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Certain commercial vehicles, “work-related vehicles” as defined in IRD Fringe Benefit tax guide IR409-2022 can be taken home by employees and the related travel not be considered a fringe benefit.  You must give employees a letter explaining the restrictions.  It is not sufficient just to include an appropriate clause in the employment contract. 

Travel to and from work is exempt from FBT and travel which is incidental to business travel.  Inland Revenue gives the example of passing a bank on the way home from work.

There is also a requirement for the employer to check at least once a quarter to ensure compliance.

Cars (ie not “work-related vehicles”) are treated differently.  There is no right for an employee to take the vehicle home and still be exempt from Fringe Benefit Tax, apart from emergency calls, as defined in IR409-2022.

In some cases, the business actually operates from home and therefore both cars and commercial vehicles travelling from their home to clients/customers could still be considered to be at work travel.  Fringe Benefit Tax would not apply.

However, if an employee, who just works at home as a matter of convenience and from time to time uses the company car to get from home to an actual place of work, for example a general medical practitioner travelling to the health centre each day, use of their company car would be a fringe benefit.

SOLE TRADERS AND PARTNERS IN A PARTNERSHIP

Sole traders and partners in a partnership do not pay FBT on business vehicles they use.  You instead make income tax and GST adjustments for private use of the vehicle.

DOUBLE CAB UTES

There could be an issue with twin cab vehicles not being considered work-related.  These vehicles seat 4 people and have a shorter cargo bed than a regular work-related vehicle.  However this does not mean they are automatically exempt from FBT. These vehicles still need to meet the conditions below:

• Employees must be provided with a letter of restriction stating that the work related vehicle is not available for private use except for travel between home and work, and for travel related to the business.
• Checks need to be done quarterly (every 3 months) to make sure employees are only using the vehicles for work-related purposes.

BUSINESS TRAVEL EXEMPTION

If an employee regularly travels with a vehicle, FBT may not apply when:

• they stay away from home overnight with the vehicle
• they are away for more than 24 hours
• they need the vehicle to perform their work.

Sources:

Tax-e-mail Issue 2404

IR409-2022 https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-guides/ir400—ir499/ir409/ir409-2023.pdf?modified=20240514224901&modified=20240514224901

IRD https://www.ird.govt.nz/employing-staff/paying-staff/fringe-benefit-tax/types-of-fringe-benefits/employer-provided-motor-vehicles-for-private-use

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content.  All related links provided to the corresponding websites are subject to change as they are live links.

The IRD has announced the kilometre rates, also referred to as mileage rates, for the 2023-2024 income year.  The rates are $1.04 for petrol, diesel, hybrid and electric vehicles for up to 14,000 km.  After 14,000 km, the rates are $0.35 for diesel and petrol vehicles, $0.21 for hybrid vehicles, and $0.12 for electric vehicles. The rates set out below apply for the 2023-2024 income year for business motor vehicle expenditure claims. 

Vehicle type	Tier 1 rates (up to 14,000 km)	Tier 12rates (over 14,000 km)
Petrol or diesel	$1.04	$0.35
Petrol hybrid	$1.04	$0.21
Electric	$1.04	$0.12

The rates have increased for all vehicle types in both Tier 1 and Tier 2 in light of changing fuel and car maintenance costs.

The IRD has a history of revising the kilometre rates and changing them every year.  Since 2017, the Tier 1 rates have increased by at least two cents per kilometre every year.  However, Tier 2 rates actually decreased in the 2019-2020 and 2020-2021 income years and again went up for the 2021-2022 and 2022-2023 income years due to the high fuel prices.

This year, the IRD has increased the rate for the first 14,000 km by 9 cents, the biggest increase so far.  All rates for kilometres over 14,000 have increased by a cent.

Records you need to keep

You must keep a logbook of your business and personal driving to get Tier 1 reimbursement or deductions for the first 14,000 km (total).   If you don’t keep records of your driving, you can only claim Tier 1 rates for the first 3,500 km of business-related driving.

Source: https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-expenses/claiming-vehicle-expenses/kilometre-rates-2023-2024

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

As a business owner or manager, you need to be ready for the minimum wage rate increase from 1 April 2024.

• Adult starting wage will go up from $22.70 to $23.15 an hour
• Starting-out and training minimum wage will go up from $18.16 to $18.52 an hour
• All rates are before tax and any lawful deductions, for example, PAYE tax, student loan repayment, child support.

If any employment agreements (contracts) are not current or you did not give one to your employees, now is an ideal time to discuss with them in good faith. Update the contract with any terms and conditions that were agreed to by both parties before the contracts were last reviewed. Make sure they include all the mandatory clauses a contract should have by law. Another useful tool is the employment agreement builder if your employees do not have one.

