Tax Tips Archives - GECA Chartered Accountants

How New Zealand’s New Tax Rules Affect Remote Workers And Foreign Employers In 2026

Giles — Thu, 23 Apr 2026 10:48:41 +0000

Remote work was sold as borderless freedom. Work from anywhere, earn globally, and manage your income independently. But the reality in 2026 is different. New Zealand tax rules are tightening, and remote workers are now being assessed based on where they live, not where their employer sits.

This shift is catching both individuals and businesses off guard. Many still assume working for an overseas company keeps them outside the system. It does not. The rules were always there, but enforcement has changed, and the visibility of cross-border income is now significantly higher.

The New Zealand Tax Shift Nobody Is Talking About

This is not about a new law. It is an enforcement shift. For years, Inland Revenue relied heavily on self-reporting. In 2026, the system moved toward structured visibility into offshore income, cross-border payroll, and remote work arrangements.

What has changed in reality:

Data Symmetry: New Zealand takes part in global reporting frameworks, such as the Common Reporting Standard (CRS). This allows authorities to access data on offshore financial accounts.
Remote work surge: Global remote work has grown significantly since 2020, increasing the complexity of cross-border tax reporting (OECD insights).
Smarter analytics: Inland Revenue now uses data matching and analytics to identify inconsistencies between reported income and financial activity.

The contrarian truth: If you are a New Zealand tax resident, your global income is generally taxable, regardless of where your employer is based.

The Rule That Actually Decides Everything

Forget where your employer is registered. What currency you’re paid in. What your contract says. One factor overrides all of it: Your tax residency is the only thing that matters.

The 183-Day Rule Is Only the Starting Point

According to Inland Revenue (IRD), your New Zealand tax residency status determines how your income is taxed, not your immigration status. You become a tax resident if you spend more than 183 days in any 12-month period.

IRD also makes it clear that the 183 days do not need to be continuous, and even partial days count. Your residency is backdated to the first of those days, which means tax obligations can start earlier than expected.

The idea of a tax exemption for remote workers in New Zealand is often misunderstood. IRD states that having a permanent place of abode or strong ties like family, property, or financial interests can still create tax residency, even below 183 days.

Permanent Place of Abode: The Hidden Trigger Most People Miss

New Zealand tax law contains a secondary test that most remote workers have never heard of. You can be taxed as a New Zealand resident under the “permanent place of abode” rule. This applies even if you stay for less than 183 days, as long as you have strong ties to New Zealand.

What counts as a tie:

A home available to you in New Zealand (owned, rented, or provided)
Family living in New Zealand
Ongoing economic activity – bank accounts, investments, business interests
A pattern of regular returns that indicates NZ is your base

Scenario	What Actually Happens	Risk Level
You stay 200 days	Automatic Tax Resident	Critical
Stay 120 days but keep a rental/home	Likely taxed on worldwide income	High
Work for a US firm via VPN	Income is NZ-sourced by default	High
Leave NZ but keep an active bank/gym	Tax obligations may continue	Medium

The Biggest Myth: Remote Income Is Tax-Free

There is no blanket tax exemption for remote workers in New Zealand. This is a common misunderstanding of New Zealand tax rules that continues to mislead people. This myth is widespread in Facebook groups, expat forums, and outdated blog posts, and it is costing people serious money.

What actually exists:

Double Tax Agreements (DTAs): NZ has 40+ DTAs that prevent the same income being taxed twice. A DTA does not remove your NZ tax obligation. It determines which country has primary taxing rights.
Foreign tax credits: If you have already paid tax on income overseas, NZ will credit that against your NZ liability. This prevents double payment. It does not create a zero liability.
Transitional resident exemption: New migrants to NZ (not returning residents) get a 4-year window where foreign-sourced passive income is exempt. This is time-limited and not available to everyone.
The new non-resident visitor category (from 1 April 2026): Allows certain overseas employees to work from NZ for up to 275 days in any 18-month rolling window without becoming a tax resident. More on this below.

Note: If you are physically in New Zealand while earning income, that income is likely within the tax net, regardless of where your employer is located.

Why Foreign Employers Are Now in the Spotlight

Remote hiring used to feel simple. It is no longer risk-free. If a foreign company employs someone who is working from New Zealand, that company may create a tax presence without realising it. This is where foreign employer tax exposure begins.

