Campbell Tyson Blog

Subscribe to this list via RSS Blog posts tagged in Accounting

I'm married to a teacher and so have been very close to what has been going on in the media as a result of Budget changes for schools.  I must say, I really feel for the schools.  As Gary Sweeney alluded to at a recent NZAIMS conference, the current issue is not about Teachers wages or contracts, it is about budget cuts affecting their ability to do the job they were charged with - teaching children.  It appears that Intermediate schools will no be doing everything they can to voice their displeasure and bring pressure to bear on the Ministry.  I believe this is a sensible approach to highlight policy decisions that will have a negative impact on what must surely be the most important thing we do as a country - the education of our future generations.

What saddens me is that there is no discussion around what other areas could be cut back.  Balancing a budget as a country is vital.  Just look at Ireland, Greece, Spain and Portugal to see what happens if you throw caution to the wind and borrow to fund a lifestyle beyond our means.  We have short patience for any one who does it personally, let alone a country that should know better.

Fine, campaign to stop the attempted $43million savings the Government are pursuing in a admirable attempt to balance the budget, but rather than whinging with your hand out, say what you are willing to give up to make it possible.  Suggest the areas that the Government could save money to offset the Educational Spending.  To the protesters, contribute more than clever banners and poorly sung Pink Floyd songs.  Start some meaningful dialogue rather than singing rhymes.  Show some of the maturity you are supposed to be passing on to the youth you are seeking to protect.

Image

To avoid being a hypocrite, I should say what I would do.  What about:

    • Treating prisoners in Prison as though they are there to be punished.  Drop the perks provided (under-floor heating, personal TVs, etc.) that would be denied to our Elderly in their homes

 

    • Get rid of Tertiary Institutions that teach no courses of value (and "steal" funding from those that do)

 

    • Get rid of funding for PC initiatives that bring no value other than promotion of "diversity" in society - if they were so valuable we would be doing it ourselves

 

    • Remove the option of being a beneficiary as a lifestyle choice (I have a wonderful view of the Pukekohe Courts, and I can see where your tax-payer dollar is going)



No I don't have a perfect answer, and I know there are people who would take exception to my suggestions above, but for us to be a country that is proud of the way we teach our children, we still need to balance our budget.

Till next time.

Views: 1786 Continue reading

Impending Year End

Posted by on in Financial Year End

For those of you with a standard balance date (31 March), we have the financial/tax year end coming up fast.  The following are a number of ways you can legitimately manage your tax position.

    1. Consider prepaying certain expenses - Some expenses can be prepaid in March and claimed as a tax deduction in the year to 31 March 2012, regardless of their amount.  These include stationery, postage and courier charges, vehicle registration and road user charges, rates, subscriptions for papers or journals, and even audit and accounting fees!Other expenses have limits on the extent to which they can be claimed if prepaid.  These include rent, consumables, insurance premiums, professional or trade subscriptions, travel and accommodation, advertising, periodic charges and other services.  The rules surrounding prepayments are quite complex, so if you’re planning this type of expenditure, please contact us.

 

    1. Trading Stock- Trading stock (excluding livestock) must be valued at the lower of cost or realisable value.  General adjustments for obsolete stock are not acceptable to Inland Revenue.  It’s important therefore to perform a physical stock take at year end and actually dispose of any obsolete lines or alternatively write that stock down to its net realisable value.Clients with an annual turnover of less than $1.3m can value their closing stock at the opening stock value, but only where closing stock can be reliably estimated to be less than $10,000.

 

    1. Loss offsets and subvention payments - 2011 loss offset or subvention elections must be filed with IRD on or before 31 March 2012.  Subvention payments relating to the 2011 income year must be paid by 31 March this year.  The IRD changed its practice of requiring an actual physical payment, and now accepts that a subvention payment can also be made by book entries so long as the payment obligation is discharged. 

 

    1. Write off any bad debts - To claim a deduction for a bad debt you need to physically write the debt off in your debtors’ ledger prior to the end of your financial year.  For most clients that’s 31 March 2012.  There should also be evidence that you have taken reasonable steps to recover the debt prior to writing it off.

 

    1. Employee expenses - Any amounts owing to employees at year end (such as holiday pay, bonuses, long service leave, redundancy payments) can be claimed for tax purposes in the current year as long as they are paid within 63 days of balance date.

 

    1. Review last years fixed asset register - The book value of assets can be written off for tax purposes if the asset is no longer in use by the business, the business has no intention of using that asset in the future and the cost of disposing that asset is expected to be greater than the proceeds from its sale.  Actually, it’s simpler than that.  Scan your asset schedule from last year’s accounts and you’ll probably notice assets that no longer exist (the mobile phone that you dropped in the tide at Christmas time), or simply don’t work.

 

    1. Retentions - Retentions on building contracts are generally taxable in the year the contractor becomes legally entitled to receive them.  This can result in significant deferral of income.

 

    1. Discount Reserves - A deduction for a discount reserve, to cover for example prompt payment discounts, is allowable where debtors are entitled to such a discount.  In the first year a deduction of the actual discount percentage is allowed and in subsequent years a calculation is made to maintain the discount reserve at that percentage level.  If the credit period offered to customers exceeds 93 days, different rules apply

 

    1. Repairs and maintenance - General adjustments for repairs and maintenance reserves are not allowed as a tax deduction.  Instead it may be worthwhile to undertake any necessary repairs and maintenance on key assets prior to the end of the financial year to ensure a full deduction.  Deciding whether expenditure on an asset is deductible as repairs or maintenance or should be capitalised is not always cut and dried, so please contact us if you aren’t sure.

 

    1. Imputation credits and dividends- Companies that have imputation credits for tax paid at 30% have until 31 March 2013 to distribute dividends with those imputation credits attached up to the previous maximum of 30:70.  But tax paid at 28% for the 2011-12 income year and onwards can only be attached at the new rate of 28:72.In addition, imputation credit account balances must not be overdrawn as at 31 March each year.  If so, they attract penalties.

      We realise the subject for imputation credits is complex for many of our clients.  Rest assured we will contact you regarding any necessary dividend and taxation planning before 31 March.

 

    1. Income - Be sure to review any credit notes issued to customers following balance date that can be applied to the previous year, i.e. 31 March 2011.  In doing so, you will be entitled to effectively reduce your current year’s taxable income.



If you are uncertain on any of the above issues, or had a query concerning what you are able to do to plan for the year end, don't hesitate to drop me a line.

Till next time.

Views: 5937 Continue reading

Go the All Blacks!

Posted by on in General

Hard to believe six weeks of fantastic sport are almost over. The wait for the Rugby World Cup seemed so long and now we have the final being played tonight at Eden Park. I still remember the building excitement and euphoria of the first world cup in 1987, and the subsequent bitterness of defeat in the cups since. I never want to be a "good loser", but I do feel better equipped to congratulate the competition when they win. I hope this finely honed skill is not required tonight!

Views: 1693 Continue reading

The Female Touch

Posted by on in Campbell Tyson News

Campbell Tyson Cooper White has been a bastion of male-ness for almost 90 years. Although our Team is mainly female (80%), all the Partners/Directors positions have been held by males. This has given the place a decidedly male feel to it. Until this year.

Views: 1788 Continue reading