International Automatic Exchange of Information

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New Zealand has signed up to the Automatic Exchange of Information (AEOI) – a global OECD initiative to combat tax evasion.

Inland Revenue has been running an AEOI awareness campaign since 9th June 2018 with a primary focus of this campaign being to generate awareness among New Zealand tax residents most likely to have offshore accounts or financial interests, so they can take steps to determine if their tax affairs are in order and disclose if they identify issues. New Zealand tax residents with complex international tax affairs should contact us for support or advice.

This awareness campaign has included online advertising on relevant websites and via Facebook. These ads include a link to IRD’s campaign landing page.

As part of AEOI financial institutions will provide Inland Revenue with information about foreign tax residents with financial accounts in New Zealand, in line with the Common Reporting Standard (CRS).

IRD are now exchanging information with many other countries so it is vital you tell us about any income or assets you may have in other countries, if you don’t then chances are IRD will find out about it and that may cause you a few problems, something no one likes happening with IRD

The requirement of New Zealand Tax Residents to report world-wide income hasn’t changed, but IRD are now more likely to find out about it even if you don’t declare it. Please make sure information regarding ALL overseas income, bank accounts or assets is provided to us for your tax return preparation, even if you think it’s non-taxable income!

Accountants to comply with AML/CFT legislation

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Some time ago New Zealand has passed a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT).

The purpose of the law reflects New Zealand’s commitment to the international initiative to counter the impact that criminal activity has on people and economies within the global community.

The first sector required to comply with this legislation was the Finance sector (Banks, Financial Planners etc), lawyers are required to comply with the requirements of the AML/CFT Act from the 1st July 2018 and recent changes to the Act mean that from 1 October 2018 accountants are required to comply too.

The intent is for the entire professional services community (lawyers, accountants,banks, etc) to help combat money laundering and terrorist financing, and to help Police bring the criminals who do it to justice so even though the vast majority of our clients are honourable people we know well, and have had a long relationship with, this legislation requires us to do a number of things with regards to every client

The law says that we must assess the risk we may face from the actions of money launderers and people who finance terrorism as well as identify potentially suspicious activity and that means more paperwork for us and a requirement for you to supply us with more information.

For most of our clients we will be asking for certain information when you bring in your annual accounts work, while we need to have compliant processes in place by the 1st October we have a year or so to collect this information about all clients. New clients will need to provide the information BEFORE we can carry out any work.

To complete the risk assessment we must obtain and verify information from prospective and existing clients about a range of things. This is part of what AML/CFT calls “customer due diligence” (‘CDD’).

CDD requires us to undertake certain background checks before providing services to clients or customers. Accountants and other professionals must take reasonable steps to make sure the information they receive from clients is correct, so we need to ask for documents that show this and we need to keep the information on file for a minimum of five years.

If your business activities change significantly then we may need to update the CDD

The minimum information we will need to obtain from you and verify to meet these legal requirements includes:

  • your full name; and
  • your date of birth; and
  • your address.

To confirm these details, documents such as your driver’s licence or your birth certificate, and documents that show your address, such as a current bank statement will be required.

If we complete work for a company or trust we will need information about the company or trust too, including the people associated with it (such as directors and shareholders, trustees and beneficiaries).

We will need to ask you about the nature and purpose of the proposed work you are asking us to do for you; in most cases it will be business advisory and annual accounts/tax work.

We may need information confirming the source of funds for certain transaction to meet the legal requirements and we may also need to ask you for further information depending on a range of variables required by the legislation.

If we are not able to obtain the required information from you, it is likely we will not be able to act for you.

Before we start working for you, we will let you know what information we need, and what documents you need to show us and let us photocopy.

While we may shake our heads at some of the requirements, the Act is bringing New Zealand into line with other countries and if you have any queries or concerns please contact our Practice Manager, Neil Hodgson, who is our AML/CFT Compliance Manager.

From our business perspective there is a huge amount we need to put in place, including various compliance programmes and reporting systems, staff training programes all of which will be audited every two years (NOTE – this is not an audit of you, it is an audit of our systems). We need to keep records regarding AML/CFT for a minimum of five years and this will be held in individual client files as well as in our various compliance documents.

And just so you know they aren’t picking on you we even have to carry out Department of Justice checks and credit checks on our staff as part of our compliance programme.