What can be triggered:

Payroll obligations such as PAYE
Reporting requirements to Inland Revenue
Risk of creating a taxable presence in New Zealand

When risk increases:

The employee works long-term from New Zealand
The work contributes to business activity linked to New Zealand
The employer controls how and where the work is performed

Foreign Employer Tax Exposure: Risk Matrix

Employment Type	Exposure Summary	Risk Level
Casual Freelancer	Individual handles tax; contractor rules apply.	Low
Full-time Employee	Working from NZ usually triggers PAYE.	Medium/High
Revenue Generator	Linked to NZ sales; creates corporate tax risk.	High
Decision Maker	Management power establishes NZ taxable presence.	Medium

Meeting New Zealand’s tax deadlines is non-negotiable. You must file monthly PAYE by the 20th, register for GST once earnings exceed $60,000, and stay current with provisional tax instalments if your prior year’s tax bill topped $5,000.

The April 2026 Rule That Can Reduce Your Tax Exposure

There is one important update in the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Bill that actually benefits remote workers. It introduces a new non-resident visitor category.

From 1 April 2026, overseas employees can work remotely from New Zealand for up to 275 days in any 18-month period. This means they can work for about nine months without facing NZ income tax. Previously, the threshold for non-DTA countries was just 92 days.

The 275-day rule is real progress. But the qualifying conditions are strict, so many who think they qualify won’t. Also, the employer’s obligations still apply no matter what.

To qualify as a non-resident visitor, you must:

Arrive in NZ on or after 1 April 2026 (not apply to pre-existing stays)
Not have previously been a NZ tax resident or transitional resident
Be a tax resident in a country that levies a comparable income tax
Be working solely for an overseas employer, serving overseas clients
Not perform work requiring physical NZ presence for NZ-based clients or business

The last point removes a large category of workers from eligibility. If you are a remote worker whose role involves any NZ client relationships, NZ-facing sales, or physical attendance for NZ business purposes, you do not qualify for the exemption.

Note: It explicitly disregards the non-resident visitor’s NZ presence when assessing whether their overseas employer has created a permanent establishment in NZ. This is a significant protection for foreign companies that was missing before.

What Should Remote Workers & Foreign Employers Do About NZ Tax in 2026?

There is a clear gap between businesses and individuals who react to IRD contact and those who structure ahead of it. Here is what the latter group does.

For Remote Workers Based in New Zealand

Track your days in NZ carefully for both 183-day and 275-day rules.
Understand your DTA position before earning income.
Claim treaty benefits correctly and on time.
Review your permanent place of abode status yearly.
Reassess if family, property, or ties change.

For Foreign Employers Hiring in New Zealand

Register with IRD early. Proactive compliance reduces risk.
Update payroll for KiwiSaver increased to 3.5% from 1 April 2026.
Assess permanent establishment risk before IRD does.
Review contractor versus employee classification carefully.

Don’t let complex New Zealand tax rules stall your growth. Contact GECA Chartered Accountants for expert, streamlined advice to ensure your remote work or hiring process remains fully compliant.

Final Take:

New Zealand tax rules around remote work are not always straightforward. There is a limited tax exemption for remote workers in New Zealand, and your position depends on residency, ties, and how your income is structured. Understanding this early helps you stay compliant and make better decisions with confidence.

Don’t let shifting New Zealand tax rules stall your professional growth or create corporate risk. GECA Chartered Accountants provides expert, streamlined guidance to help you structure your income correctly, manage PAYE, and ensure your remote hiring process remains fully compliant, efficient, and stress-free. Book a FREE consultation!

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The Trust Tax Rate Has Increased to 39% From 1st April 2024

Giles — Sun, 21 Apr 2024 23:55:42 +0000

From the 1st April 2024, the trust tax rate has increased from a flat rate of 33%, to a flat rate of 39%.This is on any income retained in the trust and not distributed to beneficiaries.

However, there are a few exemptions:

Exemption 1: if your trust income is less than $10,000

If your trust earns $10,000 or less in a tax year, and this income is retained in the trust and not distributed to beneficiaries, you will only pay tax at 33%. However, if your trust earns any more than $10,000, you need to pay at a rate of 39%.

