101 Accountants - Summer Christmas Newsletter 2016

Melessa Henderson CA Ltd @101 accountants 101 Arawa Street North PO Box 366 Matamata 3440 p 07 888 6740 f 07 888 7498 e office@101accountants.co.nz w www.101accountants.co.nz

101 ACCOUNTANTS NEWS MELESSA’S MESSAGE ISSUE: Summer 2016 MELESSA’S MESSAGE

1

ENTERTAINMENT RULES

1

EMPLOYMENT ISSUES

2

FARMING FACTS

3

OFFICE CLOSURE

3

Seasons Greetings to you & your families

As another year comes to an end, we look back on the year that was, and look ahead to 2017. It is important to set some goals, have something to aim for and reflect as the year goes by. Is it time to pump up the volume? Grow the business? Take on more staff? Or has the time come to take a step back, implement some succession planning, or downscale?

Who would have thought we’d be having a change in Leadership of our country? And that the milk payout would be back up to $6.00? It just goes to show, we can never predict the future, but forecast for a few scenario’s of what ‘might be’ and be prepared for them.

Our existing team have continued throughout the year; Wendy as our Farming and Taxation specialist, Raewyne as our Business and Xero specialist, and Maree as our Payroll specialist and Administration champion. We are all Xero Certified, which means we know the system well and how to get the best of it for our clients. Richard continues to get in about 20 hours per week, and enjoys the office banter, not to mention being surrounded by females  We congratulate Wendy as she has taken the first steps to become an Accounting Technician (AT) which will recognise the work experience she has endured in her 13+ years within the accounting industry. Wendy will be undertaking the theory ethical side in the new year.

Thank you for your continued support and loyalty throughout the year. It has been a pleasure to attend to your accounting requirements and watch your business grow. We hope you all enjoy some well-earned downtime surrounded by special friends and family. We look forward to attending to your business matters in the year ahead!

Wishing you Christmas Cheer and a Happy New Year!

From Melessa 

ENTERTAINMENT RULES TAX PAYMENT DUE DATES 2016 TERMINAL TAX Due 7 April 2017 2017 PROVISIONAL TAX Balance Dates 31 March 31 May Prov 2: Prov 3:

15 Jan 2017 7 May 2017

GST Nov 2016 PAYE Dec 2016 GST Dec 2016

28 Feb 2017 28 Jun 2017

15 Jan 2017 20 Jan 2017 28 Jan 2017

With the festive season upon us, we remind you about Entertainment Expenditure rules and limitations in your business.

Deductions for “entertainment expenditure” are generally limited to 50% of the cost incurred. There are however a number of exemptions which may enable you to claim a full deduction.

ACTIVITY

DEDUCTIBLE 50% 100%

SUBJECT TO FBT

Work Morning & Afternoon Teas

No

Yes

No

Taking clients to Lunch

Yes

No

No

Friday Drinks, Christmas Party

Yes

No

No

Staff Gifts (unless under $1200 pa /employee)

No

Yes

Yes

Meals if working out of town

No

Yes

No

Overseas Travel, incl Meals with clients

No

Yes

No

Meal Voucher (as award)

No

Yes

Yes

Meal Allowance paid to staff working

No

Yes

No

Please contact us if you have any queries around deductibility of Christmas entertainment.

DEC 2016 - PAGE 2

EMPLOYMENT ISSUES With the holidays season upon us, there are many considerations that need to be made with regard to Christmas Holiday Payrolls.

Statutory Holidays This year Christmas and New Year’s Day fall on a Sunday, therefore the statutory holiday is ‘Mondayised’ and leave entitlements for employees who work Monday to Friday will move to the Tuesday.

Boxing Day and January 2nd are on a Monday and therefore statutory leave will be on the actual day of celebration.

Employees are entitled to a paid day off on a public holiday if it would otherwise be a working day for them. If they don’t work a Saturday or Sunday, this public holiday is transferred to the next working days. Therefore they will observe Monday & Tuesday as public holidays and be paid normal time.

If an employee does work the public holidays, they are entitled to be paid at time and a half for the time they work, plus receive an alternative leave (lieu) day at another date.

If your business operates on Sunday and Monday, employees don’t get both days as public holidays—they just get one.

If you hire someone to work on these days and they are not their normal working days, ie: would not normally work for you on a Saturday or Sunday, they still need to be paid time and a half for the hours worked but you do not need to give them any days in lieu.

Statutory Holidays for Farming Employees An employee’s pay on a public holiday depends on whether it is an ‘ordinary working day’ for the employee. For farming employers that run a roster (such as 12 days on, 2 days off), it is simple.

Extend your roster out from today until the summer holidays. This will tell you whether any particular day is an ordinary working day or not for each employee.

Employing Students or Casual Staff If you’re an employer, this information is important to you if you take on students or casual staff over the Christmas break.

School students: The tax credit for children has been repealed, which may change how you tax school students. All children need to complete a Tax code declaration (IR 330) and give it to their employer so tax can be deducted from their wages.

Tertiary students and other staff: All other staff, including any university, polytech or other tertiary students, must complete an IR 330 and give it to you so you can deduct the correct PAYE or tax on schedular payments from their pay.

