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One of my clients is a shareholder in two different Companies and he gets income from both the Companies as shareholder.
Can he claim Wages subsidy for both the Companies. Both the Companies have suffered loss of income.
We have a question in regards to a member of our team who is over 70 and therefore a vulnerable worker under alert level 3 and possibly under alert level 2, as the work requires site visits to multiple locations during the day.
We do not think we can keep him at 80% of salary while remaining at home after the level 4 lockdown has ended. Do you have any advice or recommendations in this area?
During the lockdown period I have been working on our financials and also budgets moving forward and our business is not in good shape. I have gone through what costs can be cut, however this will unfortunately not be enough. At the moment I am forecasting a loss of approx 250k in this coming year if we stay as we are, the only way I can see of preventing this is cutting costs and also moving staff from other positions into sales roles so that we are also able to increase our turnover.
I myself have never performed a redundancy/restructure however I have been involved with one by crunching the numbers.
Any advice or guidance on this matter would be greatly appreciated.
If we received the Wage Subsidy for an employee with the intention of retaining him, but now realise we will have to let him go, can I use the balance of the subsidy as a redundancy payment to him?
We are an essential service but due to covid19 we are working reduced hours and most staff are working approximately 50% of their working day. We are paying those employees 80% of their pay by topping up with annual leave. We also have a few workers who are working their normal hours. Can you please clarify the following:
Do we have to top up to 80% without using their annual leave, or can it be topped up with annual leave
Are the employees who are working 100% of their hours entitled to 100% of their pay, or do we reduce this to 80% regardless of the fact that they are working 100%
If a company has no staff, but two directors each of whom is entitled to get the subsidy, what is the entitlement? 1 x $7029 ? or 2 x $7029?
The wage subsidy is not taxable, will staff wages be deductible, or have to be proportioned to remove the non deductible part? Eg, staff weekly wage = $2,000 wages subsidy =585, so deductible = $2,000 - 585 ? How does this work? Please help.
There is a confusion about the wage subsidy. Are employers required to pass the weekly subsidy to employees? Most our clients' employees are on much higher salaries than the $585 per week. For those clients, they have to top up their employees' pays. But for the part time employees, especially, they may work 10 hours a week at $20 per hour, their weekly pay = $200 which is less than the under 20 hours subsidy of $350. Do employers need to pay the part time staff $350, although the staff's normal part time job weekly pay is only $200?
One of our clients wishes to lease a car via an operating lease through a company. Is the company able to claim the car lease payments as a deductible expense? I assume FBT would still need to be paid on this car?Please advise.
An individual runs a property development business. She also has spare land to build her own home. Do we need to include the spare land in her accounts? I.e. as an asset in balance sheet? It is not a business property.
My client has residential investment properties and they replaced the garage door in one of them, costing $6,000. Are we able to claim depreciation on this? If so, at what rate.
We have someone who paid for his airfare for travel for a registered charity and in the same deposit he paid enough for two other people.
Can he have this amount for the other two airfares as a donation and get a donation rebate receipt for it?
Should the costs of building fitout be capitalised and depreciated? e.g. An office is leased by a company for its business use and they have to do some fitout work to make it suitable. We believe this is the case but would like confirmation.
My client bought a farm with a house, a cottage and a glasshouse on the farm. This farm was purchased in 2002 with GST zero-rated. The house and cottage were rented to my client as residential rental and no GST charged on rental. The glasshouse was rented out with GST. Now client is looking to sell the farm including the house, cottage and glasshouse. How to fill out the sales agreement?
A client owns a company and has been advised to put the shareholding in the name of the family trust?
Are each of the entities (i.e. the company and the trust) required to have separate IRD numbers?
Taxation
One of our clients wishes to lease a car via an operating lease through a company. Is the company able to claim the car lease payments as a deductible expense? I assume FBT would still need to be paid on this car?Please advise.
An individual runs a property development business. She also has spare land to build her own home. Do we need to include the spare land in her accounts? I.e. as an asset in balance sheet? It is not a business property.
My client has residential investment properties and they replaced the garage door in one of them, costing $6,000. Are we able to claim depreciation on this? If so, at what rate.
We have someone who paid for his airfare for travel for a registered charity and in the same deposit he paid enough for two other people.
Can he have this amount for the other two airfares as a donation and get a donation rebate receipt for it?