Exemption 2: the estate of someone who has died

If an estate continues to earn income while it’s being wound up, that income will continue to be taxed at 33%. This rate will apply for all estate’s income during the tax year the person dies and for the next 3 years. After 3 years, any income will be taxed as though it is a trust at 39%.

Exemption 3: disabled beneficiary trusts

If you settled your trust to care for disabled beneficiaries, then it will continue to pay tax at the 33% tax rate, no matter how much it earns.

The IRD characterises a ‘Disabled beneficiary’ as an individual who, within a given tax year, is the recipient of one or more of the following governmental support payments: the Disability Allowance, the Child Disability Allowance, the Supported Living Payment (because of restricted work capacity), or the JobSeeker Support Health and Disability (if this has been paid for at least 6 months).

Disabled beneficiaries also include anybody over the age of 65 who would have met the ‘disabled beneficiary’ definition in the year they turned 65, or the tax year before that year.

Your trust can qualify for this 33% tax rate if it cares for more than 1 disabled beneficiary, but not if it has any beneficiaries who do not meet the definition.

Exemption 4: Energy Consumer Trusts or Lines Trusts

These are a special type of trust that deals with electricity distribution. These are taxed at 33%.

Exemption 5: Legacy Superannuation Funds

Some superannuation funds pay tax at 28%.

If you’d like to read more on this topic, you can read IRD’s fact sheet, or contact us at sheral@geca.co.nz for more information.

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Airbnb Properties – Tax Impact for Change in Use

Giles — Tue, 14 Jul 2020 23:53:25 +0000

This post is by Sheral Reddy, an chartered accountant and tax specialist at GECA Chartered Accountants. Call Sheral now for tax advice on your circumstances.

Airbnb Properties

Tax Impact for Change in Use

Properties rented out for short-term accommodation and as well as being used by property owners come under the Mixed-use asset rules. The mixed-use asset rules limit deductions in relation to the property and any excess deductions are quarantined and offset against future year’s rental income.

Due to the Covid-19 pandemic and international travel bans, the Airbnb property owners have had a significant impact on their income from Airbnb properties and some property owners have had to make some tough decisions during this time.

Some are bearing the ongoing property costs in wait for the economy to recover, some are selling their properties, some are moving into those properties themselves and others are switching from short term rentals to long term fixed rentals.

Change of circumstances to the rental property may lead to change in use and as a result Airbnb property owners’ need to be aware of the GST and tax implications.

For example, if a property owner decides to start renting the property to a fixed long-term tenant the property will be then subject to the new legislation for ‘The Ring-Fencing of Residential Rental Property Losses’ applicable from 1 April 2019. Under this legislation any expenses or deductions greater than the residential income is ring fenced and available to be offset against future year’s rental income.

If your Airbnb activity was registered for GST, then you will also need to account for the GST on the change of use. If the change of use is temporary, then a change of use adjustment will be required in the next return and this would be a proportionate calculation. However, if the change of use is permanent, then a final adjustment will be required in the next GST return ceasing the taxable activity and return of GST on the property as deemed market sale value.

The new legislation ‘The Ring-Fencing of Residential Rental Property Losses’ is not applicable to Airbnb properties being rented out for short term rentals and being used by the property owners as well. However, any properties rented out for short-term rentals 100% of the time as an Airbnb without being used by the owners will be subject to the Ring-Fencing of Residential Rental Property Losses. As the activity won’t have any private use element and won’t be considered as a Mixed-Use Asset.

Please refer to our previous publication on ‘How to choose the right business structure for your residential rentals after ring-fencing losses were introduced”.

We suggest Airbnb property owners to consult with their accountants or tax advisers if they are planning on making any major changes to their Airbnb activities. Please contact your GECA advisor now on 0800 758 766 if you require any assistance with either your short- or long-term rental properties and if you have any questions as to how the change of use impact you as a property investor.

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Tax Updates

Giles — Tue, 14 Jul 2020 23:40:35 +0000

by Sheral Reddy, Associate Director at GECA Chartered Accountants. If you need help with tax advice including end of financial year preparation, then Sheral and the GECA team can help.

Tax Updates

Depreciation on Non-Residential Buildings

In our earlier newsletters we have mentioned reintroduction of depreciation on commercial properties from 2021 financial year as part of the changes enacted in the COVID-19 Response Act 2020.

