DOING MORE - Diprose Miller
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DOING MORE. The Diprose Miller Newsletter | Autumn 2021.
EDITORIAL TELLING OUR STORY
As part of the process of renovating the reception to achieve. It encompasses all aspects of our
areas in both our Te Aroha and Morrinsville clients’ businesses, including business structure,
offices we’ve added a Values Board to remind business planning, human resources and payroll,
ourselves and our clients of our fundamental building business value, taxation management
Well, autumn has definitely No doubt part of the reason for the increase in goal, which is ‘Enabling Better Business’. This and succession planning.
arrived and it’s pleasing to see our property values can be put down to investors phrase is the cornerstone of what we hope
agricultural and horticultural clients exiting the banks and looking to property to
keep their capital intact. That’s not all good, Morrinsville board
continuing to do well. As I’ve said
as it puts pressure on our children trying to
before, the rural sector fell out of enter the property market. There’s no easy
WE DON’T
JUST TICK
favour over the last few years, but answer. That’s why economists and the Reserve BOXES,
WE LOOK
Covid-19 has brought it back with a Bank Governor make the big bucks – they know OUTSIDE
vengeance. There seems to be a bit of all the answers! THEM. ENABLING
BETTER
a speed bump with the goat industry With 31st March upon us, we’ll soon be looking
BUSINESS
and beef prices could be better, at 2021 accounts for our business clients.
but overall the rural sector They’ll be interesting and will show the full Te Aroha board
is strong. impact of Covid-19. One would expect turnover
WE DON’T
and profitability to be down because of the JUST TICK
lockdown, but by how much? Most tradies have BOXES,
WE LOOK
been extremely busy, but I can’t imagine they OUTSIDE
will claw back to pre-Covid-19 numbers. THEM. ENABLING
BETTER
BUSINESS
Part of the reason for improved rural In conclusion, with
profitability is declining interest rates. While Easter early this
that’s good for borrowers, it’s the opposite year, I hope you all
for lenders. Many of our investor clients will
have little choice but to eat into capital while
get a good break.
I’m heading to the THE FARMER IN THE DEL
interest rates remain low. It’s important not South Island for a
to panic. We’ve seen in the past that where couple of weeks. As an enthusiastic member of the Dairy In the next newsletter we’ll ask Melissa to
higher interest rates are being offered there is a It seems a good Environment Leaders (DEL) programme, comment on the key issues discussed at the
definite risk factor. It’s a matter of each investor opportunity to Diprose Miller Associate Melissa Slattery is forum and any initiatives underway as a result.
working out the level of risk that’s acceptable have a better look enjoying (and keeping very busy) taking an active
to them and investing accordingly. at my own country. role to raise awareness of environmentally
sustainable dairy farming in NZ.
Melissa’s one of around 40 farmers attending
LANDLORDS BLINDSIDED BY TAX CHANGE the Dairy Environment Leaders Forum in
Wellington this month. The DEL programme
has been set up “by farmers, for farmers”
On 23 March 2021 the the interest deduction will be taken NZ tax advisors by
and is funded by DairyNZ.
government announced the phased out over the next few surprise. We'll have more
introduction of legislation years and eventually disappear detailed comments in the Established in 2013, the DEL programme now
removing the deductibility of on 1 April 2025. For rental next edition, but we're comprises 300 farmers with a common goal
interest on funds borrowed properties acquired on or after happy to discuss the impact to improve water quality, and reduce both
to purchase residential rental 27 March 2021 the deduction of this change with clients climate change emissions and dairy’s
property. For existing rental will cease on 1 October 2021. at any time. environmental footprint while maintaining Melissa with DairyNZ Strategy and Investment Leader
properties and new builds, This significant change has a profitable farm business. David Burger on her and husband Justin’s Elstow dairy farm.
