The Residential Tenancies laws have changed. What effect does the "Healthy Homes Act" have on landlords? The Residential Tenancies Amendment Act will take effect in three main stages:
 
Phase 1: Law changes from 12 August 2020

• Transitional and emergency housing: Accommodation provided for these purposes, which is funded by the government or part of a special needs grants programme, is exempt from the Residential Tenancies Act.
• Rent increases: Rent increases are limited to once every 12 months. This is a change from once every 180 days (six months).
  Any rent increase notices given to tenants from 12 August must comply with the new 12-month rule. 

 
Phase 2: Law changes to take effect from 11 February 2021

• Security of rental tenure: Landlords will not be able to end a periodic tenancy without cause by providing 90 days’ notice. New termination grounds will be available to landlords under a periodic tenancy and the required notice periods have changed.
• Changes for fixed-term tenancies: All fixed-term tenancy agreements will convert to periodic tenancies at the end of the fixed-term unless the parties agree otherwise, the tenant gives a 28-day notice, or the landlord gives notice in accordance with the termination grounds for periodic tenancies.
• Making minor changes: Tenants can ask to make changes to the property and landlords must not decline if the change is minor. Landlords must respond to a tenant’s request to make a change within 21 days.
• Prohibitions on rental bidding: Rental properties cannot be advertised without a rental price listed, and landlords cannot invite or encourage tenants to bid on the rental (pay more than the advertised rent amount).
• Fibre broadband: Tenants can request to install fibre broadband, and landlords must agree if it can be installed at no cost to them, unless specific exemptions apply.
• Privacy and access to justice: A suppression order can remove names and identifying details from published Tenancy Tribunal decisions if a party who has applied for a suppression order is wholly or substantially successful, or if this is in the interests of the parties and the public interest.
• Assignment of tenancies: All requests to assign a tenancy must be considered. Landlords cannot decline unreasonably. If a residential tenancy agreement prohibits assignment, it is of no effect.
• Landlord records: Not providing a tenancy agreement in writing will be an unlawful act and landlords will need to retain and provide new types of information.
• Enforcement measures being strengthened: The Regulator (the Ministry of Business, Innovation and Employment) will have new measures to take action against parties who are not meeting their obligations.
• Changes to Tenancy Tribunal jurisdiction: The Tenancy Tribunal can hear cases and make awards up to $100,000. This is a change from $50,000.

 
Phase 3: Law changes to take effect by 11 August 2021 (but may take effect earlier if the Government agrees)

• Family violence: Tenants who experience family violence will be able to withdraw from a fixed-term or periodic tenancy without financial penalty by giving two days’ notice and evidence of the family violence. If they are the only tenant, the tenancy will end.
• Physical assault: If a tenant physically assaults the landlord, owner, or agent of the landlord, or family member of the landlord/owner, and the Police have laid a charge against the tenant, landlords can issue a 14 days' notice to terminate a fixed-term or periodic tenancy.

Contact us for advice or call now

What records do you need to keep for your rental* property? Here is a general guide. Note that this list assumes you are using a property manager.  All costs are for the 12 months preceding 31 March:


​
RENTAL PROPERTY

• Copy of Sale & Purchase Agreement (if 1st year)
• Total Rent Received
• Insurances, e.g. Landlord Protection, Mortgage Protection, House
• Legal fees
• Property Management fees (if applicable)
• Rates – water and Council
• Maintenance, including any purchases e.g. heat-pump
• Rubbish collection (if you are paying for it)
• Property improvements (detailed invoices please)
• Any other fees or charges
• Sale and purchase agreement
• Valuation/s

HOME OFFICE
In our view, Home Office expenses can be claimed if you have rental property; however, as it is generally passive income (unless you are managing the properties yourself) we recommend a conservative claim, as follows:

• Telephone – please separate out the costs of line rental, internet and tolls
• Mobile phone costs
• Stationery, e.g., printer ink, pens, paper etc
• Visits to the rental property - please record the date of each trip you make to your rental property to check on it.
• Any existing (if not claimed before) or new business related expenses e.g., computer, cell phone, iPad etc. Include make, model, date and cost
• Any “home office” improvements (if in doubt, please keep records and we can verify these at year end)

MORTGAGE/S INFORMATION
For the rental property:

• Full bank statements for the 12 months ending 31 March
• Applicable interest rate
• Balance remaining on mortgages as at 31 March
• Any fees charged

If you'd like a downloadable copy, please see below.

