Hot Topics

Year end checklist for farmers

At the end of each financial year, it is important to note the specific information we require for farming clients to enable us to prepare your financial statements and tax returns.

Consumables

Consumables are the supplies which farmers have produced, manufactured, acquired or purchased and are still on hand at balance date. If the total value on hand exceeds $58,000, the total value of all the consumable aids must be added back into the calculation of gross income. This is a big issue for dairy farmers who have a substantial quantity of brought in and/or farm made supplementary feed.

Trading Stock on hand at balance date

Trading stock, such as wool, hay, cereal crops, grapes and vegetables, that have been harvested but not sold at balance date must be brought to account for income tax purposes. Until harvest they have no value attributed to them for tax purposes.

Stock on hand

  1. Livestock

Regardless of where your stock is located, we need to know: 

  • The quantity of stock held at balance date (split between age/sex).
  • Stock sold or purchased during the year.
  • Any stock killed (for dogs or rations).
  • Any stock bred during the year
  1. Grain and seed

We need an estimated cost value (ex GST) of any grain or small seeds held at balance date. Your annual questionnaire includes tables to fill out with this information.

  1. Wool on hand

We need details of any wool held at balance date including the total KGs and the value/KG.

Debtors and creditors

We have to account for any payments due or amounts receivable at balance date. Please provide us with details of any transactions which took place before balance date that have not yet been paid by you or received by you.

Please contact our helpful team with any queries regarding the information we require to prepare your financial statements and tax returns.

 

2012 Relay for Life - Celebrate, Remember, Fight Back!

Relay for Life is back and Leech & Partners took part in this wonderful event. Held over the weekend of the 24th - 25th of March 2012, the Ashburton Showgrounds played host to over 60 teams. With the aim to raise money for the Cancer Society , a very succesful event was held which helped to minimize the impact of cancer in our community.

Thank you very much to everyone for your support!

 

Residential Rental Properties

February 2012

The tax you should pay depends on the type of investor you are - residential rental investor or a dealer in residential rental properties.

A residential rental investor is required to pay tax on rental income which they earn from their properties. GST does not apply to residential rental income. The only exception to the GST on residential rental rule is if you own an investment apartment with a management or service agreement in place where there may be implications to consider. For more information, please click here.

In comparison, residential rental dealers and speculators must pay income tax on any gain they make when reselling their property. They also must pay tax on rental income which is earned from their properties. GST applies to dealer or speculator income.

Generally, any income which is received from renting out property will be liable for income tax; therefore it must be included in your tax return. This income could be derived from renting out rental properties or having private boarders or flatmates living with you. Special rules apply to private boarder income as discussed below. Expenses which can be deducted include:

  • Rates and insurance
  • Interest paid out on money borrowed to finance the property
  • Agents fees and commissions
  • Repairs and maintenance (except if they substantially improve the property)
  • Motor vehicle and travel expenses
  • Legal fees to arrange the mortgage or finance to buy the property
  • Mortgage repayment insurance
  • Accounting fees for the preparation of accounts
  • From the 2011 - 2012 income year, the rate of depreciation on buildings has been reduced to 0% if buildings have an estimated useful life of more than 50 years, therefore no depreciation will be allowed on any domestic rental house

The following expenses cannot be claimed:

  • Capital or private expenses are not able to be deducted from rental income. Capital expenses are those costs incurred when you buy or increase the value of a capital asset
  • Private expenses incurred for your own benefit which are not connected with producing taxable income
  • Purchase price of rental property
  • Principal repayments of any mortgage repayment(s)
  • Any repairs and maintenance which go beyond replacement and are in fact improvements to the property
  • Real estate agent's fees which are incurred as part of the process of buying or selling the property
  • The cost of making improvements or additions to the property
  • Depreciation on the building from the 2011-2012 income year forward

Boarders

The method to calculate tax for people who take in private boarders changed at the beginning of the 2007 income year. This has created a reduction in the number of boarding service providers who are likely to have to file a tax return. You can use either the standard-cost method or the actual-cost method to determine whether you have to pay tax on boarders income.

The standard-cost method uses an average price for the costs of basics such as food, heating, power and transport. If your annual income from boarders is less than this standard cost, you do not have to file an annual return, keep records of related expenses, or pay tax. Use this calculator to determine if you have any tax liability under the standard-cost method.

You can alternatively use the actual-cost method which requires you to keep full records of your actual income and expenses for the year. If you use this option, you must complete a tax return to declare any profit or claim the loss.

If you require any more information about Residential Rental Properties and the associated tax rules, please do not hesitate to contact one of our helpful team.

 

New ACC rates agreed by Cabinet

The ACC levy rates for 2012-13 have been agreed by Cabinet to be passed into legislation during the first quarter of 2012.

The earners' levy has been set at $1.70 (GST inclusive), which is down from $2.04 previously. The minimum liable earnings for self-employed workers has increased from $26,520 to $27,040.

The maximum liable earnings will increase for:

  • Self-employed people under the Work and Earners' Account from $110,018 to $111,669
  • Employees, private domestic workers and earners other than self-employed under the Work and Earners' Account from $111,669 to $113,768
  • Employees and private domestic workers for calculating the residual portion fo the Work Account from $110,018 to $111,669

Central Plains Irrigation Scheme - ever closer to 'getting bulldozers on site'

First and foremost, what is it? The Scheme, which was first mooted in 2000, will utilise run of river water from both the Rakaia and Waimakariri Rivers. It lies entirely within the Selwyn District, sitting between the Southern Alps to the west, and SH1 and the Waimakariri and Rakaia Rivers. The irrigation scheme is designed to cater for 60,000ha, with potential to irrigate up to 80,000ha if more water is available. The rivers will be linked by a 56km headrace canal, which runs around the foothills and will channel water, probably via a piped gravity system, through 500km of reticulation.

The major benefit of this scheme is the huge increase in productivity. Irrigated farmland, on average, generates three times the production of an equivalent area farmed under dry land systems.

With the election of three new board members, the skills and background knowledge of board members has been further strengthened. Construction is likely to begin once the final touches have been administered to resource consent. The success of this scheme is based on securing funding, ensuring access to a reliable water source and the economical land and construction prices.

The final design is currently being refined to establish costs and a staging programme is being developed. Stage 1 would cover areas between 5,000ha and 20,000ha of the main scheme.

We will endeavour to keep you updated on the progress of this scheme as it takes shape.

 

Becoming a Chartered Accountant? The pathway is now changing

From January 2013, the new Chartered Accountants Program will come into effect. This will change the structure of study and requirements for qualification.

Following a three year academic component, provisional members of the New Zealand Institute of Chartered Accountants (NZICA) will complete the new program which involves four technical modules and a capstone module. The new program is intended to be completed over three years while completing practical experience. It is planned that students will complete two technical modules per year with the capstone module in the third year. The academic requirements are common across both Australia and New Zealand.

The final year for which the current PAS/PCE will be offered is 2015. This will allow for current students and provisional members to qualify using either method.

Please email with the subject 'new CA pathway' for more information.

 

What to remember when preparing andfiling your Annual Return with IRD

Avoid rework and save your valuable time by ensuring you:

  • Use the correct IRD number, tax type and period end date
  • Add the right information for the period you're filing for
  • Record the period end date, not the due date or payment date (if filing electronically)
  • File all the pages of your return
  • Do a final check to ensure everything is correct beforepressingthe'send' button

 

Leech & Partners payroll service

Spend more time on your business.Read More..