The deprecation rule applies to non-residential buildings owned at the beginning of the 2021 financial year or acquired after the beginning of that financial year. This includes capital improvements as well.

The depreciation rate for a building with an estimated useful life of 50 year or more is 2% diminishing value or 1.5% under the straight-line method.

Tax depreciation of buildings was removed as per the 2010 Budget and came into effect from 2012 financial year. Going forward, any tax losses on disposal of the building will still be non-deductible. If the building is sold more than its tax book value, the tax depreciation claimed previously prior to 2012 years (if any) will be recoverable.

The depreciation recovery calculation will also apply for non-residential buildings disposed after the beginning of the 2021 financial year to account for any depreciation deductions during 2021 and future years.

The depreciation deductions will be based on the opening tax book values of the building at the beginning of the 2021 financial year.

For buildings that were already owned at the end of the 2011 financial year, the tax book values will be based as follows:

Adjusted tax book value at the end of that year less any deductions for fit-out that has already been claimed, plus
Any non-deductible capital expenditure on the building incurred from the beginning of the 2012 financial year till the end of the 2020 financial year.

For buildings acquired after the tax depreciation was removed from the 2012 financial year, the value would be based on:

The cost of the building, plus
Any non-deductible capital expenditure on the building incurred from the time it was acquired to the start of the 2021 financial year.

The reintroduction of depreciation on non-residential buildings provides tax payers a huge tax savings. However, it is important that clients are calculating the tax depreciation of the depreciable assets using the correct opening tax book values.

Please contact your GECA Advisor on 0800 758 766, if you would like to claim depreciation on your non-residential buildings and how the tax depreciation will impact your tax position going forward.

Determination EE002 – Payments to Employees Working from Home

The determination EE002 is a temporary response to the Covid-19 pandemic and applies to payments made for the period from 17 March 2020 to 17 September 2020 as there may be tax implications associated with these payments.

Reimbursement of expenses to employees related to working from home is not an employment right, therefore, the payments depends on what the employer has negotiated with their employees.

There are employers who are or intend to make payments to employees who are working from home due to the Covid-19 pandemic. Below is a brief outline of this new determination and to clarify the tax treatment of the payments:

Employers are able to make tax free payments of up to $15 per week without the need to work out the actual expenses.
In addition, Employers can make a tax-free payment of up to $400 per employee for furniture or equipment without the need to work out the actual expenses.
The determination also acknowledges that many employers will not be in the financial position to make additional payments to employees during the COVID-19 pandemic. Therefore, this determination is not intended to suggest that employers should make such payments to employees.
Such payments from the employer may be exempt income for the employees. The amount that can be paid as exempt income for expenditure incurred by an employee depends on various factors such as the extent to which the employee would be able to claim a deduction for the expenditure if the employee limitation did not apply. The deductibility test needs to be applied here.

As per IRD, for this determination to apply:

An employer must make a payment to an employee
The payment must be for expenditure or loss incurred or likely to be incurred by the employee
The payment must be made because the employee is doing their job and the employee must be deriving employment income from performing their job.
The expenditure or loss must be incurred by the employee in deriving their employment income and not be private or capital in nature
The expenditure or loss must be necessary in the performance of the employee’s job
The expenditure or loss must be incurred by the employee as a result of the employee being required to work from home because of the Covid-19 pandemic.

As per IRD, the determination does not apply to the following:

Expenditure on account of an employee
Any payments made for a period after an employee ceases to work from home
An amount paid under a salary sacrifice arrangement
To a payment made to an employee to compensate the employee for the conditions of their service.

Below is a summary of options available under Determinations EE001 and EE002 which details some of the costs the employers can pay the employees for and the tax treatments as per the IRD tax bulletin:

Please contact your GECA Advisor on 0800 758 766, if you are not sure of the tax treatment of the payments being made to your employees or if the payments exceed the thresholds outlined in the IRD determinations.

New 2020 Income Year – Kilometre rates for the Business Vehicles

If you are using your motor vehicle for business purposes, then you might want to claim the tax back on the expenses.

