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You've Got Your Finances Sorted - What About Your Kids? SquareOne Interview

2/9/2022

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So, you are all sorted, retirement plan underway, Kiwisaver, managed funds, even a bit of crypto... but wait? Schools aren't set up to teach financial literacy, so how and when should you do that? Is there a better way than just giving the kids pocket money and telling them "spend it wisely"? (Yes) Do you want your kids to be great with money? (yes) We chat to a couple of Kiwi dads (Jamie and Jovan) about the free app SquareOne, curated right here in lil' ole' NZ to help parents teach their kids about financial literacy and wellbeing. 
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Money vs Your Emotions: What You Need to Know!

12/3/2021

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Money vs Your Emotions: What You Need to Know! Amazing insights from Lynda the Money Mentalist! 
What does Money have to do with Your Emotions? A lot! We discuss with Lynda Moore* how our relationship with money can lead us to make dysfunctional decisions, and how to address that. What things do first home buyers and property investors need to have in order before they approach the bank? Or the broker? There is loads of great advice in this excellent interview. And, look out for the financial reason why you and your significant other need regular date nights!

​*Lynda is an accountant and has studied psychology. Contact Lynda via lynda@moneymentalist.com or at moneymentalist.com
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What Investors Need to Know About #Cryptocurrencies: Risk and Taxes

11/29/2021

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What investors need to know about cryptocurrencies: Risk and Taxes?

​We discuss the big questions that investors need to know: Should your investment portfolio include cryptocurrency? Why? What are the risks? What about tax? If you trade one currency for another, is it taxable? What about if you mine? Is there any way to sell crypto and it not be taxable? And lastly, what about the accusation that cryptocurrencies are not eco-friendly? We find out the answers to all these questions, and more. 
Visit Goodlife Financial Advice www.goodlifeadvice.co.nz
Buy #bitcoin at EasyCrypto
https://easycrypto.com/?ref=73913
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WHERE TO INVEST? 9 STRATEGIES

6/25/2021

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With the government's shock introduction of laws slashing interest deductions on existing rental properties, where can you as an investor put your money? What will get you the best return while still maximizing tax deductions? We present 9 strategies: 
  1. New builds.  New build homes will not be subject to the interest deduction limitations, and will only be subject to a 5-year Brightline period. 
  2. Commercial property, as it is not subject to these new rules.
  3. Mixed commercial ie commercial with a flat, may be worth looking into as well; you would likely not be able to claim interest on the accommodation portion but could on the commercial portion, so would need to "do the numbers" to see if it adds up.
  4. Short-stay accommodation, because it is not subject to these interest deduction limitations if a Mixed Use Asset - see this link for more info. (Talk to StayHub about how it could work; contact us to discuss your property/ies)
  5. Boardinghouse accommodation e.g. near large hospitals and the universities, there is a demand for this. These can consist of 4 mostly-self contained units, with shared major cooking and laundry facilities.
  6. Relocatable homes. If you relocate a home to a section, it is considered a "new build" (see point 1).
  7. Add a dwelling to your home. If you add a dwelling and a new Council Code of Compliance (CCC) is required, it is considered a "new build" (see point 1).
  8. Split 1 house into 2. If you add a dwelling and a new Council Code of Compliance (CCC) is required, it is considered a "new build" (see point 1).
  9. Buy a rental property overseas. Overseas properties are not impacted by the changes, so you can still claim interest on the borrowings.
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COVID-19 STRATEGIES FOR PROPERTY INVESTORS AND BUSINESSES; GOVERNMENT STIMULUS

10/7/2020

 

WHAT CAN YOU DO?

PictureWe haven't yet found a garden centre that sells one of these
 1. MORTAGE HOLIDAY: In other news, with the OCR dropping to (and staying at) 0.25%, your bank should be passing on rate cuts for any floating loans, and it is worth looking at existing loans to see if you should break and re-fix or extend the term. Break fees are tax-deductible. Ask the bank or your mortgage advisor to do the calculations for you, or use this tool here. You might also want to look at a mortgage holiday, but just be aware that this will increase the loan,^ but it will buy you some time, so in the big picture, may be worth it. We suggest you only do this if you really need to.

