Ask your accounting and tax questions here

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  1. Post
    #26
    Shinken wrote:
    I also want to know which of the two is the easier between the new and the old CA programme, apparently for people starting this year they can opt to take either.
    I'm starting the program this year. I haven't received any option between old and new program.

    Guess I will find out soon.

  2. Post
    #27
    These weren't the sort of accounting questions I was expecting

    I haven't kept up with the changes -what is different with the new CA programme?

    PAS (the old PAS anyway) is nothing -just a slight inconvenience costing you a Friday afternoon and a Saturday morning every month. Just do the readings, participate in the discussions and you will be fine. There is a lot of group work so make an effort to get along with the others in your class.

    About the most helpful thing I can tell Auckland attendees is if you put your location down as either East or South Auckland the bastards will stick you out at the airport So lie and opt for central if you live in those areas.

    Honestly PAS is a breeze compared to the six hour PCE 2 exam at the end -is it still six hours? I hope it is, suffering builds character

  3. Post
    #28
    Now that the limit on gifting has been removed, is there any reason not to gift the remaining amount on my house to my family trust all at once?

  4. Post
    #29
    TD wrote:
    Now that the limit on gifting has been removed, is there any reason not to gift the remaining amount on my house to my family trust all at once?
    If you make withdrawals out of the family trust it is a good idea to leave a balance in there -that way withdrawals can be treated as simple loan repayments to you rather than going through the more complicated process of authorising beneficiary distributions to cover it.

    The other reason is the rest home subsidy which still only credits gifting of $27,000 per year.

    Say the remaining amount to gift is $100k, you can gift that all in one go and the house will legally belong to the Trust. However the rest home subsidy only credits you with gifting $27,000. Many years down the line $73k ($100k - $27k) is going to be added back to your assets for assessing your eligibility for the rest home subsidy.

    If instead you keep on gifting $27,000 per year until fully gifted then the house will be excluded from the calculation of the rest home subsidy.

    This assumes that things get bad enough in the future that you need to rely on the government rather than your retirement savings.

    Basically if there is no harm in continuing to gift $27,000 per year I would keep doing it because you never know...

  5. Post
    #30
    Quick Q: Are the costs incurred in listing a property for rental purposes on Trade Me count deductible?

  6. Post
    #31
    keeptabs wrote:
    Quick Q: Are the costs incurred in listing a property for rental purposes on Trade Me count deductible?
    Yes, they should be

  7. Post
    #32
    massive wrote:
    As long as you're not a complete twat I find it hard to believe that the IRD wouldn't wave any penalties and only demand what was owed in such a case...
    You're under the delusion they're a nice bunch of people then. And they care.
    They don't.
    Happened to a friend of mine, I told her she should pay attention and go over the accountants stuff, no...she left it.

    Later, crying in IRDs offices did nothing, they got stuck with it.

    IRD point this out to you - it's your responsibility, accountant or not. The accountant is just an agent.

    Think of it like cars - your mechanic misses something or doesn't fix it right, you cause an accident as a result, the insurance and cops don't care, it's you and your car.

  8. Post
    #33
    pctek wrote:
    You're under the delusion they're a nice bunch of people then. And they care.
    They don't.
    Happened to a friend of mine, I told her she should pay attention and go over the accountants stuff, no...she left it.

    Later, crying in IRDs offices did nothing, they got stuck with it.

    IRD point this out to you - it's your responsibility, accountant or not. The accountant is just an agent.

    Think of it like cars - your mechanic misses something or doesn't fix it right, you cause an accident as a result, the insurance and cops don't care, it's you and your car.
    To an extent, although you have recourse if the accountant was negligent

  9. Post
    #34
    pctek wrote:
    You're under the delusion they're a nice bunch of people then. And they care.
    They don't.
    Happened to a friend of mine, I told her she should pay attention and go over the accountants stuff, no...she left it.

    Later, crying in IRDs offices did nothing, they got stuck with it.

    IRD point this out to you - it's your responsibility, accountant or not. The accountant is just an agent.

    Think of it like cars - your mechanic misses something or doesn't fix it right, you cause an accident as a result, the insurance and cops don't care, it's you and your car.
    Hot stuck with what?

  10. Post
    #35
    brand wrote:
    You don't know IRD very well -they don't care it wasn't your fault. As far as they are concerned you are responsible for the tax return filed in your name.
    I'm an Accountant myself - not CA yet but getting there.

    Several years ago I think you could have been right with those comments, but to be honest I find the IRD to be quite accommodating and way more lenient than I would have suspected.