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ED’S THINKIN’
Director Ed Wagstaff is often EPISODE 1 :
meeting with new clients who SETTING THE SCENE
are starting off in business
for the first time. This can be a When you’re ready to go it alone and start your
own business, whether it be farming, trades or
We address the first of these questions in our
initial meeting with new clients with the help
“Don’t worry about
challenging process for many
newly self-employed people, with
providing services, there’s uncertainty that comes
with leaving the relative ‘safety’ of a regular tax
of our new business checklist. The checklist
identifies the key actions to be taken and by
failure, you only have
many questions and concerns
needing to be addressed.
paid salary and grappling with the challenge of
being self-employed.
whom. It includes factors such as choosing
a legal structure, registering for GST and
to be right once.”
setting a plan for how we expect the business Drew Houston
For many clients, the advice we give them Starting your own business should give you: to perform.
when they first set up their business can be - more time to spend doing what you love A well-documented business plan is a critical
some of the most valuable advice we will ever component for success. Two key components
- more control over your activities and daily life
provide. This often includes an assessment of of the business plan are:
the value of an existing business the client is - more money than could be earned as an
planning to purchase. employee. 1. A
financial budget and cash forecast to
ensure you do not personally withdraw more
For this reason, we’ve prepared a series of four Unfortunately, what often happens is that cash than the business can afford once its
articles designed to help new business owners the new business: operating expenses, debt repayments and tax
navigate the minefield that is self-employment. obligations are taken into account; and
- takes control of your life
We know that we can’t cover everything, but we
can point you in the right direction. If we can - consumes all your time 2. A
separate bank account specifically for
help, we’re just a phone call away. - leaves you with no money. business transactions and from which a
regular fixed amount is taken by the owner
to cover personal spending.
Over the course of this year we’ll discuss
some of the common questions that need to While it is often a step that can be overlooked,
be addressed to maximise the chances of we know from experience that a robust budget
success with your new business, including: and forecast is the simplest way to understand
- what steps are necessary and in what order? how your business should work. It provides a
benchmark against which actual performance
- what is the best choice of business structure
can be measured and allows us to help you
(e.g. do I need a company or trust?)
react quickly when things are not going
- how do I deal with my tax obligations? according to plan.
- how and where can I obtain funding?
- how do I manage my cash flow and ensure
I don’t go broke?
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TAX BITS
& PIECES
HOW DOES 39% IMPORTANT VALUES FIXED ASSET SALE OF LAND
WORK FOR YOU? IN PROPERTY SALE THRESHOLD MIGHT BE TAXABLE
A new 39% top income tax rate comes into AGREEMENTS CHANGES We all know that New Zealand does not have a
effect on 1 April 2021 and applies to the income On 17 March 2020, in response to the Covid-19 comprehensive capital gains tax. However, what
If you’re buying or selling property, please
of individual taxpayers over $180,000. Currently pandemic, Inland Revenue increased the fixed has been put in place over the last decade (or so)
contact us to discuss incorporating specific
the top rate is 33%. There is no change to the asset threshold value from $500 to $5,000. This are a number of amendments to the Income Tax
values into the agreement for commercial
income tax rates for companies and trusts. means that fixed assets purchased over the last Act that effectively tax the gain on property sales
buildings, dwellings and associated curtilage.
year with a cost of $5,000 or less (excluding GST) in certain circumstances.
Government statistics suggest that the 39%
These values often have significant income can be written off for income tax purposes in the
rate will apply to only 2% of taxpayers, so we The most recent of these is the Brightline Test
tax and GST implications and it is important year of purchase rather than being capitalised
won’t have many clients that will experience which taxes the gain on residential property,
that both vendor and purchaser agree in and depreciated over time.
the additional 6% charge. including sections, that has been owned for less
writing on the specific values to be used.
This change was implemented to encourage than five years and has not been used as the
However, we’ll be talking with our clients that Inland Revenue expects that both parties will
businesses to continue to invest in capital assets primary residence of the owner. Sharon Coombe
may be affected by this change, but in most use the same values for tax purposes and
during the Covid-19 lockdown period and beyond. covers this in more detail in her “Sharon Says”
cases it will be difficult to dodge the increase having the values stated in the agreement
column in this edition.
thanks to the broad range of anti-avoidance avoids any potential confusion.