You are eligible to claim all the running costs for the motor vehicle if the vehicle is being used only for business purposes. However, if the vehicle is being used for both personal and business travel, then you will need to separate out the costs for each vehicle. Ways to claim business related costs are as per below:

Claim actual costs relating to the vehicle by keeping accurate records. This will involve keeping detailed records for distances travelled and vehicle expenses for business related travel.
Use a logbook to record distances travelled for all business trips and then calculate actual business use percentage for each period.
Maintaining a logbook for at least 90 consecutive days to calculate the business use percentage. This can be used for the next three years. However, if you purchase a new vehicle, you will need to keep a log book again for at least 90 consecutive days again.

Once you have determined the business proportion of your vehicle, then the kilometre rates provided by the Inland Revenue can be used to calculate how much expenses can be claimed as follows:

Tier One applies for the business portion of the first 14,000 km travelled by a vehicle in a year and is calculated as a combination of the vehicles fixed and running costs.
Tier Two applies for the business portion of any travel in excess of the 14,000 kms and accounts for running costs only.

The current rates until further review are as follows:

If you operate under a company structure and use the company vehicle as a shareholder employee or provide vehicles for the staff to use, then you also need to be aware of the regulations relating to Fringe Benefit tax and whether it is applicable to your business.

Please contact your GECA Advisor on 0800 758 766, if you would like to discuss about whether to have the vehicle under your company structure, FBT implications, vehicle expenses you can claim or any other queries you may have.

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Covid-19 Tax Update

Giles — Mon, 20 Apr 2020 22:54:08 +0000

The government response to Covid-19 and the shutdown of the economy has seen a raft of tax changes proposed. These are still in draft form and we will be in a better position to advise clients once the legislation is passed.

However, we suggest the following in regard to upcoming tax payments. As always, early engagement saves long term pain so call us if you need advice in regard to your specific circumstances.

7 May GST, 2020 Tax Filing and Business Planning

Right now we favour drafting the 2020 Financial Statement positions, but not taking a final 2020 tax position too early, our view is wait and see what the Government rolls out next, there is still a budget to come in May and we don’t know how much more stimulus or legislation changes they will need to produce. A few months of trading in 2021 will allow you assess how the remainder of teh year will progress and plan accordingly before we close off 2020. There are changes to various IRD rules as well that may make it beneficial to hold off filing 2020 tax returns early.

Having a good 2020 draft tax position though, means we can move to final accounts quickly if we need to for any reason, but we have flexibility to incorporate changes.

Please contact us urgently if you want to review your taxation, over the next few weeks to determine what is the best course of action for you, particularly for the 7^th of May Provisional Tax and GST payments and returns.

Tax Payment Strategies for On Time or Overdue Taxes and Dealing with Tax Cashflow Issues

Please contact us for a strategy no matter the tax type or period we can help, in terms of dealing with tax, the sooner we start reviewing options the better, for past, present or future taxes.
We can arrange tax purchase/options through Tax Management NZ, so there are other ways for you to deal with tax payment issues in addition to direct payment arrangement deals with IRD on taxes to be paid.

We can still purchase 2019 terminal tax due 7^th of April 2020 as far out as 17 June 2020 for final payment, and we can look at a variety of dates for the various provisional taxes. In some instances this may be more economical than the time and cost to complete a payment arrangement and remission of penalties and interest.

If you are applying for finance, a bank might require you or we to certify all taxes are up to date, a TMNZ arrangement is likely to meet that requirement, a direct tax arrears arrangement with IRD might not. Have a look here to get the basics of this at: https://www.tmnz.co.nz/

Before committing to a 7^th May 2020 tax payment, based on your draft results to 31 March 2020, due to lockdown and Covid we recommend clients review their cash flow needs, and only pay IRD in the first instance if they have significant surplus funds to do so.
Penalty and Interest relief period is for 24 moths effective 24 March 2020 to 24 March 2022.
In any event not paying the IRD upfront, will require a repayment arrangement or use of a TMNZ type Scheme.
At this stage we are still working through what IRD will deem an acceptable repayment arrangement. If come 7^th May 2020 and the IRD hasn’t yet signalled what an acceptable repayment arrangement is, we would assume 6 to 24 months, until told otherwise.
Instalment proposals may be accepted by IRD with “minimum requirement” if it’s within 24 months, thought this still needs to be clarified.
Any proposal that IRD views as risk based may require in support of the application three months bank statements/credit card statements, management accounts, lists of debtors and creditors, cash flow projections.
IRD link https://www.ird.govt.nz/Updates/News-Folder/covid19-business-changes

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COVID-19 and Commercial Rent Payments

Giles — Mon, 30 Mar 2020 22:19:16 +0000

Many of our clients lease commercial premises and rent is typically payable monthly in advance on the first day of the month (tomorrow). Clients have been asking us what relief is available (if any) in relation to their monthly lease payments.