Why keep good records? The better your records, the more expenses can be legitimately claimed, and the better the tax result is for you.  

* For guidelines on Business Expenses (non-rental property) please see this page.

​Other FAQs you might have:
USING ACCOUNTANCYONLINE.CO.NZ/MY TAX QUESTIONNAIRE
HOW DO I DOWNLOAD TRANSACTIONS FROM MY BANK'S ONLINE INTERNET BANKING?
WHAT IS XERO.COM?
WHAT'S THE PROCESS FOR MY TAX RETURNS?

The IRD provides a guide here under the heading "Deductions You Can and Can't Claim." 

Please remember, all advice given is to be taken in the light of our  disclaimer. Image courtesy of patpitchaya at FreeDigitalPhotos.net

Trust law changes: New Zealand. What are they, and how will they affect you and your trust?

The main changes are:

• Trustees will now have some mandatory duties to fulfill
• Trustees must disclose certain information to all the beneficiaries - no more opacity!
• Trustees are being given more flexible powers
• It should become cheaper to setup and run a trust
•  You might be able to remove and appoint a trustee and not have to get the courts involved
• Trust lifespan will be up to 125 years
• Some beneficiaries could become settlors!

Here is the jargon: Section 67 of the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 enacts an amendment to section HC 27 of the Income Tax Act 2007.

That amendment provides that when a beneficiary of a trust is owed an amount by the trust, the beneficiary does not become a settlor of the trust if –

• a. the trustee pays to the beneficiary in the income year interest on the amount owing at a rate equal to or greater than the prescribed rate of interest:
• b. the amount owing at the end of the income year is not more than $25,000.

This amendment comes into force on 1 April 2020, and does not have retrospective effect.

How do you know if one of your beneficiaries is owed more than $25,000 by the trust? The trust will need a balance sheet, at the very least, to track this.

What should you do if this is the case?

1. Pay out the beneficiary (check with your lawyer first), or
2. Pay interest to the beneficiary for the use of their money, as described above

​Yikes! So, some big changes coming. For a more detailed summary, please visit this page at Weston Ward & Lascelles Lawyers.^

* See a link to our blog articles on this subject here
^ This link does not constitute an endorsement of EpsomTax.com Limited by Weston Ward & Lascelles. Please contact them or your own lawyer for more information on what this means for your trust. EpsomTax.com Limited cannot provide legal advice; for accounting and taxation advice, please contact us.

IRD is till working out the tax treatment of cryptocurrency. But it has made up its mind on some things. You can read all about it here. The main points so far are:

• For tax purposes, cryptocurrency is property, not currency. This means foreign currency gain or loss provisions do not apply.
• Cryptocurrency received as payment for goods or services is business income, which is taxable. This is seen as a barter transaction and you’ll need to calculate the value of the cryptocurrency in NZD at the time it’s received.
• Cryptocurrency is considered property for income tax purposes. So that means that the proceeds you make from selling it are very probably taxable.

NZ Police in association with City of London Police have just released a warning. See below for the PDF.

Apparently, fraudulent websites alleging to offer cryptocurrency investments are dishonestly using the image of Martin Lewis, the founder and editor for moneysavingexpert.com, as an endorsement for their companies. However, Martin doesn't do adverts.  See his blog post for more info here. These sites are also falsely stating that Dragons Den back their schemes.

Our advice:

1. Don't assume it is authentic just because it looks good
2. Don't rush into any investment, including cryptocurrency
3. Consult a financial advisor

More info is available at NetSafe, especially re scams. And, just for the record, we don't claim any endorsement by Martin Lewis, his website, NZ Police, City of London Police or NetSafe. Any copyrights belong to their legal owners. We are merely making you aware of what is going on out there.  Keep safe!

Here are the main steps involved, and an approx. % showing how far through we are at each point. The chart starts at the bottom, and the top is 100%, tax returns filed and assessed by IRD!

