly from day 1.

The reality was very different!  Their new system is an off the shelf product from Canada, who has a similar tax system to us, but do not have the likes of ACC, Working for Families or Student Loan administered through the tax system.  Although we are confident that eventually the new system will be adequately modified to cope with the NZ tax environment, in the short term it has caused substantial additional work for us and, most concerningly has left us without visibility of a lot of features which we used to take for granted.  The main one of these being, that for the first month after installation, we had no data feeds into our system, meaning that we were unable to chase clients for missed tax payments.  It has also put us well behind schedule in regards to completing tax returns.

We would like to take this opportunity to apologise for any inconveniences these issues have caused our clients.  Please be assured that we are working as hard as we can to work around the IRD issues and get back on track.

Payday Filing

As part of the transition to the new system, IRD have also brought in payday filing which has proven, in many cases, to be quite onerous.  For those of you that aren't aware, the PAYE job that we used to do once a month, now must be done every time you pay an employee or contractor for whom you deduct withholding tax.  Up until now, IRD have allowed some lee-way for people who have failed to file the information within 2 days of payment, but they will begin to impose penalties shortly, so you need to have robust systems in place to fulfil this obligation.

If you currently pay contractors on an ad hoc basis, we suggest that you simplify matters by paying people together and regularly – on the same day each week or each month. 

You could also consider outsourcing your payroll to a payroll intermediary company such as Smart Payroll, iPayroll or Thankyou Payroll, who, for a small weekly fee, calculate the pays, pay the staff and file and pay Inland Revenue. All you need to do is submit the timesheets and pay the intermediary – they do everything else.

As always, we look forward to assisting you with any queries you may have so please don't hesitate to contact us if you need help.

From the team at Tyler Price – Isobel, Abbey, Bryony, Caroline, Karen, Lichelle, Tina, Virginia and Tilly