After the Christchurch earthquakes the standard Auckland District Law Society (ADLS) commercial lease agreement was changed to include a clause 27.5, the relevant parts of that clause are as follows:

“If there is an emergency and the Tenant is unable to gain access to the premises to fully conduct the Tenant’s business from the premises because of reasons of safety of the public or property or the need to prevent reduce or overcome any hazard, harm or loss that may be associated with the emergency including: …

Restriction on occupation of the premises by any competent authority, then a fair proportion of the rent and outgoings shall cease to be payable for the period commencing on the date when the Tenant became unable to gain access to the premises to fully conduct the Tenant’s business from the premises until the inability ceased.”

We have been informed that clause 27.5 means in the main rent and outgoings, with the possible exception of insurance, will abate by 100% for the Lockdown Period. The exceptions to this will be businesses that operate an “essential service” during the Lockdown Period or circumstances where access to the premises is less relevant.

The standard ADLS Lease prior to 2012 contained no provision relating to lack of access.

If the standard ADLS Lease is prior to the 2012 version, or if a lease makes no provision for “no access” then:

The Tenant will have a right to claim for its losses or damages, by not being able to access the premises, which may well end up being a fair and reasonable proportion of rent or outgoings, similar to the clause in the standard ADLS Lease since 2012.
If the Tenant provided an essential service, entirely or in part, then in a similar way their claim to damages would be reduced.

News media has reported that The Warehouse Group has penned a letter to its landlords relying on the ‘no access in emergency’ lease clause to stop paying rent. A letter from The Warehouse to its landlords, obtained by NBR said,

“Due to the government activating Alert Level 4, effective from 11.59pm on Wednesday night, we will be unable to trade from the premises which we lease from you due to the restrictions imposed.”

“We will be relying on clause 27.5 of our lease and as a result all rent and outgoings cease to be payable from March 26, 2020, continuing during the period we are unable to trade.”

The above is general commentary only and each business should take expert legal advice. Specific legal advice as to your specific circumstances should be sought, and this commentary should not be relied upon as if it is specific advice to you.

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COVID-19 Proposed Tax Changes

Giles — Wed, 18 Mar 2020 04:13:39 +0000

This post is by Sheral Reddy, an chartered accountant and tax specialist at GECA Chartered Accountants. Call Sheral now for tax advice on your circumstances.

As you may all be aware, the continuing spread of COVID-19 which has been classified as a pandemic has seen the government taking action and making various announcements this week.

The Finance Minister announced on 17 March 2020 a $12.1 billion support for New Zealanders and businesses which includes a business package containing proposed tax measures to support businesses being affected by this outbreak.

Proposed Tax Changes:

The proposed tax-related measures include:

Reintroduction of depreciation on buildings for commercial and industrial buildings to encourage investment.
Increasing the provisional tax threshold, from $2,500 to $5,000 for the 2020/2021 financial year only, to relieve small business owners.
Cancellation of use of money interest (UOMI) on underpayment of tax for taxpayers who are unable to pay the tax on time due to the outbreak.
Sharing of information between Inland Revenue and government departments to help these agencies to assist with the outbreak.
Allowing deductions for low-value assets by increasing the threshold, for low-value asset purchases, from $500 to $5,000 for the 2020/2021 financial year. Also, having a threshold of $1,000 going forward from 2021/2022 financial year.

The proposed tax changes will be included in the Bill to be introduced. For further details on the proposals, please refer to the link below:

https://www.beehive.govt.nz/release/121-billion-support-new-zealanders-and-business

Wage Subsidy Scheme

The announcement also includes support for workers and businesses who have to be on leave or self-isolate to prevent the spread of the COVID-19. This will be part of the wage subsidy scheme available for all employers that are significantly affected by COVID-19.