Employment agreement builder

Things an employment agreement must contain

Now is also an ideal time to ensure you know the details around the minimum wage, including that:

• it applies to all hours worked, unless both parties agree to a higher rate in the employment agreement
• it applies to employees paid with a salary or piece rates or commission.

Note the minimum wage does not apply in some situations including:

• employees under 16 years of age
• where a Labour Inspector has issued a minimum wage exemption permit to an employee who has a disability that limits them carrying out their work.

Minimum wage exemption for people with disability

Source: Employment New Zealand: https://www.employment.govt.nz/about/news-and-updates/minimum-wage-is-increasing-on-1-april-are-you-ready/

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

To make it easy for you to set up as a sole trader. Here is a checklist to guide you: https://www.business.govt.nz/getting-started/sole-trader-guide/sole-trader-checklist/

There are four areas that are important to understand when you’re a sole trader. 

• Getting started as a sole trader – registering for myIR, myACC and other information.
• Financial – essential tasks – filing your tax return and other essential tasks.
• Business paperwork – filing the right information in the right way.
• Hiring staff – what to do if you want to bring on staff.

When you’re deep in the day-to-day of running your business, it can be hard to keep track of the bigger picture. Or maybe these tasks are simply not your cup of tea. Seeking advice from different sources can give you a fresh perspective on your business. Consider getting help from:

• a traditional accountant
• a digital accountant
• business mentors
• investment advisors

Seeking advice from an accountant or bookkeeper can free up time for you to focus on what you do best – your job.

Source: www.business.govt.nz

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

The new Incorporated Societies Act came fully into force on 5 October 2023

The Incorporated Societies Act 2022 (the 2022 Act) came into effect on 5 October 2023. To reregister or register for the first time, your society will need to provide a constitution that’s compliant with the 2022 Act. The 2022 Act sets out what you must include in your constitution.

It’s important to understand that a rules document, or constitution, is a key legal document for every incorporated society operating in New Zealand. It sets out your society’s purposes, what it does and how it operates. Your society can only carry out lawful activities that align with the purposes outlined in its constitution. Your officers, committee and members should always refer to this document for guidance about running your society, particularly before making any decisions.

What must be included in your society’s constitution

Every incorporated society must have a set of rules. Under the 2022 Act the rules document is called a constitution. It specifies what must be included in your society’s constitution. These requirements existed before — they are just more clearly set out in the 2022 Act.

For example —

• Why your society exists – (what its purpose is)
• How someone becomes a member, and the conditions of membership,
• The makeup of your society’s committee, its roles, functions, powers, and procedures
• How your society will hold general meetings, make decisions, and elect or appoint officers

Your society may need to change or add new rules. For instance, your society might need to add rules that are compulsory under the 2022 Act. Such as —

• The need to have at least one contact person, and no more than 3. You must also include how each contact person is elected or appointed.
• How members and officers give their consent.
• The procedure for resolving disputes.
• Whether, and how, written resolutions may be passed instead of holding general meetings.
• Distribution of surplus assets – they must be given to a not-for-profit organisation (or a class of organisations) that is identified in your constitution.

Once you’ve re-registered with the Companies Office, you’ll need to let Charities Services know about the changes to your rules. The Companies Office looks after the Register of Incorporated Societies (a different register from the Charities Register) and there are lots of useful resources and information on their website to help you with the re-registration process.

For further information click on this link: https://is-register.companiesoffice.govt.nz/law-changes-for-societies/

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Charities and Incorporated Societies (only after re-registration)

The External Reporting Board (XRB) has increased the size thresholds of reporting tiers for Public Benefit Entities.   This means reduced reporting requirements for the registered charities that move a lower tier.

Registered charities with financial years ending on 31 March 2024 can apply the new thresholds immediately.  Click here for more information on XRB’s website.

These changes also affect Incorporated Societies under the new Incorporated Societies rules introduced in 2023.  There is information on XRB’s website to help societies with the changes.

The new thresholds are set out in the table below:

Tier	Old criteria	New criteria
Tier 1*	Total expenses greater than $30 million	Total expenses greater than $33 million
Tier 2	Total expenses less than $30 million	Total expenses less than $33 million
Tier 3	Total expenses less than $2 million	Total expenses less than $5 million
Tier 4	Total operating payments $140,000	No change

*Note; an entity is also required to apply Tier 1 if it has “public accountability”.

The changes come into effect for reporting periods ending on or after 28 March 2024.

Source:  Charities Services and External Reporting Board Incorporated Societies » XRB

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Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change.  We have, to the best of our ability, acknowledged any shared content.  All related links provided to the corresponding websites are subject to change as they are live links.