Here is a detailed description of each part of the process

1. First, we email you a link to the online tax questionnaire. We ask you to complete this within 7 days of receipt.
2. We send you an invoice via Xero.com for 50% of the job. (Some small jobs are billed 100% up-front).
3. We'll then send you a copy of your completed questionnaire, along with a checklist and further instructions
4. You then either email your info to mytaxinfo@epsomtax.com or send it via courier (let us know and we'll send you a bag to return to us. You just call the courier on their toll free number, and they collect it from wherever you tell them to).  Once we receive your info, we then scan it and courier it back to you after the tax returns are filed.
5. ​By now, it's the first of the month, you've sent us all of your info, and we then copy this to secure online storage.
6. We start coding your info up to trial balance stage; the second 50% invoice is issued, usually a 14-day account.
7. Financial statements are compiled.
8. A checker reviews the draft financial statements and any adjustments made. 
9. Drafts are then sent to you for review (see how to understand your financial statements), adjustments made, and then we send you the final version of the financial statements. 
10. Next, tax returns are queued to be filed online with Inland Revenue and checked again by the filing and checking team.
11. We send you a copy of these returns for your records and for you to sign and return back to us.
12. IRD processes the returns.
13. About a month later, we process the donation tax credit forms.

​

As a rough guide, from the date of invoice issuance to you having the draft financial statements in your hands, we aim for 6 weeks, subject to this disclaimer: these timeframes are indicative only and at peak times of the year e.g. May-October, it will often take longer (like 8-9 weeks)

Before Processing Starts

• 2-3 weeks before - tax questionnaires sent out via email
• 1 week before - 1st invoice sent out via email

Processing Month
We'll advise you in February or March via email when this is.

• 1st of the month - all data should be provided by you by this date; processing starts
• 3-4 weeks later - work completed to draft stage; second invoice issued
• 7 working days later - 2nd invoice paid, draft financial statements sent to you for review
• 7 working days later - changes made as required, confirmation received from you to file with IRD
• 1-2 weeks later - tax returns filed
• 1-12 weeks later - IRD processes returns.

We trust this helps take some of the mystery out of the process. Please contact us with any questions!

Other FAQs you might have:
RENTAL PROPERTY: WHAT RECORDS DO YOU NEED TO KEEP?
USING ACCOUNTANCYONLINE.CO.NZ/MY TAX QUESTIONNAIRE
HOW DO I DOWNLOAD TRANSACTIONS FROM MY BANK'S ONLINE INTERNET BANKING?
WHAT IS XERO.COM?
COMMON QUESTIONS ABOUT YOUR TAX RETURNS
COMMON QUESTIONS ABOUT YOUR FINANCIAL STATEMENTS

According to Wikipedia*, "phishing is the attempt to obtain sensitive information such as usernames, passwords, and credit card details (and money), often for malicious reasons, by disguising as a trustworthy entity in an electronic communication.[1][2]"

Quite often they look like a legitimate email from IRD (about a tax refund, or warning of tax owing), or an email from a provider like Office365 or Apple. More info here at netsafe.org.nz*. 

There are often several clues; please see the copy of example emails below.

• IRD will never email you to tell your account has been hacked, that you owe tax, that you are due a tax refund, that the Police are after you, blah blah blah. 
• Phishing emails often have spelling mistakes or unusual grammar (although not always)
• The email address is not one that matches the organisation, or it is close but not quite right e.g. it is from ird.co.nz instead of ird.govt.nz; e.g. we received a message supposedly from Microsoft, but the email address was messagealert@ another organisation

Here is one phishing email we received recently. It looks rather convincing, but there are a couple of clues in the email that it is not from a legitimate source

1. Grammatical error in the opening line: "receive" instead of "received"
2. Email address is odd
3. We were not expecting anyone to send a confidential document, so this is out of character
4. Unusual grammar in the body: "secured document" instead of "secure document"
5. Odd closing line: "We hope to continue serving you"

Here is another example of a phishing email.  Note again the clues that it is not "legit":

• email address is not from Apple
• email shows it is sent "on behalf of" someone else
• grammatical errors e.g. "problems with your account Apple", "if you ignored this email", "disabled the next 48 hours.. .", space between account and the exclamation mark
• incorrect use of capitals e.g. "Officially Permanently"