The payments will be $585.80 per week for full-time workers (20 hours or more) and $350 per week for part-time (less than 20 hours) workers. These payments will cover a period of 12 weeks and a maximum amount any one employer can receive is $150K.

The wage subsidies will be especially beneficial for businesses in the Forestry and Tourism industry who have been impacted the most due to the outbreak.

There are certain eligibility criteria for the wage subsidy. Businesses will be required to take active steps to mitigate the impact of COVID-19 and have a signed declaration form to that effect.

If the COVID-19 outbreak has had an impact on your business and you are facing financial difficulties and require our assistance or advice, please contact Giles now on 0800 758 766.

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Year End Checklist 2020

Giles — Wed, 11 Mar 2020 03:51:36 +0000

by Sheral Reddy, Associate Director at GECA Chartered Accountants. If you need help with tax advice including end of financial year preparation, then Sheral and the GECA team can help.

The end of financial year deadline

As the end of the financial year approaches, it always pays to spend a little extra time examining your financial records and considering ways to increase your after-tax income. There is a high chance that you will find a couple of extra savings from 2019-2020, which can add up to reduce your tax bill by a significant amount. It is also a good time of year to reflect on your financial position, and think about tax minimisation strategies and goals for 2020–21.

Top tax tips for preparing for the end of the financial year:

Write off bad debts

Businesses with outstanding amounts owed, no matter the size, that are unlikely to be recovered in full should consider writing these off as bad debts. Bad debts can be used as a tax deduction, effectively reducing your taxable income for the relevant year.

For a debt to be considered bad, you must have formally written the debt off in your accounts, and be able to prove to Inland Revenue that you have taken reasonable steps to recover the amount.

Pre-pay expenses

By pre-paying for tax-deductible expenses before March 31, you will be able to minimise your tax bill. Some categories of business expenses can be pre-paid without any limitations, meaning that you can claim as much as you like. Examples include stationery, vehicle registration, accounting and auditing fees and postal charges. Most other expense categories have caps that limit the amount that can be claimed in a year.

Split business income

In some circumstances, it may be possible to minimise your tax liability by redistributing the flow of income from your business. For example, if your partner is a low-income earner, it may be advisable for you to split the business income with them. It may also be possible for you to redirect some of your income towards your children.

However, if your family members are employed in your business as wage earners, you should be aware that Inland Revenue may elect to make tax adjustments if they consider the remuneration to be excessive.

Discount reserve

You can claim a deduction for a discount reserve. For example, a discount for speedy payments, if your debtors are traditionally entitled to this discount. In the years following on from the first year that you are allowed, you can claim a discount reserve deduction, adjustments will be made to maintain the discount level at a consistent level.

Trading stock valuation

Trading stock must be valued using a cost valuation method unless the market selling value is lower than the cost. Therefore, to lower the value of your stock before the end of the financial year, you should either physically dispose of it or sell it at market price (if the market price is lower than cost).

Work In Progress (WIP)

It is recommended that on 31 March you assess all the jobs in progress. Make a list of these jobs and add up the costs associated with these jobs (exclusive of GST). The costs will include any stock items used and employee/contractor time on these jobs. These costs are treated as closing Work In Progress as at 31 March and are costs yet to be billed to the customers. These won’t be deductible as an expense at the end of the financial year.

Fixed Asset Schedules

We suggest reviewing your fixed asset registers and assess whether any assets are no longer in use by the business, not working or stolen or disposed of during the year. By writing off these assets (only if they meet the write off criteria) a deduction will be allowed with respect to those assets.

Bonuses and holiday pay

It is possible to claim amounts payable to your employees as a deduction for the current financial year, so long as the full amount is paid to the employee within 63 days of the balance date. Amounts that are paid more than 63 days from the balance date can only be claimed in the following financial year.

Got a tricky tax problem? Call us now on 0800 758 766 to see what we can do to assist. Alternatively, you can email support@geca.co.nz.

Download a pdf of the 2020 year-end tax tips.

The post Year End Checklist 2020 appeared first on GECA Chartered Accountants.

Tax Tips November 2019

Giles — Mon, 25 Nov 2019 03:03:24 +0000

This post is by Sheral Reddy, Associate Director at GECA Chartered Accountants and an experienced CA who specialises in tax and property compliance.