Please see this detailed page with info about mortgage holidays, including links for all the major banks to apply for one. See also our blog post with 4 options for your mortgage to improve cash-flow right now


​2. INTEREST RATES: Check with your bank re break fees on your loans, and look at whether the math adds up to break and renegotiate one or some loans at lower interest rates.

3. RENTS: Rent increases are worth considering, as you can now only increase the rent once a year.


4. PAYMENTS: Of course, cash-flow is king, and in this environment, we suggest asking your suppliers if you can start paying in smaller regular installments, rather than bigger sums. This will help reduce the impact of having less cash coming in. EpsomTax.com group offer interest-free time payment plans to all customers as a matter of course; please contact us to arrange this now.

5. INVESTING: This might also be the time to look out for housing bargains - see this article about timing and buying.  If you can get a good deal on a cash-flow positive rental, that's going to introduce some $ into your portfolio. Heads-up: Banks are deluged with lending applications, so getting mortgage approval is slow

6. OTHER RESOURCES: Xero.com have provided a page with links to educational content. You don't have to be a Xero user to access all of it. Webinars include managing stress, resilience, business continuity and so on. 

​What good news is there for the coming weeks and months, in view of the COVID-19 pandemic and its effects on the economy? 

Government policy changes include:
  • Increasing the small asset depreciation threshold to $5,000 for the period 17/03/20 to 16/03/21.  It will return to $1,000 for 2021/22 onwards
  • Giving Inland Revenue the discretion to remit use-of-money interest (UOMI) for customers significantly adversely affected by COVID-19. Affects all tax payments due on or after 14 February 2020. (There are some conditions, see here for more info. For those who don't qualify; tax pooling is still a cost-effective option.)
  • Increasing the provisional tax threshold from $2,500 to $5,000 i.e. if your 2019/2020 income tax was under $5,000, you are not a provisional tax payer for 2021 year
  • Allowing 2% depreciation on commercial and industrial buildings from 2020/21. 
  • Giving wage subsidies or leave payments in some situations.* Find out more HERE. 
  • Business Finance Guarantee: loans for businesses with annual revenue up to $80 million can apply for loans up to $500,000, for up to three years. Click here for more info.
  • COVID-19 small business cashflow loans:  10k minimum loan, 1 year interest-free, no repayments till year 3, then 3% interest p.a.  There are some fishhooks if you miss a payment, so be aware of your responsibilities if you apply and are accepted. More info here.  Apply via the IRD website (use your myIR account)


* The wage subsidy and leave payments are NOT subject to GST - an Order in Council was passed to treat it as exempt (Section 5(6E)(B)(iii GST Act). The wage subsidy paid to the employer is not taxable; it is excluded income under section CX 47 of the Income Tax Act 2007; it is also therefore not deductible when paid by the employer as part of wages to employees. The payments made to employees are taxable for the employee and subject to PAYE, KiwiSaver deductions, Student loan etc in normal way. The same is true for self-employed persons: it is taxable income. NB: you only need to show a 30% revenue reduction for a single 4-week period to receive the full 12-week lump sum; you should be able to show that you took active steps to mitigate the financial impact of COVID-19, which could include drawing from your cash reserves (as appropriate), activating your business continuity plan, making an insurance claim, proactively engaging with your bank or seeking advice and support from either the Chamber of Commerce, a relevant industry association or the Regional Business Partner programme.

^ How it works is that the principal payments temporarily stop and the interest is added to the mortgage

Is Now a Good Time to Buy a Rental Property?

10/1/2020

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Picture
Are you thinking about buying a rental property but not sure if now is the right time to dive in?  

There’s nothing like a worldwide pandemic to give you wobbly legs at the thought of making a big financial investment! It may seem like a precarious time to buy a rental property due to Covid-19 and political uncertainty around landlord requirements. However, there are other drivers which may indicate that it is a good time to enter the property market or expand your portfolio.  Let’s take a closer look! 

The Housing Market

Despite the economic uncertainty caused by Covid-19, the New Zealand property market is still growing. International migration has decreased, however Kiwis are returning to and staying in Aotearoa in record numbers. 