Hopgood’s & Co win big

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We are delighted our client, Hopgood’s & Co, has had huge success at the Silver Fern Awards. They were named Best Restaurant in New Zealand, Aaron Ballantyne was named as the Best Head Chef and they won the award for Best Dish in the competition.

Think about all those top restaurants in Auckland and from other parts of New Zealand and you will realise just how special this achievement is.

Hopgood’s & Co chefs Aaron Ballantyne, left, and Kevin Hopgood

Congratulations to Kevin Hopgood, Arron Ballantyne and the rest of the great team at Hopgoods.

Here are some links to articles about both Kevin and Aaron that Neil Hodgson wrote for his Taste of Nelson column, their extensive backgrounds, hard work and total commitment to quality have rightly been recognised with these awards..

 

 

 

 

 

Get the IRD payment dates right

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We would like to remind everyone to make sure that when you are making tax payments to IRD they check that you have selected the correct tax type (e.g. INC for Income Tax, GST for Goods & Service Tax, DED for employer Deductions that include Kiwisaver contributions as well as PAYE etc).

Also, it’s very important that you select the correct period and year that the payment is going to. Most banks have a ‘Pay Tax’ or ‘Pay IRD’ tab in their on-line banking facilities so we suggest you follow the steps using this rather than setting IRD up as a regular payee.

Potential consequences of getting it wrong:

For example, if you are a company and you accidentally pay 2018 provisional tax to the 2017 year, and your 2017 annual accounts have not yet been completed, IRD will not allow this payment to be transferred to the 2018 year unless we fill out additional paper work, it will be applied to the 2017 year and that means it will show as overdue in your 2018 income tax account.  So please chose the year carefully.

Information about IRD’s provisional tax advertising campaign

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You may have seen the recent IRD advertising campaign about changes to provisional tax. We think the ads are misleading.

There are no changes to who is required to pay provisional tax, a tax payer will still be required to pay provisional tax if your tax at the end of the previous year was more than $2,500.

The changes are simply an introduction of a new method of how and when to pay. The new method is called the Accounting Income Method (AIM) and will be available for tax payers using Xero, MYOB or other approved accounting software.

The new rules will require taxpayers using AIM to make tax payments more often, in line with GST filing dates. A Financial Statement of Activity will be required to be filed from the software with IRD on or before the AIM instalment date. As always there are eligibility criteria to be met and exclusions that apply.

The new method will be available from the 2018-19 income year. We will provide more information closer to that time.

Tax Refund Companies – First published on Stuff website 13.06.17

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The matter of how Tax Agents, particularly tax refund companies has been raised in the media again and the most recent article comes with a warning about how your refund could be paid into their bank account even if you do your own tax return online.

At Savage & Savage we never receive client tax refunds into our account, not even our Trust Account. All client refunds go directly to the client and that is why we ask for your bank account details in our client questionnaire each year. And we most certainly do not take fees from your refund.

It is important you fill in your bank account details on the Client Questionnaire Forms each year as we never assume you haven’t changed bank accounts.

To see the original article as posted by Fairfax Media on their Stuff website click here

The article is copied here;

You might still have to pay a tax refund company a fee – even if you do your return yourself.

Casey Kaumatule thought she was being sensible and saving money when she decided to take matters into her own hands and do her partner’s tax return herself, online.

She opted to do it via the Inland Revenue website rather than paying a tax refund company to handle it.

“We got a good amount that was owed to us. But when I checked, I noticed it was paid to a different bank account. I rang IRD and the tax return money had been sent to Savvy Tax Agents. They did my partner’s tax return before and their account wasn’t removed.”

She spoke to the firm, which agreed to waive the fee it would normally charge to release the money that had been sent to it. Kaumatule said it was her mistake not to have checked the details, but it was still frustrating.

Another woman, Samantha Dallas, was also caught out. She said she was not sure when she had signed up with the tax refund firm, but discovered after she had processed her personal tax statement that they were listed as her tax agents.

“I think all tax should just be done through IRD. We already get taxed and private tax agents make it feel like you are getting taxed on your tax.”

People who sign up to have a tax refund company prepare their tax returns usually agree to have those firms act as their tax agents from then on, with their bank accounts set up to process future refund payments.

That means, even if they do their return themselves in future, the agent can end up with the refund.