Should the costs of building fitout be capitalised and depreciated? e.g. An office is leased by a company for its business use and they have to do some fitout work to make it suitable. We believe this is the case but would like confirmation.
A client owns a company and has been advised to put the shareholding in the name of the family trust?
Are each of the entities (i.e. the company and the trust) required to have separate IRD numbers?
We have a client who was resident in New Zealand for less than 180 days during the 2018 year. Do we still need to file a tax return for him?
A client has a rental property. There are two houses on the land, offering a home and income situation. He has rented for 4 years. He now plans to split the property into two titles, and sell the house. I assume he is not liable for income tax for changing the title and sell as it was a rental investment property?
A client has a trust that now only owns a personal home, although previously it had some interest and rental income. We still prepare a set of financials re keeping track of where the funds get used etc. We charge the trust a fee. Is this fee deductible to the trust if there is no taxable activity now?
My employer is offering a $400 per month fuel card as part of my package.
Is the company liable to pay FBT on this and if so how much.
GST
My client bought a farm with a house, a cottage and a glasshouse on the farm. This farm was purchased in 2002 with GST zero-rated. The house and cottage were rented to my client as residential rental and no GST charged on rental. The glasshouse was rented out with GST. Now client is looking to sell the farm including the house, cottage and glasshouse. How to fill out the sales agreement?
We have a client who receives ACC caregiver payments for care of her son at home. Does it include GST or only if the person is self-employed and earns over $60k when including all sources of income?
A client is a closed company offering Maori cultural tourism activities.
The client was recently awarded a contract for providing Maori performances on cruise ships, when the ships stop over at various New Zealand harbours. The customer/ cruise ship tour organiser is a foreign company based in the UK…
We have a client who earned $62,000 in 2018 year. We did her accounts late in the following year by which time she realised her turnover would be less in the 2019 year. She earned $52,000 in 2019.
Does she have to register for GST now or only if the coming year will be greater than $60,000?
Can you please clarify re zero- rating of GST for accounting services provided to overseas residents? Your answer in Sept- Oct publication, (and earlier) states that such services can be zero-rated. We understood that under s8(2)-(4) "if the supplier is resident in NZ.....or the services are physically performed in N.Z. " a supply is deemed, and GST is collectable?
We have a client who has just purchased a property to renovate and on-sell. The activity is a one- off transaction and not seen as continuous for GST purposes. They prefer not to register for GST. They are asking us if they should actually register for GST. What is the best way to advise our client please? (My client understands that the transaction is subject to Income Tax).
A client receives some of its payments via Paypal. It is GST registered on the sales it makes.
Would the deduction/payment to Paypal include GST or would it be exempt for GST purposes.
Someone is offering short-term holiday rental via booking.com (e.g. 4 days at a time). They are not NZ tax residents. (US ones) They will be under $60 k turnover. This will only be for a few months a year. Can they register for GST and do they have to? Is this like the inbound tour operators situation?
If two GST registered entities are involved in a vehicle transaction e.g. One buys from the other, should the sale and purchase be zero rated? Does the seller have the option to pay GST and the buyer to claim the GST?
My client bought a farm with a house, a cottage and a glasshouse on the farm. This farm was purchased in 2002 with GST zero-rated. The house and cottage were rented to my client as residential rental and no GST charged on rental. The glasshouse was rented out with GST. Now client is looking to sell the farm including the house, cottage and glasshouse. How to fill out the sales agreement?
i.e. What is the correct GST treatment for this sale?
We have a client who receives ACC caregiver payments for care of her son at home. Does it include GST or only if the person is self-employed and earns over $60k when including all sources of income?
A client is a closed company offering Maori cultural tourism activities.
The client was recently awarded a contract for providing Maori performances on cruise ships, when the ships stop over at various New Zealand harbours. The customer/ cruise ship tour organiser is a foreign company based in the UK.
Should our client charge normal GST @ 15% for the services offered to the foreign cruise ship company or is the service qualified for zero rated GST?
I have a GST registered Club that has purchased items from a non- GST registered party. No GST invoice has been provided. Is the Club able to claim GST on these purchases?
I have a client who has a property in Queenstown, which is rented out during the year on a short-term basis, via Airbnb. Is there any requirement for them to be GST registered? I assume it's considered residential property, so no need for GST registration. Am I correct?
