Business and Tax Updates November 2023: IBBZ Accounting
Summary:
As we near the end of the year, we wanted to provide you with some valuable insights and updates in the world of finance and accounting. We want to express our sincere gratitude for entrusting IBBZ Accounting with your financial needs.
Business Updates
National, ACT and NZ first have finally reached agreement regarding the coalition and it has been decided that Luxon will be the leader and Peters will take the deputy leadership role for the first term and Seymour for the second term. The coalition agreements include:
-
More funding for prisons, youth justice beds and youth demerit point system as well as more frontline police officers.
-
Restore Three Strikes legislation, with amendments to tighten the definition of strike offences and ensure some benefit for pleading guilty.
-
Tax relief of up to $100 a fortnight for families, how this will be funded is yet to be determined as the foreign buyer ban will not be lifted due to NZ First.
-
Replace first year fees free study with last year fees free.
-
Restore mortgage interest deductibility for rental properties with a 60% deduction this financial year, 80% the following year, and 100% by 2025/26.
-
Allow 90-day eviction notices for tenants on periodic agreements – without a reason.
-
Return tenants’ notice period to 21 days and landlords to 42 if the tenant wished to move and landlord wished to sell property.
-
90-day trials expanded to all businesses.
-
Repealing the Fair Pay Agreement by Christmas.
-
Reverse ban on live animal exports and reform National Animal Welfare Advisory Committee.
The Reserve bank of NZ have decided to leave the official cash rate unchanged at 5.5 per cent on 29-11-2023. The RBNZ warned that inflation remained too high and monetary policy would remain restrictive. They suggested no rate cuts were on the horizon until mid-2025, which is quite different to market expectation of rate cuts in 2024. They have also signalled perhaps one more rate hike some time next year. NZ dollar gained as investor reacted to this news means rates on savings would be higher for a long term. Strong population growth had contributed to an increase in housing rents.
Tax Updates
We have published articles this month on the following topics:
- Changing FIF calculations
Calculation can now change their FIF calculation methods for the relevant income years. Applicants will be able to choose whether they want to use the fair dividend rate (FDR) calculation method and the comparative value method will be available to trusts. - Deductibility of holding costs
For holding costs to be deductible, there must be sufficient connection between the expense and the derivation of income. In order to determine whether a sufficient connection exists, you will need to consider whether the property is being used for income earing uses. - When a subdivision project is a taxable activity for GST
When a subdivision project is carried on regularly and continuously and involves the making of supplies to another person for consider, or intends to do so, it is a taxable activity. - Professional directors and board members incorrectly registered for GST
The commissioner of IRD has concluded that a person who provides only directorship services is not eligible to be registered for GST.