Consumer NZ spokeswoman Jessica Wilson said it was something her organisation had received complaints about.

Many companies charge a fee to release tax refunds that have been put in their banks accounts in error.

“Problems arise when people aren’t aware they’re giving the company the authority to act as their tax agent – and it remains so until the arrangement is cancelled,” she said.

“There’s an onus on tax refund companies to keep their customers informed the arrangement is still in place. If a company hasn’t done so and receives the refund as a result of a return the customer has filed, we think it shouldn’t deduct a handling fee.”

NZ Tax Refunds, or WooHoo, charges a $25 handling fee in these circumstances.

Managing director Gabrielle Purchas said her firm would automatically push money back to Inland Revenue when a client had not completed the return within its system.

She said it was an administrative burden for her organisation to have to deal with and was something that could be overlooked. “We send it straight back to IRD if we can see it hasn’t been requested.”

Savvy Tax Agents said it would do the same but would not charge.

An Inland Revenue spokesman said it was clear on its MyIR online service whether a person’s account was linked to a tax agent.

“The best advice would be that if you have used a tax refund company in the past then you should check all your details are correct on MyIR before you start applying for a refund yourself.

“Once the customer has reached the My Tax Agent tab on MyIR, they can see who their tax agent is but to de-link they would need to give us this instruction by phone or through secure mail in MyIR.”

 – Stuff

Test Your Knowledge – The Privacy Act 1993

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The purpose of the Privacy Act 1993 is to promote and protect individual privacy – in particular to establish principles on: collection, use, and disclosure of information relating to individuals and access by individuals to information held about them.

Below are some common misconceptions and facts about your Privacy, rights and requirements courtesy of the Privacy Commissioner NZ.

Q 1. True or False: if your profile on a social network is set so that only your friends can see it, your profile is completely private.

Click here to find the answer

Q 2. True or False: You always have control over the pictures you post online.

Click here to find the answer

Q 3. The Privacy Act protects your personal information. Personal information consists of:

A. Your name, age, weight, height, home address and phone number.

B. Your blood type, DNA code, fingerprints and medical records.

C. Your education, purchases and spending habits.

D. All of the above.

Click here to find the answer

Q 4. It’s really easy to share pictures and stories with your friends on social networking sites. When you’re posting items you should:

A. Post everything that you think is funny and interesting – your friends will love these things!

B. Don’t post anything – it’s a creepy world out there.

C. Think first. Would you be comfortable if your parents, teachers or bosses saw what you are posting?

Click here to find the answer

Q 5. When you’re surfing online, websites can collect this information about you:

A. My personal preferences.

B. My approximate location.

C. The software I’m using.

D. All of the above.

Click here to find the answer

Q 6. You’re buying an item of clothing at the mall. As you’re about to pay for them, the shop assistant asks for your address and phone number. You:

A. Give it to him. The shop probably needs it in case I want to return the jeans.

B. Ask why he needs it. Once you know what the shop plans to do with your information, you can decide whether to hand it over.

C. Refuse. It’s none of their business!

Click here to find the answser

Q 7. Under the law, you have a right to complain if:

A. You think your personal information was improperly collected, used or disclosed?

B. You run into difficulties trying to get your personal information from an organisation, or to get your personal information corrected when it’s wrong?

C. All of the above.

Click here to find the answer

Q 8. Can an employer contact a job applicant’s past employer for a reference?

Click here to find the answer

 

Other Privacy breaches/concerns that Chapman ER have seen of late are:

 

Q 9. Birthdays. Is it OK to email ‘All staff’ notifying them of an employee’s birthday so they can congratulate them or buy them a card or present?

A. It’s only OK if it’s a special birthday for example a 40th or 60th

B. It’s only OK to send to the employee’s immediate team

C. It’s only OK if the employee gives you permission

D. It’s never OK

E. It’s always OK

Click here to find the answer

Q 10. Resignations. Is it OK to send an email to all staff notifying them of the resignation of an employee and communicating where the staff member will be moving to or what they will be doing next?

A. Only OK if the staff member agrees to the communication

B. It’s always OK. The role is being vacated, the employee is leaving and the staff have a right to know.

C. It’s never OK and the staff will find out soon enough when the job is advertised.

Click here to find the answer

Q 11. Work emails. Can you monitor any information on your company’s computer system i.e. Information accessed and saved on your employee’s desk top?