From 1 July 2024 it is proposed the three existing bright line tests will be abolished. In their place there will be a two-year bright line test. Bright line will apply if the bright-line end date is within two years of the bright-line start date. The two years will apply retrospectively from 1 July 2024 so that if the bright-line start date is before 30 June 2022 the bright-line end date will be 1 July 2024 at the latest.

Main home exclusion

• Where the bright-line end date is after 1 July 2024 the main home exclusion will be based on the predominant use of the land. If it is being used more than 50% for main home then the exclusion from the bright-line test will apply. Note it is actual use of the property not intended use of the property.
• There is also a time basis. The land must be used most of the time as the main home – more than 50% in total.
• The main home exclusion cannot be applied more than twice in two years or where a person has engaged in a regular pattern of acquiring and disposing of residential land.
• If a house is being constructed on the land, the time involved in the construction is excluded from the bright-line calculation. This change is retrospective to property purchased on or after 29 March 2018. Where a person has already returned bright-line income under the previous rules that would now not be taxable, they can apply for a reassessment.
• Rollover relief will be available for transfers between associated person’s provided they have been associated for at least two years prior to the transfer. Similarly, a transfer to a trust can qualify for rollover relief where the beneficiaries have been associated to the transferor for at least two years prior to the transfer.
• Rollover relief will also be available in certain circumstances to transactions with companies (including look through companies), partnerships and between trusts.

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Source:  Tax-e-mail Issue No. 2403

Why you should check your Society’s balance dates and AGM dates

All societies are required to hold an Annual General Meeting (AGM) and their committee must present the financial statements for that period to its members at the AGM, before submitting it to the Registrar. Under the new Act, the end of the financial year (balance date) plays an important role in determining other deadlines.  In particular, within six months of the balance date your Society must:

• Prepare its annual financial statements, and
• Hold its Annual General Meeting (AGM), and
• File an annual return with Charities Services, along with the annual financial statements.

IMPORTANT:  You will need to make sure your Society’s financial statements are prepared early enough to be presented at your AGM and be filed with Charities Services all within the six month time frame.

There is an exception to this rule for a society which is newly incorporated – a society does not have to hold its first annual general meeting in the calendar year of its incorporation but must hold that meeting within 18 months after its incorporation. Logically this would only apply to a newly incorporated society, not a society who is reregistering under the new Act. The Incorporated Societies Act 2022 (the “new Act”) recently received Royal Assent resulting in significant changes for the 24,000 incorporated societies in New Zealand.  The new Act replaces the Incorporated Societies Act 1908 (the “old Act”), which has been long overdue for an upgrade. 

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Set Up a Payment Plan to tackle GST Debt

Paying tax in one lump sum isn’t always easy. Instead you can set up an instalment arrangement to spread your bill over smaller weekly or fortnightly repayments. There is no fee to set this up, and you won’t be charged penalties and interest. You can set up an instalment arrangement in myIR under the Payment section.

Simply head to myIR, click on ‘I want to…’ then ‘Payments’.

Before you start, you’ll need to know:

• how much you can afford to pay towards reducing your debt
• whether you’ll be paying by direct debit or another payment method
• when you want your instalment payments to start.

Source: MBIE & IRD:  Set up a payment plan

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Square Metre rate for Home Office Calculations 2023

The square metre rate for home office calculations has been set at $51.05 for the 2023 income year (1 April 2022 to 31 March 2023).

Home Office Expenses

If you’re a business owner and use part of your family home for work, you can make a claim for this as a business expense. In order to claim the expenses, there must be a connection between the use of your home and the business income being generated.

You can claim a portion of your household expenses, such as rates, insurance, power and mortgage interest. The portion you can claim relates to the area of your home that you use for business.

Companies Claiming Expenses for the Use of your Home

If your business is a company and does not pay anything towards the home office expenses, it cannot claim an expense.

However, if your company reimburses you for the use of your home, then it may be able to claim an expense. The company needs to be able to prove that there is a link between the money paid for the use of your home and the income the company makes. It also needs to keep accurate records that show how and when it paid for the use of your home, the amounts paid, and how it arrived at the amount to pay.

If you are a shareholder-employee/employee and the amount paid is a fair reimbursement for the use of your home, then it is exempt income and you do not need to pay income tax on the amount.

Splitting your Household Expenses

If part of your home is completely set aside for business use you just need to consider the floor area. If it is not completely set aside, you also need to consider the amount of time that part of your home is used for income-earning activities.

If you are registered for GST, the business expenses you claim will not include GST, when this applies. If you are not registered for GST, these expenses will include GST.

If you have a mortgage you can claim the same proportion of your mortgage interest (but not the principal) paid during the year. There is no GST involved in this.

For GST, you can claim a portion or percentage of the GST on the expenses.

Like you do for any other business expenses you are claiming, you need to keep invoices and other records for these expenses.

IRD Link: https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-expenses/using-your-home-for-your-business

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.