The threshold has now dropped to $1,000 for
tax legislation currently in place. fixed assets purchased after 17 March 2021. There are a number of other measures that
can tax the gain on sale of not just residential
property, but farm and commercial property,
depending on the circumstances. In fact, it can
INLAND REVENUE FILING NIL be easy to assume that sale of property has no
TO TARGET REAL GST RETURNS income tax or GST implications when that is not
ESTATE AGENTS Inland Revenue has indicated that they will be
the case.
making contact with the agents of taxpayers We recommend to clients that they contact us
Inland Revenue have advised tax agents that when contemplating the sale of property to check
they believe real estate agents are claiming a who have filed NIL GST returns for more than
whether there is a potential income tax or GST
high level of expenses relative to their income. six months to discuss whether the taxpayer
Where this is the case, they plan to ask for should be deregistered. Deregistration can “Death, taxes and issue. The legislation is varied and complex on this
matter, but as Inland Revenue receives details of
records to support the expenses claimed. be an expensive process, especially where childbirth! There’s never all property sold in New Zealand, it is better to be
We’re thinking that a common example will be land and buildings are the major asset of the
claims for motor vehicles where the log book business. a convenient time for aware of any tax implications before the sale.
requirements have not been properly followed.
If you are contacted by Inland Revenue, any of them.”
If Inland Revenue contact you directly, please please let us know.
refer them to our office. Margaret Mitchell
(Gone with the Wind)
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SHARON SAYS...
“IT’S A BRIGHT LINE!” HR NEWS
Inland Revenue’s been very active
recently on non-compliance with
the “bright-line” property test.
So what is the bright-line test
Residential property includes any land:
• with a house on it, or
• a section on which the owner will (or may)
& ADVICE
build a house in the future
and how does it work?
There are three exclusions where the ACC COVERPLUS RECEIVE ACC
The test taxes gains on the sale of
“residential property” and applies to any
bright-line test does not apply: EXTRA POLICY INVOICES VIA EMAIL
taxpayer that sells a residential property:
1. I f the property is the main home of the RENEWALS You can elect to receive ACC invoices
owner. A taxpayer can only have one main
Clients on Cover Plus Extra (CPX) ACC and other correspondence by email.
• Within two years (if purchased between home. Residential properties held in a trust
policies should have received their renewal For most clients, this will be a preferred
1 October 2015 and 28 March 2018) can use the main home exclusion if the
notices from ACC for the year commencing option. To set this up, please contact our
property is the main home of a beneficiary
• Within five years (if purchased between 1 April 2021. HR Manager Angela Millward on Ext 816.
of the trust or the principal settlor of
29 March 2018 and 26 March 2021)
the trust
If you are happy with the level of cover
• Within ten years (if purchased on or
after 27 March 2021)
2. I f the property has been inherited indicated on the renewal notice, no action
is required on your part and ACC will
MINIMUM WAGE
For all new builds, a concessionary
3. If the taxpayer is the executor of a
invoice you automatically for the renewal. HITS $20
deceased estate.
five-year period applies. Please remember that the premium must From 1 April 2021 the minimum adult wage
You can only use the main home be paid, or a written payment arrangement rises from $18.90 to $20.00 per hour. This
exclusion twice over any two-year period. set up, by the due date, otherwise ACC will applies to employees aged 16 years and over.
The exclusions are only available for cancel the CPX policy.
individuals and trusts. The “Starting-Out” and “Training”
If this happens, the existing guaranteed lever minimum wage rates also increase from
For any property sold that is subject to of cover no longer applies. To restore the $15.12 to $16.00 per hour. For information
the bright-line test we need to complete CPX cover, the full application process must on when these rates apply, go to
a ‘Property Sale Information’ form (IR833)
be repeated, and it may not be possible to www.employment.govt.nz/hours-and-wages
as part of your income tax return, and will
reinstate the existing level of cover. Until the
need information from you regarding the
CPX policy is reinstated, the default Cover
purchase and sale of the property and any
Plus policy conditions apply, under which
improvements carried out while owning
the property. there is no guaranteed level of cover and
you will need to prove loss of earnings at the
time of the accident.
If you have moved in the last year, you will
need to advise ACC of your new address.
“Don’t wait to
buy real estate.
Buy real estate
and wait.”
Will Rogers
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COMING EVENTS STAFF NEWS
ENJOY THE BENEFITS OF FARM BUDGETING KAYAKING IT’S A LITTLE MR ED!