A. No that is an invasion of your employee’s privacy.

B. You can only monitor work related information.

C. You can only monitor information on an employee’s computer if an alarm alerts you to pornography or inappropriate material being accessed

D. It is your system and you can monitor and access any information stored or accessed on an employee’s desktop, laptop, or other device

Click here to find the answer

 

Q 12. Which answer applies to information gathered from an employee during a workplace investigation e.g. Health & Safety, Bullying:

A. The employee can withdraw their statement at any time through the process

B. The employee cannot withdraw their statement once communicated

C. The employee can correct the information provided if it is recorded inaccurately

D. The employee cannot refuse to participate in an investigation process

Click here to find the answer

Employment Agreements Require Updates Now

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We encourage you to update your employment agreements immediately as last years amendments to the Employment Relations Act are due to come into force for existing employees very soon. The new requirements, which relate to working hours, cancellation of shifts and restrictions on secondary employment, will apply from 1 April, 2017. The wording of some clauses in your current employment agreements may become ineffective from this date.

Below is a summary of the changes or please contact us if you would like assistance with reviewing your employment agreements.

Zero Hours Contract

There are a number of changes to the Employment Relations Act, which address zero hour contracts, cancelling shifts, making deductions from employee pay, and prohibitions on secondary employment. Below is an article from the Ministry of Business, Innovation and Employment which summarises the changes.

It is likely existing Employment Agreements will require updating to reflect these changes, particularly if you have Agreements with no minimum number of hours guaranteed. Please let us know if you would like your Agreements reviewed or having any questions on how these changes affect your workplace.
 

Addressing zero-hour contracts

The Employment Standards Legislation Bill includes a package of measures to prevent unfair employment practices in the New Zealand labour market, such as “zero-hour contracts”.

The changes aim to retain flexibility where it is desired by both, employers and employees, but also increase certainty by ensuring that both parties are aware at the beginning of the working relationship of the mutual commitment that they have made.

The changes mean that where the employer and employee agree to hours of work, they will be required to state those hours of work in the employment agreement.

The changes also prohibit the following practices:

  • employers requiring employees to be available to work for more than the agreed hours without having a genuine reasons based on reasonable grounds
  • employers requiring employees to be available to work for more than the agreed hours without paying reasonable compensation for the number of hours the employee is required to be available
  • employers cancelling a shift without the provision for reasonable notice or reasonable compensation
  • employers putting unreasonable restrictions on secondary employment of employees
  • employers making unreasonable deductions from employees’ wages.

When hours are agreed, these must be stated in the employment agreement

Where the employer and employee agree to set hours of work, they will be required to state those hours in the employment agreement. This includes agreement on any or all of the following:

  • the number of guaranteed hours of work,
  • the start and finish times,
  • the days of the week the employee will work
  • any flexibility in the above.

What if there are no agreed hours?

The employer and the employee do not have to agree on hours, times or days, but when they do, anything that is agreed must be recorded in the agreement. This will ensure employers and employees are clear in their commitments to each other.

In cases where no hours were agreed to, the employer must provide an indication of the arrangements relating to the employee’s working times. This is consistent with the current law.

Employees will be able to apply to the Employment Relations Authority for a penalty against their employer, if they agreed on hours, but have failed to record these in the employment agreement.

Preventing employers requiring employees to be available without a genuine reason based on reasonable grounds and providing reasonable compensation

The changes will prohibit employers from requiring employees to be available above the agreed hours of work stated in their employment agreement unless employees are reasonably compensated for that availability as agreed in the employment agreement. Employers will not be obliged to offer work that is above the agreed number of hours. Employees will be free to decline extra work unless they agreed to an availability provision and they are provided reasonable compensation for that availability.

What about availability provisions?

Availability requirements and compensation rates will need to be agreed and stated in the employment agreement. An employer can not include an availability provision in the employment agreement, unless there are some guaranteed hours in the agreement.

The employment agreement should also indicate the amount of availability the employer requests.

Employers will also need to have a genuine reason based on reasonable grounds to require employees to be available above the agreed hours. Employers also need to have a genuine reason based on reasonable grounds for the number of hours of availability.