According to the REINZ, in August median house prices across New Zealand increased by 16.4 percent. Furthermore, every region in the country has experienced an annual increase in median house prices.  There are still housing supply issues which is hot on the political agenda and demand for rentals are said to be strong. 

Interest Rates

The amount at which home loan interest rates are set is influenced by the Reserve Bank of New Zealand’s Official Cash Rate. As of September 2020, the Official Cash Rate was held at an all-time low of 0.25 percent.  These modest home loan interest rates make it a more affordable time to borrow funds. Consequently, term deposit rates are decidedly slim… 

LVR Ratio Restrictions

 In addition to low-interest rates, you currently will need to use less of your hard-earned savings to buy an investment property.  

Pre-Covid-19, the loan-to-value ratio (LVR), or the size of the deposit that lenders require you to provide in order to buy an investment property, sat at around 30 percent. In response to Covid-19, these LVR restrictions have been removed for one year in an attempt to make it easier for households and businesses to buy property

Legal Requirements for Landlords

Something to keep in mind when thinking about purchasing an investment property is any new and ongoing legal requirements on landlords. 

For example, the new healthy homes standards have been introduced for rental properties in New Zealand, to ensure tenants have access to warm, dry and safe homes.  These standards set specific and minimum requirements, including heating and insulation for rental properties. This means any property you purchase will either need to be up to specification when you buy it, or investment will need to be made to get it ready for tenants.

Final Thoughts

In reality, the decision on whether now is the right time to buy is always going to be ‘as long as a piece of string’. There are always going to be risks and potential threats.

However, lower interest rates, the temporary removal of LVR restrictions and ongoing demand in the housing market make it an attractive time to buy a rental property. Ultimately, the decision of buying a rental property needs to be right for your situation. Doing your research and seeking expert advice is going to help you make informed, long-term financial decisions that are right for you.  

Engage with us at EpsomTax.com to learn more about how you can minimise tax when investing in a rental property.  
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COVID-19 BUSINESS & TAX SUPPORT

4/15/2020

 
In addition to the measures announced (see this article and this article), the government recently announced several new measures (this article was updated 22/05/20:
  • a tax loss carry-back scheme.  
  • business tax loss continuity rules relaxed; see this page for more info. Rules to be clarified later this year
  • greater flexibility /discretion for IRD if businesses can't meet tax obligations*
  • business debt hibernation - click here for instructions and info
Picture
TAX LOSS CARRY-BACK SCHEME
IRD say "Businesses expecting to make a loss in either the 2019/20 year or the 2020/21 year would be able to estimate the loss and use it to offset profits in the past year. In other words, they could carry the loss back one year. This change means we could refund some or all the tax already paid for the year they were in profit. It means firms could cash out all or some of their losses in 2019/20 or 2020/21. Without this change, firms would have to carry forward any loss to a year when they make a profit."

Points to note:
  • The loss carry back rules apply to ALL businesses whether trading individually or through a company.
  • You will be able to estimate your 19/20 (FY20) financial year provisional tax to NIL based on estimated 20/21 (FY21)  financial year losses. 
  • IRD will update their systems to allow the provisional tax already paid at 28 August and 15 January to be refunded.
  • You don't have to wait until FY21 accounts are finalised to access the losses.
  • If you think there's going to be a loss for this year, let us know and we will include a reasonable estimate of that in the FY20 calculations.
  • You do not need to rush to re-estimate your provisional tax before 7 May. Part of the proposed law change would make it possible for you to re-estimate it after the date of the final instalment. This will give you more time to work out any estimated loss for the 2020/21 income year. 
  • Just be aware that if you get it wrong, use of money interest will still apply; we are told a new rate will be announced soon.

Some caveats: 
​
If you are unable to pay this tax on time because of the effect of COVID-19 on your business, IRD expect that you will pay this tax as soon as practicable. In such cases our recommendation is that you contact IRD now to let them know you can’t pay the tax on time and negotiate a payment plan.  That will typically be an arrangement to pay the tax over a number of months (or fortnightly or even weekly), and possibly with a deferred payment start date.  As part of that process, although this is not specifically mentioned on the IRD website, a pre-requisite may be that you have applied to your bank for some help under the business finance support package underwritten by Government. The advantage of talking to IRD as soon as possible is that you will most likely qualify for remission of late payment penalties and interest.

