Tenancy Services: Who is responsible for what, around your rental?

Landlords and tenants are both responsible for keeping the property in good condition.

Fair wear and tear
A tenant is not responsible for normal wear and tear to the property, or any chattels provided by the landlord when they use them normally. The tenant is responsible for any intentional damage.

Chimneys
Cleaning the chimney is the landlord’s responsibility. The tenant remains responsible for cleaning the ashes from the hearth. The landlord must have the chimney swept and checked at least annually to make sure it’s safe. (A landlord’s insurance policy for the property will often not cover the property if the chimney is not swept at least annually).

Lightbulbs
Both landlords and tenants can be responsible for light bulbs, as they are not covered by the Residential Tenancies Act. However, if the landlord supplies light bulbs and the tenant takes them at the end of the tenancy, or damages them intentionally, the tenant may be responsible for replacing them.

If the light bulbs remain in place but have blown, responsibility is less certain. Standard light bulbs may be seen as consumables and replaceable by the tenant or may be seen as fair wear and tear and replaceable by the landlord.

Non-standard light bulbs – which may be more expensive or are tricky to fit – may be the responsibility of the landlord. If a light bulb of this kind blows, it’s likely to be treated as fair wear and tear.

Maintaining heaters and ventilation systems
Landlords are responsible for maintaining any heaters and ventilation systems but although landlords are responsible for maintenance, tenants are required to keep the rental property reasonably clean and tidy, and this includes cleaning heat pump filters or heaters installed to meet the healthy homes heating standard or supplied as part of the rental property. Landlords may be required to have appliances such as heat pumps or ventilation systems serviced regularly as part of their warranty conditions.

Landlords must agree before tenants make any changes to the property.
Tenants can’t renovate, alter or add major fixtures to the property unless the landlord agrees. Any changes must either:
• be in line with the tenancy agreement, or
• the tenant must have the landlord’s written consent, but it is important to note that the landlord can’t unreasonably withhold consent.

Before the tenancy ends, the tenant can remove any of their fixtures, unless this would cause irreparable damage to the premises or the agreement from the landlord was conditional upon it remaining and becoming the property of the landlord at the end of the tenancy. Fixtures are things that are fixed in position (such as garden sheds, spa pools, heat pumps, security alarms or lights, clothes lines and panel heaters).

Any fixture put up by a tenant and not removed at the end of a tenancy becomes the property of the landlord. But this doesn’t apply if a different agreement exists, or the landlord has led the tenant to believe that the tenant can remove the fixtures after the tenancy ends.

If the tenant causes damage when removing the fixtures, the tenant should tell the landlord. The landlord should then tell the tenant whether they want them to repair the damage or negotiate compensation.

Minor changes to the property include fixtures like:
• curtains replacing corded blinds
• visual fire alarms and doorbells
• baby-proofing, e.g. a baby gate, cord tensioners or cord cleats for corded blinds
• earthquake-proofing, e.g. securing a bookshelf to the wall.

Exterior
Both landlords and tenants are responsible for maintaining the outside of the house.

The landlord is responsible for outside cleaning and maintenance tasks such as house-washing and gutter cleaning. The landlord is also responsible for maintaining trees, shrubs and hedges as they may require special care or knowledge to maintain.

The tenant can do outdoor cleaning tasks like window cleaning (if the windows are easily accessible, not apartment buildings or multi-level houses) and includes mowing the lawns and weeding the gardens as part of their responsibility to keep the property reasonably clean and tidy. It is a good idea to discuss this topic in detail at the start of the tenancy and note what is agreed on the tenancy agreement to avoid misunderstandings.

Source: Ministry of Business Innovation and Employment

For more information visit: MBIE: tenancy.govt.nz maintaining-the-property

Trustee Tax Rate Heading North

Budget 2023 – Trustee Tax Rate Heading North

The headline tax change in Budget 2023 is the raising of the trustee tax rate from 33% to 39% — effectively bringing the Trustee rate in line with the top marginal tax rate. The increased rate takes effect from the 2024–25 income year.

Noting that some taxpayers had taken advantage of the misalignment in tax rates once the top tax was raised in 2021, the Minister of Revenue pointed to the Inland Revenue’s recent High Wealth Individuals research:

“New information from Inland Revenue has shown an almost 50% spike in income subject to the trustee rate, from $11.4 billion in the 2020 tax year to $17.1 billion in the 2021 tax year.” The legislation will contain measures to ensure that deceased estates and Trusts for disabled persons are not subject to the 39% rate.

Tax cuts, and any moves to change the tax thresholds, have been firmly ruled out on the grounds that any relaxation of tax rates would fuel inflation.

Economic outlook
Treasury’s executive summary notes that:

  • Treasury no longer anticipates a recession during 2023, although growth remains low and labour market conditions will begin to deteriorate
  • the economy is forecast to grow by 3.2% in the year to June 2023 but slows to 1.0% in the June 2024 year, and averaging 2.7% thereafter
  • net debt is expected to peak as a percentage of GDP in 2023–24 at 22.0%
  • a surplus is forecast for the 2024–25 financial year
  • inflation peaked at 7.3% in June 2022 and is forecast to fall to 4.5% by the end of 2023.

