Table full of Christmas decorations and couple making Christmas wreath

Planning For Christmas

Homosexual couple working from home with kid. Business, remote work, family concept

Do you need to come into the office?

Okay so now you have secured sufficient funding to carry you through the Christmas period, ask yourself the question, do I (or any staff) really need to come into the office over Christmas?

Many years ago we considered this question, not because of Christmas but we wanted to make the office disaster-proof and the only way to do that was to ensure that we could work anywhere.  When you walk into my office you’ll see no phones, no desktops or server. One of the other questions at the time was that we were facing an upgrade to our old server costing in the vicinity of $25k. 

For a small accounting practice, we couldn’t justify the expense so we opted to look for a cloud-based accounting program, which of course there was only one viable option at the time and that was Xero.  They also offered us a system that covered our client management, billing and tax management needs. By removing hard assets (servers, and fixed lines) that tie your business to a location, either by doing away with them altogether (online software) or using mobile solutions (laptops and mobile phones) you have made the next step. But wait, what was the first step?

Just about every New Zealand business made it through this year with lockdown.  So many businesses (and their staff) have broken the mental ties to the workplace and many businesses still have staff working remotely for part of the week. With such a chaotic year why not really test your resilience and consider closing the door over Christmas completely and working remotely.  I believe there are plenty of holiday opportunities to be had with far fewer people than normal.

Kangaroo in Australia

Is the grass greener over the ditch?

Australia has recently released its 2020-21 Federal Budget where they plan to combat the effect of Covid-19 by investing in infrastructure, job creation, asset write-offs and personal tax cuts. Meanwhile, in New Zealand, Labour continues their plan to keep New Zealand moving by investing in people, jobs, small businesses, infrastructure and global trade.

Australia’s approach of increasing the low-middle tax bracket thresholds is similar to what National proposed, with eligible Australians receiving tax relief of up to $2,745. These tax cuts are provided to encourage spending and stimulate the economy. Conversely, in New Zealand, there will be a new top tax rate affecting 2% of New Zealanders and generating $550 million of annual revenue.

Australia has extended its $150,000 asset write-off deduction until 30 June 2022 for businesses with a turnover of up to $5 billion. In New Zealand, our threshold has been increased to $5,000 until 17 March 2021, then $1,000 thereafter.

Both countries have implemented tax loss carryback changes. In Australia, small businesses can carry back tax losses from the 2020-2022 tax years to offset previously taxed profits in 2019 or later tax years. All New Zealand businesses expecting to make a loss in the 2020 or 2021 year can use that loss to offset profits they made the year before. The key difference is that in New Zealand tax losses can be carried back one year, while in Australia they can be carried back to any year from 2019.

Additional Australian policies to boost job creation include a job hiring incentive credit where businesses will receive either $100 or $200 per week for each employee hired depending on their age, and businesses taking on new apprentices or trainees will be eligible for a 50% wage subsidy.

HAVE WE GOT YOU THINKING?

Give us a call on (04) 563 6965 or email: dennis@taxman.co.nz or shawn@taxman.co.nz Keep an eye out for First New Year’s article!

TAX DATES TO REMEMBER

  • 20th December. 2020 – monthly employers PAYE payment…
  • 15th January. 2021 – Bi-monthly GST Return for Oct/Nov 2019…
  • 15th January. 2021 – Second instalment of 2021 Provisional Tax…

The staff at Dennis O’Grady Limited wish you a safe and happy time over the Christmas Holiday period.

We are closed from end of business on 23 December 2020 and will reopen on 4 January 2021.

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