If you would like us to talk to IRD on your behalf, please let us know at your convenience.  We will then contact you to discuss the best approach, and whether or not to use this or tax pooling.



* IRD can remit Use of Money Interest (UOMI) and penalties; criteria are:
  • tax is due on or after 14 February 2020, and
  • the taxpayer’s ability to pay by the due date, either physically or financially, has been significantly adversely affected by COVID-19.
The IRD Commissioner may exercise her discretion to remit the interest if the taxpayer has contacted the Commissioner as soon as practicable to request relief and has paid the outstanding tax as soon as practicable - right up until 25 March 2022.

To prove you've been "significantly affected", you'll likely need to provide at least three months’ banks statements and/or credit card statements, a list of aged creditors and debtors and probably profit and loss statements and/or balance sheet from your business.

Alternatively, you might also be able to apply to
  • pay the tax via installment (possibly with a deferred payment start date);
  • have IRD partially or fully write-off the debt due to serious hardship, with payment of the remaining tax by installment or a lump sum;
  • allow a partial payment, and write-off the balance.
You would need to provide similar proof, as mentioned above.

What Is A Phishing Email? What Does It Look Like?

12/11/2017

 
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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]"

What Do Phishing Emails Look Like?

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*. 

How Do You Know If It Is A Phishing Email?

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

What Does a Phishing Email Look Like?

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"
Picture

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"
Picture

How Can I Keep Myself Safe?

  • 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.

Using U-SIGN-IT.com

8/28/2017

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How to View Documents

You will be sent an email with a link.  Click on the link to view the document. This will open in a web browser on your device. To view the document, click on it.

How to Approve Documents

Click on the email link once again, scroll to the bottom of the page and click on the green approve button if you are happy with the contents.
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Provisional Tax Changes

8/8/2017

 
From the 2018 income year (that is, 1 April 2017 onwards), the safe harbour threshold has been increased! Hooray, I hear you say. It's gone from $50,000 to $60,000. It has also been extended to non-individual taxpayers e.g. companies. 

What does this mean? Use of Money Interest (UOMI) will only be payable from terminal tax date* for natural persons and non-individuals where their residual income tax liability is less than $60,000 and the following requirements have been met:
​
The taxpayer must have:
  • Paid all provisional tax instalments under the standard# methods on time,
  • Not estimated their Residual Income Tax (RIT), and
  • Not used the GST ratio method.

There are a couple of other points: The requirement that they must not have held an RWT exemption certificate at any time during the year has been removed. Oh, and there is an anti-avoidance rule as well, so that you can't manipulate your incomes to fall within the safe harbour provisions.

See this article for the 2020 changes to provisional tax. Basically, you'll have to pay provisional tax if you had to pay more than $5,000 tax at the end of the year from your last return. $2,500 was the threshold for years before the 2020 return

* Terminal tax date is either 7th February if you do not have an accountant or tax agent OR 7th April if you have an accountant or tax agent who has an extension of time on your behalf.... more info
# Standard method is last years residual income tax + 5%, OR your residual income from two years ago + 10% (only if you haven't filed last year's return yet)... more info
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    Garreth Collard

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  • HOME
  • ABOUT
    • IN THE NEWS >
      • OWNERSHIP STRUCTURES
      • TURNING SKILLS INTO MONEY AND A BETTER LIFESTYLE
    • PARTNERS
    • SERVICES
    • TESTIMONIALS
    • WHY USE A PROPERTY ACCOUNTANT
  • FAQ
    • AML/CFT
    • ANTI-CORRUPTION
    • AUDIT SHIELD
    • DATA PRIVACY
    • FORMS
    • GETTING STARTED IN INVESTMENT PROPERTY
    • HOW TO CALCULATE RENTAL YIELD
    • INFO FOR NEW INVESTORS
    • INVOICES
    • NEW VS OLD VS LAND&BUILD
    • TAX RETURN FAQ
    • TAX POOLING
  • CONTACT
  • BLOG