Source: Wolters Kluwer Budget Report 2023

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.

USE OF MONEY INTEREST RATE CHANGE

FROM 9 MAY 2023 THE UOMI RATES ON UNDERPAYMENTS AND OVERPAYMENTS OF TAX WILL CHANGE.

The new rates are:

  • Underpayments – 10.39% (up from 9.21%0
  • Overpayments – 3.53% (up from 2.31%)

Interest amounts

Interest gets calculated daily on your overpaid or underpaid tax. It does not compound and is not included when calculating penalties.

The interest rates are set by government and are based on market rates, so they vary over time.

When interest rate startedDebit rateCredit rate
9 May 202310.39%3.53%
17 January 20239.21%2.31%
30 August 20227.96%1.22%
10 May 20227.28%0.00%
8 May 20207.00%0.00%
29 August 20198.35%0.81%
8 May 20178.22%1.02%
8 May 20168.27%1.62%
8 May 20159.21%2.63%

Source: https://www.ird.govt.nz/updates/news-folder/use-of-money-interest-rate-change

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.

Tax Toolbox for Tradies

Tax Toolbox for Tradies

If you’re a tradie, or someone who helps a tradie keep on top of their books, check out Inland Revenue’s tax toolbox.

The toolbox will show you:

  • what expenses you can claim and how to keep good records
  • what you need to do to stay on top of your income tax and GST
  • what your obligations are if you’re an employer.

Source: Inland Revenue – https://www.ird.govt.nz/the-tax-toolbox

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.

Vouchers and GST Claims

Vouchers and GST Claims

Where a voucher is purchased (often as a gift) there is an issue on whether a GST input is claimable on it.  Usually, it will not be claimable on the purchase of the voucher but the recipient who uses it would be eligible for a claim provided they meet the normal rules for claiming inputs (ie registered for GST and the goods or services are applied by them to make taxable supplies).  This is the case with the likes of Prezzy Cards, Petrol vouchers and Farmers, Noel Leeming, Foodtown gift vouchers.  The problem is that in some rare cases GST will be claimable on the Voucher itself so the question is how do you tell?  The answer is to look carefully at the invoice or till receipt to ensure it complies with the GST documentation requirements and particularly whether it shows that GST was actually charged.  If so, the GST input is claimable if not, then a GST input is not available.

Source:  Tax-e-mail Issue 2301

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.

When charities can provide housing

When Charities can Provide Housing

Providing housing can be charitable, but it needs to be connected to a charitable purpose. What does this mean? Charitable purposes must have a public benefit and not just create private benefits for people who aren’t in need. Case law says that housing is a basic need and right, but home ownership itself is not.

Many amazing registered charities achieve their purposes, like relieving poverty or regenerating urban or rural areas, by providing a variety of housing options throughout Aotearoa.

You can check out: Sector-Showcase-Design-Island-Child-Charitable-Trust-2-1.pdf (charities.govt.nz) that provides transitional homes for whānau experiencing homelessness.

Charities can, and do, support people into housing in a huge range of ways – whether it’s emergency housing, cheaper rentals, or home ownership. However, not all groups that support people into homes qualify as a charity. Having a purpose to make it easier for people to own homes is not itself charitable. If your group intends to offer a home ownership programme, we recommend getting in touch before you apply and we can discuss whether your group might qualify for registration.

Source:  Charities Services website, accessed 21 June 2022. Charities Services | Myth busting: when charities can provide housing

Got questions? Please get in touch! Charities Services.

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.

Buying or Selling a Business

Buying or Selling a Business

Buying or selling a business is significant for both the buyer and seller. Tax is treated differently depending on whether the sale involves assets or shares. Both asset and share sales can be a mix of taxable and non-taxable parts.

It’s important to set up your business sale or purchase the right way so that you:

  • get the right entitlements
  • pay the right amount of tax
  • get the right after-sale profits and allowable deductions.

The information here is a general overview of different tax obligations for common situations you should be aware of.

Getting these wrong can lead to an unexpected tax bill, so it’s best to talk early with a tax professional to make sure you get the details of your sale right from the start.

Source: https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/buying-or-selling-a-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.

New guide on accounting for koha

New Guide on Accounting for koha

The Charities Services recently created a new guide on their website that looks at how to report koha.

This new resource is aimed at helping charities report on receiving and gifting koha in their annual performance reports  

Koha can be hard to account for, as the way it is given, and what could be considered as koha, can vary greatly. This resource explains the concept of koha and provides step-by-step guidance to help charities report on it more easily.

What is koha?

While koha can be described as an “unconditional gift”, the way koha is given and what is given as koha can vary widely, and this changes how it will be reported. The purpose of this guide is to help you think about how to report koha in your performance report. We have also included some examples of how you could account for different types of koha.