• Be cautious about emails asking you to update or verify your details online
• Be cautious of emails saying you’ve won prizes from competitions that you don’t remember entering
• Be cautious of emails that try to get you to act quickly by threatening you with legal action or loss of an account
• Ignore any emails asking you to provide personal information like passwords, or banking information
• Remember legitimate organisations like banks will never ask you to send them your password
• Only open email attachments when you’re expecting them, even if you know who the sender is
• If you’re unsure if an email is from a legitimate organisation, you can contact them to ask. If you do contact them, make sure you go through their official contact channels – don’t use the phone numbers, websites or email addresses included in the email

See more tips on this page at netsafe.org.nz

What should I do if I need help or advice?
You can contact Netsafe:

• Email queries@netsafe.org.nz
• Call them toll free on 0508 NETSAFE (0508 638 723)
• Online report form at netsafe.org.nz/report

Their helpline is open from 8am – 8pm Monday to Friday and 9am – 5pm on weekends.

* We have quoted information from Wikipedia (licence terms) and Netsafe (licence terms). Use of this information does not constitute an endorsement of EpsomTax.com by either organisation. This information is not provided for commercial purposes, but strictly in an attempt to help promote community awareness of fraud and how to prevent it and protect yourself.

Is selling your home taxable?, Or in other words, do you have to pay tax when selling your home?

Buying and selling your private or family home typically is not taxable. However some are looking to purchase a family home with the intention of reselling it in time, and a few earn their income this way – buying and selling.

If you have established a pattern of purchasing and then selling your “family home,” this could be considered as property speculation or dealing for tax purposes.

So, how do you know whether you are considered a property speculator, dealer or investor?  Click here for the IRD definition

Things to consider in answering the above question:

• what was your intention when you bought the property?
• what pattern have you established in terms of property transactions?
• are you (and if so, how) associated with a developer, builder or property dealer?
• will the Bright-line Test* apply?
• will you be affected by rezoning?

​How do you know if selling your home will be taxable?  Think carefully about the answers to these five questions.

“Ok, so I just have to hold onto a property for a really long time and then I’m not considered a dealer?”  No.  The amount of time you hold the property is immaterial.  It’s your intention at the time of acquisition.If you bought a property with the intention of reselling it, then any capital gain that you make on the sale taxable.

“Right-o.  So, is there some sort of level?  That is, my first couple of properties are tax-free and then I pay tax after that?”   Ahhh… no.  Again, it’s intention, patterns and associations – not numbers of properties sold.

“Great.  It looks like I will have to pay tax then.  How do I figure that out?”  The IRD have a great resource here – or you can contact us.

* For a definition/more info please see this article at the IRD Tax Policy website

As a result of changes imposed by Google, we will soon be acquiring an SSL certificate for our website.  The host, weebly.com, is rolling this out to all sites.  Meantime, if you wish to check our credentials, you can do so here.​

For more information, please contact us

Why is a chattels valuation necessary?
Typical valuations assign a valuation to chattels of $10-15,000. However, they often miss many depreciable items, such as driveways, fences, decks, paths, hot water cylinder, letterbox, garage door motor etc. 

When you obtain a chattels-specific valuation, typically the value of the chattels for a new home is $45-50,000+ and for one built in the 1980’s $25-30,000. Even if your chattels valuation comes out at only $30,000 then the value for the tax refund will be around $10,000. The higher the chattels value, the more depreciation can be claimed, which means less tax to pay or larger tax refunds. 

Are there any exceptions?
The only exception to the chattels valuation, is if it was a rental already owned by you or another entity you controlled, and you had already filed a tax return for that property at least once. In that case, we can’t “re-value” the chattels. 

​What will it cost and who does this?
We know of only one firm: ValuIt. Visit their website www.valuit.co.nz or call 0508 482 583 to book a valuation. Please note, we receive no financial incentive or otherwise for recommending them. However, we encourage you to do this without delay, as they are very busy and it can often be 2-3 weeks before someone can get to see your property.

Further reading
Depreciation: Simple Overview (video)
6 Minutes on Depreciation (video)
Depreciation Clawback and Your Rental Property
Depreciation of Chattels in Your Rental Investment Property
​Valuation of Chattels - Why Necessary

First, open your sheet on your iPhone or iPad. 
Next, touch the three dots at the top right-hand corner

Then, choose Send a Copy
​Touch Excel

Lastly, email to us or share to your Google Drive or Dropbox.com, then share to office@epsomtax.com