Changes to Payroll Reporting

As part of the Budget Savings (Omnibus) Act 2016, employers will be required to comply with the ATO’s Single Touch Payroll Reporting (STPR). The STPR will streamline the way that employers report tax and superannuation information to the ATO.

The compulsory switch will take place on 1 July 2018 for businesses who have more than 20 employees and from 1 July 2019 for businesses who have less than 20 employees.
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Agriculture Needs Innovation, Not Levies

New Zealand is currently in the grip of “Election Fever”. From the outside looking in, the financial position of our close neighbours is very similar to that of our own in 2007 just before John Howard took us to the polls.

 

Their economy is strong, with the growth rate of 4%, unemployment is below 5%, and Government debt has reduced significantly. Put simply, New Zealand is in a boom.
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A Different Approach to Investment

Most entrepreneurs use business as a way to pursue their passions, whether it’s philanthropy, culture, sports or politics.

Sharon Osberg is the other way around.
Her passion is playing bridge, a card game for math whizzes. Her passion led her into a rarefied world most others would kill to be a part of. Her alternative approach to investment has solidified her position amongst some of the most influential and successful entrepreneurs of our time.
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Small Business Tax Concessions Now Open to More Businesses

The Government and Senate reached a consensus on Friday 31 March 2017, to pass tax reductions for certain companies and broaden access to tax concessions previously only provided to businesses with a turnover under $2M.

These changes come into force for the current 2017 financial year and may assist any decisions you make and their tax impact.

 

Small Business Tax Concessions Extended

The Legislation allows small businesses, with aggregated turnover of less than $10M, to access most small business tax concessions. The current $2M threshold is retained for access to the Small Business Capital Gains Tax Concessions.

 

Key features of the new law apply to Small Business Entities with aggregated turnover of less than $10M and include the following small business tax concessions:

  • Immediate deductibility for small business start-up expenses;
  • Simpler depreciation rules, the ability to “Pool” assets to accelerate depreciation and immediate write off for assets acquired under $20,000 (net of GST)
  • Simplified trading stock rules
  • Roll-over for restructures of small businesses
  • Deductions available for prepayments of certain business expenses e.g. overhead operating costs
  • Accounting for Goods and Services Tax (GST) on a cash basis
  • Annual apportionment of input tax credits for acquisitions and importations that are partly creditable
  • Paying GST by quarterly instalments

 

Small Business Income Tax Offset Adjusted

The Legislation increases the small business income tax offset for eligible individuals from 5% to 8% that relates to their total net small business income. This rate of offset, which is a non-refundable offset, will be applied for the 2017 to 2024 financial years. The maximum benefit of the offset to individuals has been retained at $1,000. This offset provides benefits for individuals in business, partners in trading partnerships and beneficiaries of trading trusts and is limited to those enterprises with an aggregated turnover of less than $5M during the 2017 financial year.

 

Reduction of Company Income Tax  to 27.5%

This was a contentious issue in the Legislation with effect in the 2017 financial year. The reduction in this year is only available to a small business entity, i.e. a trading company with an aggregated turnover less than $10M. The concession to the lower tax rate does not apply to non-trading or purely investment companies.

For 2018 and subsequent years there is a new description applied to a second group of companies, i.e. Base Rate Entities and the 27.5% tax rate will be applied to companies with a aggregated turnover of less than $25M.

These changes are a major bonus for businesses in the $2M to $10M turnover range and will provide opportunities for significant tax savings for the current and future financial years.

Contact your Accountant at Powers to find out what these changes mean for you.

The Government Give & Take

Changes in legislation by the Government often reminds us of the feeling of being a child in a lolly store. That pure bliss when we find all the lollies we want, we’re excited to run out of the store with bags of lollies in hand. Except, we are told that we can only choose one and the rest are swiftly taken from us and placed back on the shelf, leaving us upset and longing for that sweetness.

The income tax reduction to specified companies comes with some changes for shareholders. In the 2016 financial year, small companies could potentially frank dividends at 30% if sufficient credits were available, even though those companies were paying 28.5% on current earnings.
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