    Case in point - I had a client who was receiving bonus employee shares that were never declared in the tax return for 4-5 yrs.
    We refiled the tax returns and managed to write off approx $50k in penalties (essentially all the late payment penalties)

    As long as you can articulate your self well and explain that you thought you were doing everything correctly, the IRD can be very accommodating.
    This is going through an Accountant mind you - if you're dealing with the IRD direct, you may be shit out of luck.

  11. Post
    #36
    brand wrote:
    These weren't the sort of accounting questions I was expecting

    I haven't kept up with the changes -what is different with the new CA programme?

    PAS (the old PAS anyway) is nothing -just a slight inconvenience costing you a Friday afternoon and a Saturday morning every month. Just do the readings, participate in the discussions and you will be fine. There is a lot of group work so make an effort to get along with the others in your class.

    About the most helpful thing I can tell Auckland attendees is if you put your location down as either East or South Auckland the bastards will stick you out at the airport So lie and opt for central if you live in those areas.

    Honestly PAS is a breeze compared to the six hour PCE 2 exam at the end -is it still six hours? I hope it is, suffering builds character
    I've done the new PAS which is now called Foundations. Its essentially the same thing though. Its fairly boring - Code of Ethics and knowing the NZICA code etc. I think its a two day course and a bunch of self guided study. As long as you participate in the discussions its an easy pass.

    The new CA programme has been dumbed down a little bit and now aligns with the Australian CA programme - which could be very good news for kids wanting to cross the ditch. Uni requirements have gone from 4 yrs down to 3yrs and I believe you only need to reach proficiency in 2 areas now instead of the 3 that it used to be in order to get your CA hours signed off too.

  12. Post
    #37
    Here's one for you brand:

    The wife and I own a company that was set up a number of years ago. It traded ok for a few years, but never quite made a profit (it was more of a hobby for the wife to give her something to do). Since then it's been on the back burner but I have still been running fixed costs through it etc and has losses carried over from year to year.

    Question is, is there a way to attribute these losses somehow to offset our own personal tax? From what I understand to be an LAQC you have to nominate this at the start and can't do it retrospectively (which we never did as obviously the intention was to make a profit) - but is there some kind of mechanism when can use to get around that?

    Cheers man.

  13. Post
    #38
    Grolim wrote:
    Here's one for you brand:

    The wife and I own a company that was set up a number of years ago. It traded ok for a few years, but never quite made a profit (it was more of a hobby for the wife to give her something to do). Since then it's been on the back burner but I have still been running fixed costs through it etc and has losses carried over from year to year.

    Question is, is there a way to attribute these losses somehow to offset our own personal tax? From what I understand to be an LAQC you have to nominate this at the start and can't do it retrospectively (which we never did as obviously the intention was to make a profit) - but is there some kind of mechanism when can use to get around that?

    Cheers man.
    No, if you elect now you lose the losses. The only thing you can really do is run income through it -the easiest way of doing that is by transferring term deposits and/or interest paying bonds into the company. It isn't very exciting but the losses mean you will get all the tax on those investments back.

  14. Post
    #39
    Grolim wrote:
    Here's one for you brand:

    The wife and I own a company that was set up a number of years ago. It traded ok for a few years, but never quite made a profit (it was more of a hobby for the wife to give her something to do). Since then it's been on the back burner but I have still been running fixed costs through it etc and has losses carried over from year to year.

    Question is, is there a way to attribute these losses somehow to offset our own personal tax? From what I understand to be an LAQC you have to nominate this at the start and can't do it retrospectively (which we never did as obviously the intention was to make a profit) - but is there some kind of mechanism when can use to get around that?

    Cheers man.
    LAQC's are gone now anyway, 2012 was the last year you could use that company structure. LTC's have replaced them but they are a bit more restrictive.

    And what brand said. Try and get the company to generate some end of year profit now and you can utilise those previous periods tax losses to offset current profit.

  15. Post
    #40
    What a bugger - transition that into a sole trader and those losses would've come into your own name.

    Re: trust gifting - I hope you don't mind but it is also worth raising insolvency law. If you make a gift to a trust while insolvent or become insolvent because of making a gift, this could be clawed back if a creditor make a claim against you.

  16. Post
    #41
    i'm about to be employed as a 6 months independant contractor and this will be my first contract job

    i was wondering how does the tax work ? Would appreciate if you or someone else can shed some light here. Do i also need to setup a company ?

    I read briefly here that if the annual income before tax is lower than $60,000 , I do not have to pay tax ? Can't be true, right ?

    If your Gross Income before Tax is more than $60,000 in a 12 month period, then you must pay GST. You can register with the IRD for GST. They will provide you with a GST number, which you must show on any invoice you charge for your employment services.
    http://howto.yellow.co.nz/careers-an...-a-contractor/

  17. Post
    #42
    Income Tax and GST are a completely different thing.

    On the subject of tax - how does rental income from an investment property get taxed?