When considering whether there is a genuine reason based on reasonable grounds, employers must consider:

  • Whether it is practicable for them to meet their business demands without using an availability provision
  • How much availability they’re requiring and the proportion of the availability to the number of agreed hours of work

What is considered reasonable compensation for availability?

When establishing what compensation an employer offers to an employee in exchange for their availability, employers must consider:

  • The number of hours they are requiring an employee to be available
  • The proportion of the availability to the number of guaranteed hours
  • Any specific restrictions the availability provision requires (e.g. must not drink while on call)
  • The employee’s regular pay rates
  • If the employee is paid by salary, the amount of the salary

Cancelling a shift only with reasonable notice or reasonable compensation

Reasonable notice and reasonable compensation for cancelling a shift will need to be specified in the employment agreement. When a shift is cancelled, the employer will need to give either reasonable notice or reasonable compensation before the commencement of the shift. If the employment agreement does not specify these, then the employee must be paid the full amount they would have earned, had they worked the shift.

What is a reasonable notice period?

When considering whether the notice period is reasonable, employers must consider:

  • The particular nature of business
  • The ability of the employer to control or foresee cancellations
  • The nature of the employee’s work and the likely effects of a cancellation on employees
  • The nature of the employee’s employment arrangements including whether they have guaranteed hours and if so, the number of guaranteed hours

What is considered reasonable compensation for shift cancellation?

When considering whether the compensation is reasonable, parties must consider:

  • the length of the notice period stated in the employment agreement
  • the remuneration the employee would have received for working the shift
  • likely costs incurred by the employee in preparation for the work

Prohibiting unreasonable restrictions on secondary employment

Employers will be prevented from restricting secondary employment for employees, unless they have a genuine reason based on reasonable grounds to do so. Those grounds won’t be prescribed but will be related to:

  • the risk of loss to the employer of knowledge, property (including intellectual property) or competitive reputation.
  • Preventing a real and unmanageable conflict of interest

Employers must not restrict employees to a greater extent than is necessary. They should consider whether particular cases warrant restrictions instead of putting blanket restrictions on secondary employment.

Prohibiting unreasonable deductions from employees’ wages

The current law already requires employee consent to deductions from wages. The new legislation will mean the employer must consult with the employee on each specific deduction, even where the employee has given general consent to lawful deductions in their employment agreement. This obligation does not extend to lawful deductions for things like Kiwisaver or student loan repayments etc.

The changes will also mean that even where there is consent, a deduction must not be unreasonable. For example a deduction to cover losses caused by a third party through breakages or theft may be unreasonable, particularly if the employee had no control over the third party conduct.

Inland Revenue GST Online Changes & Services Unavailable

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Inland Revenue is improving their GST online services. While the update takes place, all IRD systems will be unavailable from 3pm on Thursday 2 February until 8am on Tuesday the 7 February. You will not be able to access any myIR online services or contact IRD through their call centers. The system update will cause draft returns to be deleted so make sure you complete any draft GST returns before 2 February.

If you are using myIR to file your GST return(s), from the 7th February you will be able to:

  • Pay your GST at the same time you file your return
  • Arrange GST installment plans online
  • Add file attachments online
  • Choose to receive email and/or text message reminders

If you have provided others with administrator or user access (not your accountant) to your myIR account, you’ll need to review and confirm the level of access you want them to have by 1 February or they will not have access to the improved GST services from 7 February.

The myIR mobile app will no longer be available, you will need to file  your GST through your myIR account.

If you have any queries about the changes or how to use the new system, please contact us.

Barbican Training Centre

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Barbican Training Centre is an organisation we love to recommend to our clients, they provide outstanding training for people new to business or those who want to improve their business management and IT skills.

The popular no fee, 36 week, ‘Certificate in Small Business Management’ is starting again in March 2017. The programme is designed to give you the tools and inspiration to kick-start your business idea or manage your existing business more effectively.

Another popular course is the part time ‘Get Money Smart’ programme. It’s one evening a week and free to all permanent NZ residents. The course covers personal finances and personal budgets, hot to keep out and get out of debt, different savings and investment options , understanding real estate, interest rates, mortgages, shares and more.

To register for an Information and Enrollment Session, contact Barbican  or for more information contact Pip Bruce, Barbican Training Centre Limited, 03 547 6138 or visit the Barbican website  for further information and other courses available.