Useful tips for Small Business

Healthy body means healthy thoughts for business

Mobile application – Moves is awesome to record  your daily activity.

This life style changing APP records real time information and its name is Moves. It tracks your everyday life and exercise. What you should do is just carry your phone in your pocket or bag.

This app automatically records your daily walking, cycling and running. It is able to recognise places in your daily life. It will generate a visualised report showing how you spend your day.

 With the app, you can see you every day exercise and review your lifestyle. You can start with small changes that can lead to a fitter lifestyle and healthier habits.

Link: https://www.moves-app.com/

Look through company (LTC) is a fairly new concept to our tax system which was introduced in Budget 2010. Basically the main purpose of introducing LTC is to strengthen our tax system by putting a cap on loss attribution rules.

Look through company rules were applicable from 01/04/2011 onwards and only apply to New Zealand resident companies.

What is it?

Subpart OB of ITA 2007 defines the rules related to Imputation credit accounts (ICA). Every company in New Zealand need to maintain an ICA account, basically if you are paying income tax then it is advisable to maintain this correctly as when you start distributing dividend you can also distribute imputation credits to the shareholders.

Imputation credit account is a memorandum account (section OA2), and section OA3 defines an ICA account must record all credits and all debits that arise in the account as at their credit date or debit date. 
Credit balances
The credit balance recorded in a memorandum account during a tax year or income year, as applicable, is the excess of credits over debits.
Debit balances
The debit balance recorded in a memorandum account during a tax year or income year, as applicable, is the excess of debits over credits.

Motor vehicle is an integral part of any business, and the motor vehicle expense for a small business can be between $5000 to $8,000 per annum thus record keeping and tax rules adherence becomes important.

Things to know about your motor vehicle-

There are four important proposed changes to tax laws announced by the honourable minister Peter Dunne today while making Budget 2013 announcement:-

What is imputation credits?

Imputation credits regime was introduced in NZ in 1988. It is a system which avoids double taxation on already taxed income. So, when NZ Company issue you a dividend this is reported in your tax return as income, and imputation credits attached with that dividend are used as tax credits to avoid double taxation.
Section LA5 (4) ITA 2007: permits imputation credits to be used as credits to settle one's income tax liability.

What is franking credits?

Franking credits is similar to what we have in NZ as imputation credits. In Australia imputation credits are referred as franking credits.
NZ and Australia both have similar imputation credit tax regime which ensures the taxes paid in local jurisdiction are not paid twice.

Financial Reporting Act 1993 (FRA) defines companies into two categories: Exempt companies and Reporting Entity.

Exempt Company audit requirements

Exempt companies need not to comply with the auditing requirements.
Section 6A of FRA defines exempt company:
Exempt company must not be an issuer or overseas company or the subsidiary of another body corporate and did not have any subsidiaries. Further more it must meet two of the following criteria:

• the value of the total assets of the company (including intangible assets) reported in the statement of financial position did not exceed $1,000,000
• the turnover of the company did not exceed $2,000,000
• the company has 5 or fewer full-time equivalent employees

From 01 April 2011, depreciation on building and items attached to the building are depreciated at zero %, thus there is no deduction for you.

However, there are lots of assets in your rental property for which you can claim deduction and reduce your taxes.

Commissioner’s view (TIB vol 22 No 4 May 2010) on a depreciable asset is to follow a 3 step process to ascertain whether the assets are a part of the building or are individual assets.

IBBZ Accounting is very different from your traditional accountant. We are creative and really go out of the way to ensure our customer receive the best advice and great satisfaction. We are different in many ways below is just one example from a property investor point of view.

Increasing mobility of capital, cross-border investments and international trade have all necessitated the need for ‘Double Taxation Avoidance Agreements’ between countries, aimed at eliminating ‘double jeopardy’ and facilitating global partnerships.

New Zealand has such agreements with many countries including Australia, UK, European Union and India (to mention a few) but the increasing Trans-Tasman trade and investment has necessitated a better understanding of the financial impact and more importantly, filing appropriate tax returns. While the importance of tax compliance cannot be undermined, individuals and companies must ensure that they are not burdened beyond their taxable limits.

New Zealand Double Tax Agreement with Australia does not allow tax credits received on Australian dividends as tax credits in your tax returns filed in New Zealand.