    Is it just like normal household income?

    i.e. http://www.ird.govt.nz/how-to/taxrat...etaxrates.html

  18. Post
    #43
    Is basically normal household income except you can take into account the expenses such as fixing stuff up. People usually have expenses exceeding the rental income hence they can offset it against their normal income.

    My work sent me some info about the new CA programme and it says something like you can easily do it in the comfy of your home because is all on the cloud or something. But did not mention which of the 2 is more useful/easier etc etc. Guess I will need to find out next week during induction

  19. Post
    #44
    brand are you looking to take any interns? my female friend is looking for a place to intern at for a semester!

  20. Post
    #45
    Flux wrote:
    i'm about to be employed as a 6 months independant contractor and this will be my first contract job

    i was wondering how does the tax work ? Would appreciate if you or someone else can shed some light here. Do i also need to setup a company ?

    I read briefly here that if the annual income before tax is lower than $60,000 , I do not have to pay tax ? Can't be true, right ?



    http://howto.yellow.co.nz/careers-an...-a-contractor/

    That is a pretty broad question and I can't really cover everything without know more details but basically you will have to file a tax return at the end of the year (to 31 March) which includes the income you earned as a contractor. This will tell you how much tax you have to pay.

    So don't spend all your earnings -keep some aside to pay tax.

    Depending on the job you may be able to claim expenses (e.g. if you use your own tools, laptop or use your own car for business etc.) keep records of as much as you can.

    You employer may also deduct withholding tax (now called "schedular payments" ) from your earnings and pay this to IRD on your behalf -this will be credited against the final amount of tax you have to pay.

    It is unlikely that you need to set up a company unless there is a high risk of something going wrong and you being held personally liable (e.g. builders and trades people) in which case you might want to consider a company to shield yourself.

    And yeah the $60k is referring to GST NOT income tax.

  21. Post
    #46
    Therk wrote:
    On the subject of tax - how does rental income from an investment property get taxed?

    Is it just like normal household income?

    i.e. http://www.ird.govt.nz/how-to/taxrat...etaxrates.html
    Yes more or less the rental income/(loss) is added/(deducted) from your other income giving a total amount which tax is calculated on using those rates (although ACC doesn't come into it for rental properties).

    e.g. If you earned $50k (gross) salary/wages and had net rental income of $10k your total income for tax would be $60k -you would probably end up with tax to pay because you have only had tax (PAYE) deducted on $50k not the full $60k.

    The opposite happens if the rental made a net loss:

    e.g. If you earned $50k (gross) salary/wages and had net rental loss of $10k your total income for tax would be $40k -you would probably receive a tax refund because you have had tax (PAYE) deducted on $50k when you only made $40k.

    You have to file a tax return to work all this out.

  22. Post
    #47
    dragonfruit818 wrote:
    brand are you looking to take any interns? my female friend is looking for a place to intern at for a semester!
    No sorry

  23. Post
    #48
    I am selling Real Estate but am not currently GST registered(as earning under the threshold in my first 6 months). When billing, the business does a standard of 3-4% + GST. I then take my cut of the amount without GST added, and the business takes their cut with the GST added. This leaves $xxx of the commission that I would have got as GST if I was registered in the holding account for me to have sitting there for when I filed my GST return.

    Am I correct in saying I need to refund this amount back to the vendor as personally I am not eligible to charge GST (but the business is)?

    Should I be GST registered regardless?

  24. Post
    #49
    The Real Pacman wrote:
    I am selling Real Estate but am not currently GST registered(as earning under the threshold in my first 6 months). When billing, the business does a standard of 3-4% + GST. I then take my cut of the amount without GST added, and the business takes their cut with the GST added. This leaves $xxx of the commission that I would have got as GST if I was registered in the holding account for me to have sitting there for when I filed my GST return.

    Am I correct in saying I need to refund this amount back to the vendor as personally I am not eligible to charge GST (but the business is)?

    Should I be GST registered regardless?
    You have to look at the sale of the property and the payment to you as two separate transactions.

    The sale is between the Real Estate Agency and the Vendor, the Agency is GST registered so has to charge the Vendor GST on its commission.

    The payment to you might be calculated on the selling price but in all other respects it is a separate transaction between you and the Real Estate Agency. Because you are not GST registered there is no GST on it.

    The loss is actually to the Real Estate Agency because they have to pay GST on the commission they charge the vendor but are unable to claim back the GST on the portion they pay to you.

  25. Post
    #50
    Excellent, thank you so much. We recently changed payroll systems and they behave differently with dealing with this payment (the new one does it correctly it seems!).