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Published December 2012

 

Mixed use assets - gearing up for change

With summer set to sizzle no doubt you'll have serviced the motorhome and prepped the launch or bach to reap the seasonally highrents…. Let's consider the proposed new rules around mixed-use assets and how they could affect you from 1 April 2013.

As previously signalled:
  • You'll be required to apportion deductions based on actual income earned and private use of the asset, instead of based on the availability to produce income
  • Expenses relating to the asset (power, rates, insurance), maintenance and interest on debt will also be apportioned to the number of days it was actually rented
  • If annual rent received for assets exceeds $60,000 then the owning entity is required to be GST registered - this may affect the tariffs you charge and if you sell the asset you may have to account for GST

It's complicated and we suggest you get into the habit of diarising the days you (plus family and friends) use assets. If you're concerned, do call us to discuss your situation.

 
 
 

Introducing the starting-out wage

The starting-out wage is the latest government initiative designed to help get more young kiwis into jobs by giving employers incentive to take them on.

The starting-out wage will be simple for employers to implement and should provide more 16- to 19-year-olds with the opportunity to earn money, gain skills and the work experience they need in this tough labour market.

Those who'll qualify for the starting-out wage are:

  • 16 and 17-year-olds in their first six months of work with a new employer
  • 18 and 19-year-olds entering the workforce after more than six months on a benefit
  • 16 to 19-year-old workers in a recognised industry training course involving at least 40 credits a year

Expected to be effective from 1 April 2013, the starting-out wage will ensure 16- to 19-year-olds are paid no less than 80 per cent of the minimum wage for the first 6 months with a new employer. After the first 6 months, they'll be eligible for the minimum wage.

Workers between 16 and 19 years of age who fill training or supervisory roles must at least be paid the minimum wage.

 
 
 

'High' cost of employee dismissal

Always follow the letter of the law when dealing with problematic staff and dismissals!

A recent employment case shows the need for perfect process - even if your employee breaks the law.  Mr O was employed as a full-time builder by Consortium Construction Ltd for 4 years until he was dismissed without notice for using drugs in the workplace. He denied the accusation and complained that there was no investigation.

What happened: Mr O and his colleagues were working at a demolition site high up on scaffolding when cannabis was smelt and identified as coming from Mr O. He was told to put it out and did so. A manager was later informed of the event, and that Mr O had grinned when confronted, admitting it was something left over from the night before. The manager told Mr O that his employment would immediately end due to his behaviour.

The Employment Relations Authority noted that, as part of the duty of good faith, an employer proposing to end an employee's employment must give that employee access to relevant information and the opportunity to comment on that information before making the decision. In this case, Mr O had no chance to mitigate his conduct as accidental or make reference to his employment history.

Despite Mr O having smoked marijuana - potentially putting himself and his co-workers at risk - his former employers were ordered to pay compensation for lost income and distress as well as a penalty for an illegal deduction on the final pay - totalling over $12,000.

Moral of the story: seek advice immediately from an employment specialist and make sure proper process is followed and documented.  Even when it seems a complete no-brainer.
 
 
 

Christmas party for staff and their partners


Did you decide to splash out for this year's staff Christmas party and put a shin-dig on for employees and their partners?  Will this expenditure be subject to the entertainment rules or the FBT rules?


Staff Christmas parties are subject to the entertainment regime and therefore the expenditure on drink and food is only 50% deductible. If you really splashed out and shouted staff and partners to one-night stay in a hotel, then this cost and travel costs to and from the hotel would not be subject to the entertainment tax rules. However, both items of expenditure will be subject to FBT and will be fully deductible to the employer. The employer's liability for FBT extends to benefits provided to associates of employees (ie, the partners of staff in this case).
 
 
 

Employee falling sick on holiday


If one of your staff falls ill whilst on their pre planned annual leave, should they be paid sick leave instead of holiday pay?


If the sickness or injury occurs just before the employee starts a period of annual holidays, the  employer must allow the employee to take any  period of sickness or injury as sick leave.

However, if the employee is taking annual holidays and falls sick or is injured (or his or her spouse or  dependant falls sick or is injured) at some point during the holiday, the employee can use sick pay instead of annual holidays for that period only with the employer's agreement. An employee cannot insist that the sick leave entitlement is used in such circumstances.
 
 
 
Some useful snippets...

Timely reminders
  • Provisional tax payment due Jan 15 for March, July or November balance dates, or Jan 28 if you have a December balance date
  • Your GST return and payment may also be due January 15
  • Interim student loan payments due Jan 15
  • Quarterly FBT return and payment due Jan 28

Can an employee be forced to work on a public holiday?

Yes - but only if the public holiday falls on a normal working day for the employee and the employee's employment agreement includes a clause allowing the employer to do this.

Lock & Partners Christmas hours

We close on Friday 21 December and re-open on Monday 14 January 2013. 

Please contact me on 021 286 2601 if you need urgent assistance over this period.

 
 
 
Related Pages:

Business & Tax

+ Services for business owners
+ Choosing a trading structure
+ Accounting & Tax returns

READ MORE

Property Investment

+ Annual accounting & tax returns
+ Set ups & structuring

READ MORE

Trusts

+ Learn the benefits of trusts
+ Want asset protection?

READ MORE

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