Our resident banking and to prepare budgets, forecasts concept are more likely to
THE WAIHOU It’s a big “Congratulations” from all of us to
farm finance expert Fraser and scenario comparisons that get the results they want and Our busy Social Club director Ed Wagstaff on the arrival of son Finn
Belgrave, together with will help farmers see the way have control of the process organised a kayak trip down in early February. Both Finn and Mum Hayley
Associate Melissa Slattery, forward. It will also provide along the way. the Waihou River at the end are doing well. Finn is a brother for 4-year old
will be hosting a presentation a valuable insight into what of February. The enthusiastic Isla, so it’s all go in the Wagstaff house.
for interested clients on 11 banks are looking for when paddlers were cast adrift at
the Mace Road bridge and
May on important aspects of
farm financial planning. Fraser
assessing applications for term
loan and seasonal finance. took their time to meander NAKITA THE NEW
is an ex-ASB Rural Manager
A comprehensive forecast
downstream with the MAKES MRS ORR
and Melissa has significant
allows farmers to properly
current to Te Aroha.
THE SIDESTEPS
experience with forecasting
and financial planning in her
plan for capital expenditure, Waiting at the finish line GRADE LOCKDOWN
income tax payments, loan The presentation will be held was a burger buffet dinner
own farming operation. Nakita McNab has passed From the good news file, we say
repayments and personal in the Te Aroha Boardroom prepared by Diane Cooper,
with Murray Whittaker the final exam required for “congratulations” and best wishes
The presentation will focus spending. It is clear from our at 6pm. To register for this
manning the BBQ. A very “Accounting Technician” from all the team here at Diprose
on the benefits of using Xero experience that farmers who event, email Fraser at
pleasant evening, with (AT) status with CAANZ, our Miller to staff member Nicole
in conjunction with Figured embrace the forecasting frb@diprosemiller.co.nz
on-water entertainment governing professional body. Robinson who took the plunge
provided by Steven Eccles, It’s been a tough road for Nakita, and married long-time partner
who had an unplanned juggling family and Diprose Miller Stefan Orr in early March.
LET’S GO PAPERLESS WITH HUBDOC! dip while attempting the obligations while completing her Fortunately Nicole and Stefan
Warrior III yoga manoeuvre qualification. She fully deserves
Operating your business Many businesses are now the relevant information into just missed the Covid-19
on his paddleboard. This was our congratulations.
without printed records is now issuing invoices to our clients the Xero accounting software. lockdown restrictions and were
followed by an unexpected,
a reality for many clients. This via email. Rather than printing It will even automatically read She’s thinking that she now has able to have the wedding
but amusing, eskimo roll by
process is made easier with the these, Hubdoc provides an invoices and input details Deborah Young and husband enough qualifications in the exactly as planned at “The Hall”
Hubdoc product now available easy way to store these in a such as supplier name, invoice David, who upset their accounting field. She holds a near Te Aroha. Workmates
to our Xero users. structured manner and import number and invoice values. double kayak by laughing so Bachelor of Business degree Anne Mohring, Jeanette Clubb,
much at Steve’s soaking. Who from AUT that she completed Nakita McNab and Rae Brus
To make things even easier,
says you need television to back in 2012, so she’s looking were on hand to witness the
Hubdoc has a mobile app
have a good time? forward to spending more time happy event. We’ll try to get
that allows clients to
discovering what life without a photo of the newlyweds for
photograph printed invoices
study and exams has to offer. the next edition.
and receipts that are
automatically uploaded into
the Xero accounting software.
NETBALL TEAM skills to the test, along with
a few “hangers-on”. Lyn Miller
As with Xero itself, invoice
Some of our staff put together a was the team umpire.
information held in Hubdoc
team for the Te Aroha Summer
is stored in the cloud and It was a much-improved result
Netball League held over the
available from any device. from last year, with the team
last six weeks. Sharon Coombe,
actually winning a couple of
To find out more about the Steven Eccles, Fraser Belgrave,
games and losing a few more
Hubdoc option, contact your Nakita McNab, Jeanette Clubb
by only small margins.
Client Account Manager. and Anne Mohring put their
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MORRINSVILLE
298 Thames Street
Morrinsville 3300
PO Box 323 | Morrinsville 3340
P 07 280 5519
FP 0800 888 055
TE AROHA
53-61 Whitaker Street
Te Aroha 3320
PO Box 290 | Te Aroha 3342
P 07 884 8055
Disclaimer
Every effort is made to provide accurate and complete information in this newsletter. However, Diprose Miller
makes no claims, promises or guarantees about the accuracy, completeness or adequacy of the contents of
this newsletter and expressly disclaims liability for errors and omissions in the contents.
TRACTA63763
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