Inland Revenue has made some updates that we thought you might like to know about, these Tax Tips have been outlined below:

Interest rates

Effective 29 August 2019, IRD has changed the use of money interest rates as follows:

An increase for taxpayer’s paying rate of interest on the unpaid tax from 8.22% to 8.35% per annum, and
A decrease of the Commissioner’s paying rate of interest on the overpaid tax from 1.02% to 0.81% per annum.

IRD Payment Changes

From 1 March 2020, IRD will no longer accept cheques if customers have alternative payment options available (this includes any post-dated cheques after 1 March 2020). Suggested ways to pay are as follows:

myIR: You can pay by direct debit and make debit card and credit card payments securely through myIR online services.
Online banking: You may be able to make payments using online banking.
Credit or debit card via IRD website: Use your credit or debit card to make online payments through the IRD website. Visit ird.govt.nz/pay.
In person at Westpac: Pay by EFTPOS or cash at a Westpac branch or Smart ATM.
Money transfer: If you are overseas you can pay us using a money transfer service. Search for “make a payment” on the IRD website for more information.

GST Changes

New GST rules on low-value goods being imported will come into effect from 1 December 2019. Non-resident suppliers (including electronic marketplaces) need to register for and charge GST if the turnover from those supplies exceeds $60,000 in a 12-month period and if they are:

resupplying any goods that are supplied by a non-resident,
are outside of NZ at the time of supply or are delivered to a place in NZ by the supplier and has entry value of $1,000 or less.

The rules are not intended to apply to supplies made to GST registered businesses, or to supplies valued over $1,000, but to reduce compliance costs and subject to certain thresholds. The non-resident supplier can be permitted to also charge GST on those supplies.

The $1,000 threshold applies per item instead of per invoice/transaction. High-value items will continue to be taxed at the border as they come into New Zealand except for fine metal, alcohol and tobacco products.

Resident Withholding Tax (RWT) Changes

From April 2020, the new non-declaration rate for RWT on interest income will be 45%. If you will be receiving interest income we recommend your correct tax rate is provided to your investment provider or organisation.

If you have any queries about the above rate changes, please contact Sheral Reddy or your GECA advisor.

The post Tax Tips November 2019 appeared first on GECA Chartered Accountants.

Tips on Tax Deductions for Employee Gifts and End of Year Functions

Giles — Fri, 01 Nov 2019 21:23:15 +0000

This post is by Giles Ellis, an experienced business coach and Director at GECA Chartered Accountants. If you need help with Tax advice, then Giles and the GECA team can help.

Not too long until Christmas and the season of gift giving and entertaining. And as a business owner, it’s likely you are considering what gifts to give to clients and staff, however, when doing your budgets, remember that some gifts can’t be accounted for as tax deductions.

Here is a brief outline of the general rules for Christmas entertainment and gifts.

Tax deductions for entertainment: 50%

Christmas parties for your employees, in-work celebrations, ‘shouts’ at the local pub and any kind of general entertainment with food and drink allows you to deduct 50% of your party expenses – claimable as tax deductions in your GST or Income Tax returns. The 50% entertainment rule also applies to your clients and suppliers who you may wish to celebrate a good year with.

If you shout them a ticket at a corporate box where they can eat and drink – that’s entertainment; so is accommodation in a holiday home or a journey in a corporate yacht. Basically, where food and drink is provided or consumed on your premises, at a local restaurant or hotel the 50% rule applies.

However, all offshore entertainment is 100% deductible so if you are feeling extra generous, consider taking your team or clients (or your accountant) to Fiji to celebrate.

Tax deductions for gifts and promotions: 100%

Christmas presents for your staff and clients are deductible provided they do not exceed the general employee exemption figure and the maximum employer exemption figure for Fringe Benefit Tax.

The current exemption figures are $300 per employee per quarter and $22,500 maximum employer exemption per annum. If you exceed the exemptions you will need to pay Fringe Benefit Tax on the total value of the benefits.

So that’s the rules in brief, but if you are still unsure or looking at other benefits for your staff throughout the year then give us a call and we’ll help make sure you are claiming the right tax deductions.

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Got a tricky tax problem, call us now on 0800 758 766 to see what we can do to assist. Alternatively, you can find other ways to contact us here.

The post Tips on Tax Deductions for Employee Gifts and End of Year Functions appeared first on GECA Chartered Accountants.