A New Zealand company (A Ltd) provides immigration services to both NZ tax residents and overseas clients, as immigration advisors. They have a new client, which is an overseas company B, based in China. They signed an agreement to provide services for Company B's clients, who are currently living in NZ, both NZ Tax residents and those who are non-tax resident. There is no separate agreement between company A and individual clients of Company B. In this case, should 15% GST be charged, or should they be zero rated?
Property Investments
A family trust has owned a family home and a holiday home since 2000. In Oct 2017, the trust started building a 200m2 dwelling (without subdividing the land) on the land where the holiday home is. Please advise whether the new dwelling is subject to Bright-line Test.
We have a client who has just purchased a property to renovate and on-sell. The activity is a one- off transaction and not seen as continuous for GST purposes. They prefer not to register for GST. They are asking us if they should actually register for GST. What is the best way to advise our client please? (My client understands that the transaction is subject to Income Tax).
An individual bought insurance to cover his mortgage liability, which is a major expense serviced by his income. Can this insurance premium be deducted as expenses in his personal tax return?
A client bought land. The intention was to sell for a profit. He sold the land after two years, and made a loss.
The question is whether he can use the loss to offset other income, such as salary and interest etc.
My client is dissolving his Trust and transferring all assets (via him and his wife) to a company structure. Included in the assets is the family home. As long as no costs associated with the home are claimed for tax purposes is there any issue with the home being owned by the company?
We have a client who inherited three rental properties in Sept 2017. We are looking at transferring these properties into a Trust the client has created. Will they be caught under the brightline test and if so how will the gain be calculated, as she didn’t pay anything for the properties.
If a property is being sold and is subject to tax under the bright-line test, are all the holding costs since the property was purchased deductible?
Are rates paid back to the time of the initial purchase deductible on sale?
Could you confirm the following is correct:- Because property was jointly owned, then upon a relationship property transfer into one party's name, it is treated as being transferred on the same day as the original purchase and so falls outside of the bright-line test.
I have a client who has owned a rental property for a long time so it has depreciation claimed on the dwelling...
A client required a valuation on their residence in order to get a loan to buy an investment property. Can they claim the cost of this valuation?
Companies
Two trusts are 50% shareholders in an look through company (LTC) each. Can the trust retain their 50% LTC profit or does the profit have to be distributed to an individual (beneficiary)?
A company has sold its business. The funds from the sale have been taken out by the shareholders without liquidating the company. The company charges interest on the shareholders’ overdrawn current accounts. There was no capital distribution. Is there a deemed dividend situation in this case?
If a company lends money to a trust, is the company required to accrue interest income? (if so, the trust will mirror the entry as an interest expense). The shareholder and director of the company is also a trustee of the trust.
A lawyer client who currently trades in his own name is looking to incorporate a company and trade from that company.
1. Does a formal valuation need to be made of his existing business to enable a value for the transfer to the company or would something less formal suffice?
2. How do you differentiate between “A” and “B” class shares (voting and non voting shares) when you incorporate?
I have a client who has an ordinary company with A & B as directors and 50/50 shareholding which has losses carried forward. They have another company which is a look through company (LTC) with the same shareholding but one of them is a director. Can we do subvention payments to offset the profits in the LTC company?
In its final year of trading, a company issued a dividend to clear the shareholder current account overdrawn balance. The 5% RWT on dividend paid by the company will be refunded by the IRD to the shareholder who is not on the highest marginal tax rate. Can company choose not to pay the RWT?
Non-Companies
If a partner's current account goes into an overdrawn situation in a partnership, does interest need to be charged on it. I’m thinking not, but can you please confirm.
Are partnerships bound by the accrual rules? Do I need to bring in accounts receivable and payable into the annual accounts, or is that just for companies?
My client has a company and has made a donation of groceries through the company to a third party. Can this be a deductible expense?
If he started a charity could money given to that charity be counted as a donation and be tax deductible, providing that the charity used the funds to provide for those in need.
If a company lends money to a trust, is the company required to accrue interest income? (if so, the trust will mirror the entry as an interest expense). The shareholder and director of the company is also a trustee of the trust.
We have someone who paid for his airfare for travel for a registered charity and in the same deposit he paid enough for two other people.
Can he have this amount for the other two airfares as a donation and get a donation rebate receipt for it?
Are there any NZ tax implications for a NZ Trust which makes a capital and final distribution to a non-resident New Zealander who is a beneficiary? The beneficiary is aware that there may be tax consequences for her in her current country of tax residence.