On this page we separate between koha and payments for a good or service. Koha is often given by manuhiri (visitors) to tangata whenua (hosts) in the pōwhiri process. While koha may help with the costs incurred by tangata whenua, the manuhiri are giving koha because it is customary to do so, not as a result of a financial transaction.

Some examples of koha are:

  • gift of money to a marae.
  • gift of art with the intention they sell it.
  • gift of whiteware to a marae to use in their facilities.

Some people refer to koha as the cost of goods or service, such as the payment for renting out or staying at a marae.

When and how do I record koha?

When recording koha you first need to know if the koha given was cash, or non-cash. Then look at whether anything was provided in exchange, which would be considered a Receipt from providing goods and services. If it was not cash, consideration needs to be made if it was significant to the charity.

The word “significant” on this page is an accounting term. It’s used to refer to something you expect to use for more than 12 months, or an asset large enough in value that not recording it could change the reader’s understanding of your charity/performance report.

We are not talking about things that are culturally significant, such as taonga. We are also not talking about things that may have cultural significance, but no monetary value or no way of being priced. If you think it’s important for readers of your performance report, then providing a Note with a descriptive list of significant taonga may be an appropriate way of acknowledging the mana of those that have donated taonga to your group. If your charity is gifted taonga that is also significant from an accounting perspective (e.g. a high value piece of art), you would still need to record this as income and an asset.

Source: https://www.charities.govt.nz/teaomaoripages/financial-reporting/how-to-report-on-koha/

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.

Land Purchase – When Not to Claim GST

Land Purchase – When Not to Claim GST

Do not claim GST on residential land purchased unless you are sure you are going to sell it. If you do claim GST and convert to a rental, the sale of the property will always be subject to income tax even if you sell it to an associated entity in the meantime. By claiming the GST you are notifying IRD that you purchased the property with an intention of resale.

Source: Tax-e-mail Issue 2201

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.

Seven top tips to close off the financial year

Seven top tips to close off the financial year

The end of the financial year can be an exhausting and stressful time for small businesses.

Start this new financial year by utilising automation to stay on top of your bookwork. Take photos of receipts and send them to Xero, create invoices on your mobile, complete bank reconciliation daily and form habits to keep you up to date and in control.
Often you are so focused on the day-to-day running of your business, the less exciting aspects, like bookkeeping, can be swept to one side.  As the calendar ticks over towards March 31 there can be a lot of pressure.
Throw in the complications of Covid-19 and preparing for the EOFY has become an increasingly complicated process for SMEs. Business owners will have to account for changes brought about by a year marked by lockdowns, uneven cash flow and general economic uncertainty, but it doesn’t have to be that way. By investing in good accounting software like Xero, SME owners can take control of the process and keep their focus on the business.

Catch up on paperwork

Technology can help get your paperwork up to date, catalogued and, crucially, in the same place. Software like Hubdoc allows you to import all your financial documents (receipts, emails) and magically extracts the data to Xero. All the documents are then stored online, and you can search and access bills and receipts from anywhere.

Look to the cloud

Make your accountant’s job easier by using a cloud-based accounting platform, which will help you (and them) complete your year-end accounts and tax returns quickly and simply. Xero has tools for managing invoicing, bank reconciliation, simple inventory, purchasing and bookkeeping, making it a popular choice for SMEs wanting a painless end to the financial year. Much of it is automated, so it’s like having a virtual employee who does a lot of the work for you.

Know your worth

Manage your deductions by figuring out what you can claim.  Have a chat with your accountant about how you treat any money you have received from government subsidies and understand what the Government is providing in terms of Covid-19 relief, if there are any changes to levels. Record personal expenses and business expenses separately, so that you don’t lose sight of small business costs paid in cash or with a personal card, because they add up. Start the new financial year with separate credit or debit cards – one for your business and one for your personal expenses.

Goodbye bad debt

If you are still chasing invoices from the financial year it may be worth writing them off as a bad debt. Think about whether your accounting software can take the hassle out of chasing payments by sending online invoices or automated reminders, so you get paid on time. Alternatively, consider offering the client a small discount if they pay before the deadline to close the books.

Write it down

Know the key dates on the financial year calendar and don’t leave anything to the last minute. Get familiar with important dates for the upcoming tax year and set reminders in the diary in order to avoid costly penalties for missing deadlines and late payments. Those penalties can really sting – and take a bite of your profits for the new financial year.

Ask an expert

Talk to an expert. Getting some time to speak to an accountant or bookkeeper can make a big difference and they can offer invaluable guidance on write-offs, rebates and potential deductions. Yes, it’s hard for businesses to plan for a whole year ahead in the age of Covid, but talking to an expert and setting up some simple goals can really help.

Get a plan

Set next year’s game plan because once you’ve got all your up-to-date information your accountant is in a good position to help you budget and talk about your taxes. They can also help put a strategy in place for the new financial year and forecast for different scenarios.

SOURCE: CONTENT BY XERO 25 Mar 2021

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.