KiwiSaver: If you employ anyone on a temporary contract for less than 28 days you don’t have to enrol them for KiwiSaver. If they’re already KiwiSaver members and they want you to make KiwiSaver deductions they must give you a KiwiSaver deduction notice (KS 2).

If you think you may need some assistance in processing your Christmas Payroll, please contact us NOW on 07 888 6740 Or you can contact the Department of Labour directly Ph 0800 20 90 20 www.dol.govt.nz

Christmas Day is the only day that the past and the future are not as interesting as the ‘present’

Annual Leave Employees are entitled to a minimum of four (4) weeks Annual Leave per year, or 8% of their earnings if they have worked less than a 12 month period.

Payment for annual holidays is calculated at the greater of the ordinary weekly pay at the time the holiday is taken or the employee’s average weekly earnings over the 12 month period before the annual holiday is taken.

Bonuses Bonuses or lump sum payments can include annual or special bonuses, cashed-in annual leave, backpay and retiring or redundancy payments. Overtime or any regular payments aren't lump sum payments. Follow these steps to find out what tax rate to use for a lump sum payment: 1. Work out what your employee has earned (before tax) over the past four weeks.

2. Multiply this figure by 13.

3. Add the lump sum payment to the figure in step 2.

4. Use the table below to work out what income bracket your employee is in.

5. Tax the lump sum payment at the tax rate shown in the righthand column for that income bracket.

Income bracket

Tax rate to use (including ACC earners' levy)

$14,000 or less

11.95%

From $14,001 to $48,000

18.95%

From $48,001 to $70,000

31.45%

From $70,000 to $118,191

34.45%

Greater than $118,191 (ACC earners’ levy maximum threshold)

33.00% (excludes ACC)

Taxing Cashed-Up Annual Holidays Employees can ‘cash in’ up to one week of their available annual leave entitlement if the employee and employer agree. The payment for this annual leave should be treated as an extra pay or unexpected bonus. Because it’s taxable income, PAYE should be calculated using the rates for extra pays. If your employee usually has student loan or KiwiSaver deductions made from their pay, deduct these from the cashed-in annual leave as well.

Your employees may need to check that the correct amount of PAYE has been withheld over the tax year. Your employee’s child support liabilities and Working for Families Tax Credits entitlement may also need to be adjusted if their family income has changed.

Please remember that if you make any bonus or extra wage payments to your employees over this holiday time, please let us know so we can correctly record it in your payroll records.

One of the most glorious messes in the world is the mess created in the living room on Christmas Day. - Andy Rooney

DEC 2016 - PAGE 3

FARMING FACTS Fonterra 2016/17 Milk Forecast Fonterra Co-operative Group has increased its total Farmgate Milk Price $6.00 per kilogram of milk solids.

The group announced the forecast earnings is maintained at 50-60 cents per share with emerging headwinds. With a forecast Farmgate milk price of $6.00, this lifts the total available payout to $6.50-6.60kgMS. The Fonterra Support Loan is not repayable until the Total Advance Rate Payment exceeds $6.00, where the repayment will be the amount exceeded multiplied by the season to date production.

Provisional Tax The 2nd instalment of Provisional Tax is coming up, due 28 February 2017. We will monitor farm performances with the higher 2016/17 payout and provide a 2017 YTD estimate for provisional tax payments if necessary.

Tax planning and budgeting for the year ahead becomes most important with the fluctuations we are seeing in the dairy industry. Please contact us if you have any issues.

Fonterra FarmSource ONE login Have you got online access to Fonterra and Farm Source for all your milk production, shares and payments information? You can also add your trusted advisors as a User to your useful farm information: NZ Farm Source - Farm Business - Settings - Staff & 3rd Party Access - Add a new Person.

My Practice Farm Source User ID is melessah. Under Role select ‘Accountant’

SMALL CHANGE Mileage Rate Change The motor vehicle mileage rate is reviewed every year and the rate for 2016/17 has reduced to 72 cents a kilometre for both petrol and diesel fuel vehicles. You can choose to use the actual costs rather than the mileage rate. But you must keep records to support any expenditure you claim.

ACC Motor Vehicle Levy Cuts ACC is recommending that the average motor vehicle levy – built into the cost of car registration to cover the cost of accidents on public roads – be cut 13% from 2017.

That would take the average levy from $130.26 to $113.94.

In 2014, the average levy was $330. The amount paid varies depending on the risk rating of the vehicle.

Minimum Wage Rates The adult minimum wage increased on 1 April 2016 from $14.75 to $15.25 an hour, and the starting-out and training minimum wages rose from $11.40 to $12.20 an hour.

OCR Review The Official Cash Rate (OCR) has declined by 0.25% to 1.75%.

Fuel Rebates Fuel rebates can be completed by farming clients for litres used by farm vehicles on the farm (ie: off road). The appropriate forms (MR70 and RUCOR) can be downloaded from www.nzta.govt.nz or contact us for more assistance.

OFFICE CLOSURE Our office will be closed for the 2016/17 Holiday Season from 12.00 pm Friday 23 December 2016 Re-opening at 8.30am Monday 9 January 2017 We take this opportunity to wish you all a very Merry Christmas and a safe and happy New Year, and look forward to dealing with you all throughout 2017.

From (B-F) Wendy, Raewyne, Richard, Melessa, & Maree

@101 Accountants