Business and Tax Updates September 2024: IBBZ Accounting

Summary:

Spring has officially sprung, and just as nature awakens, so do new possibilities for you and your business. It's a time to embrace fresh start , plant the seeds of success, and nurture them into future achievements. Whether it's reviewing your goals, rethinking strategies, or embracing new ventures, spring offers a perfect moment to grow and expand.

In September 2024, several important tax and business changes were introduced in New Zealand, providing clarity on how companies should manage international operations, employee benefits, and tax obligations. Here’s a simple breakdown of the most important updates that might affect your business.

New Laws Affecting Businesses

New Zealand-Slovakia Double Tax Agreement (DTA)

• New Zealand and Slovakia have signed a new agreement to prevent businesses from being taxed twice on the same income. This change took effect in August 2024 and helps companies by lowering withholding tax rates and simplifying tax procedures between the two countries.

• How it helps businesses: If you do business in Slovakia or plan to invest there, this agreement makes tax matters easier, reduces compliance costs, and ensures fairer tax practices.
  

Update to Tax Agreement with Austria

• New Zealand also updated its tax agreement with Austria, reducing withholding tax rates on dividends and simplifying rules for businesses that invest across borders.

• How it helps businesses: This update means less tax on dividends and easier compliance for New Zealand companies investing in Austria.

New Guidelines for Employers

Several guidelines were introduced to help businesses understand their tax responsibilities when offering employee benefits, especially regarding employee share schemes.

Handling Cash-Based Employee Share Schemes

• If your company offers employee share schemes but provides cash instead of shares, there are specific tax rules to follow. You must withhold PAYE (income tax) and any student loan repayments that apply.

• What this means for businesses: Companies can choose to pay employees in cash instead of shares, but they must ensure the right tax is deducted and reported.

Paying Taxes on Employee Share Benefits:

• If your company provides shares to employees, you can also choose to cover their tax obligations. This makes it easier for employees by reducing their tax burden.

• What this means for businesses:Employers who offer share schemes can take care of the tax responsibilities on behalf of their employees, making share-based benefits more attractive.
  

Important Tax Changes

Some new rule focus on how businesses handle tax filings and employee payments.

Updated PAYE Rates

• The tax rates for certain income payments, such as social benefits, have been updated following the 2024 Budget changes. Businesses need to ensure they are using the correct rates when calculating PAYE deductions for employees.

• What this means for businesses: Stay updated on the new PAYE rates to avoid mistakes in tax deductions for your employees.

Changing Your Business’s Balance Date

• If your company wants to change its balance date (the end of your financial year), there’s now a clearer process for doing so. You can apply for this change if there’s a valid business reason.

• What this means for businesses: If changing the financial reporting period makes sense for your business, you can now apply for it with easier-to-understand steps.

More Time to File Taxes

• Businesses that don’t use a tax agent can apply for more time to file their tax returns. This extension option is especially helpful for small businesses and sole traders.

• What this means for businesses: If you’re struggling to meet tax deadlines, you can now request more time to file your tax returns, even if you don’t have a tax agent.
  

Key Decisions That Could Impact You

Two important decisions were made that clarify tax rules for specific situations:

GST and Religious Practice Payments

• Payments for participation in religious practices are not subject to GST. This ruling affects businesses and organizations involved in religious or charitable sectors.

• What this means for businesses:  If your organization is involved in religious activities, these payments won’t require GST, making tax management simpler.
  

Look-through Companies (LTCs)

• For businesses structured as Look-through Companies (LTCs), recent decisions clarify the rules for capital distributions and how they’re taxed.

• What this means for businesses: If your business is an LTC, make sure you’re following the latest guidelines to stay compliant with tax regulations.

Conclusion

These updates aim to simplify tax obligations and provide clarity for businesses in New Zealand. Whether your company is involved in international trade, offers employee share benefits, or needs more time to file taxes, these changes are designed to make tax compliance easier and more transparent. Stay informed and ensure that your business takes advantage of these updates for smoother operations.