We pride ourselves on offering our clients with the best solutions available - one size does not fit every option.
With the introduction of "cloud" based accounting this solution has become easier through the use of products such as Xero. Xero is the leader in this industry with it's fully automated and secure bank feeds. Ask the founder of MYOB, who now sits on Xero's board!
Plain Talk, Smart Thinking... is fixed fee, accounting and taxation service packages! They include everything you need to run your business plus the added benefit of regular advice and reporting.
* no surprises at the end of the financial year
* better management of cashflow
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Ask us today how we can reduce your fees, increase that advice and provide that advice to you in real time.
No matter which plan you are on you can call us or email us anytime for no extra cost!
Which plan is right for you?
* We can customise your individual needs
* Plans that suit multiple entities and structures, property investors and sole traders/contractors
* Free initial consultation service - Your office or ours!
Contact us today 06 833 6295 or email admin@walshassociates.co.nz
Wednesday, September 22, 2010
Tuesday, September 14, 2010
Tax Changes 2010 - What you Need to Know Part 4
Had a really interesting session at the Business Expo last week and it is obvious that there are still a number of questions and concerns surrounding the impending GST increase on 1st October 2010.
Nearer the end of September, we will release a newsletter with an update and a refresher on all the issues that we have raised this month.
At Walsh and Associates we look after our clients and will help them plan their way through this change. Looking at some other forms of transactions...
Gift Vouchers
The usual time of supply means that a supplier should treat vouchers as a supply for GST purposes at the time a customer purchases them, not when the vouchers are redeemed.
So, say Peter buys a voucher for $50.00 from a CD outlet on 15 September and intends to give it to Harry for his birthday. Harry redeems the voucher on the 1st December. What is the time of supply?
The time of supply is on the 15th September and not when Harry redeems the voucher on the 1st December.
Periodic Payments and Hire Agreements
Theses are treated as a series of separate supplies for each period of the agreement. The time of supply is the date payment is due or received.
For example, Bryan has a Xero subscription for which he is grateful to have, his payments are due on the 1st of the month and he takes out the subscription in July.
So, for August and September, he would pay the GST on the subscription at 12.5% and from 1st October on, he would pay GST at 15%.
Local Authority Rates
The time of supply for rates is the earlier of:
• The date an instalment notice is issued.
• The due date for payment, or
• The date when payment is received.
So, Waipukurau sends out notices to its ratepayers in July, saying that rates can be paid in full on 20 October 2010, or alternatively in quarterly instalments, payable 30 September, 31 Decmeber, 31 March and 30 June.
For those residents who elect to pay the full amount of rates in the first quarter:
• they will pay GST at 12.5%,
For those who elect the quarterly option:
• they will pay GST at 12.5 % on the first quarter (notice issued prior to 30 September) and
• 15.0% on the ensuring quarters after that.
Nearer the end of September, we will release a newsletter with an update and a refresher on all the issues that we have raised this month.
At Walsh and Associates we look after our clients and will help them plan their way through this change. Looking at some other forms of transactions...
Gift Vouchers
The usual time of supply means that a supplier should treat vouchers as a supply for GST purposes at the time a customer purchases them, not when the vouchers are redeemed.
So, say Peter buys a voucher for $50.00 from a CD outlet on 15 September and intends to give it to Harry for his birthday. Harry redeems the voucher on the 1st December. What is the time of supply?
The time of supply is on the 15th September and not when Harry redeems the voucher on the 1st December.
Periodic Payments and Hire Agreements
Theses are treated as a series of separate supplies for each period of the agreement. The time of supply is the date payment is due or received.
For example, Bryan has a Xero subscription for which he is grateful to have, his payments are due on the 1st of the month and he takes out the subscription in July.
So, for August and September, he would pay the GST on the subscription at 12.5% and from 1st October on, he would pay GST at 15%.
Local Authority Rates
The time of supply for rates is the earlier of:
• The date an instalment notice is issued.
• The due date for payment, or
• The date when payment is received.
So, Waipukurau sends out notices to its ratepayers in July, saying that rates can be paid in full on 20 October 2010, or alternatively in quarterly instalments, payable 30 September, 31 Decmeber, 31 March and 30 June.
For those residents who elect to pay the full amount of rates in the first quarter:
• they will pay GST at 12.5%,
For those who elect the quarterly option:
• they will pay GST at 12.5 % on the first quarter (notice issued prior to 30 September) and
• 15.0% on the ensuring quarters after that.
Tax Changes 2010 - What you Need to Know Part 3
This week we look at a recent Government change to the GST legislation, a challenge to two of the issues raised last week plus some more transactions and how GST changes will affect those transactions.
Government Change
During the week the Government relaxed its stand to transactions, which were completed in September but not invoiced till October. The original intention was that all invoices raised after the 1 October would have to be at 15.0%. The change is now that come the 1st October 2010, you can still invoice at 12.5% for work completed in September, but the extension only applies to 11th October 2010.
A Challenge !!!!!
A client raised two issues to last weeks newsletter, the first of these related in part to the above comment about transactions having to be invoiced at 15.0% come 1st October 2010. However, the argument centred around progressive payments in that his belief was that if you received a progressive payment on the 25th September 2010 that would have GST at 12.5% and if you received the final payment on the 5th October 2010 that would also be at 12.5%. The Government change aside, the right to charge the higher GST is covered by section 78(2) of the GST Act 1985, which says that even though a contract may have been for a fixed price, this part of the Act allows suppliers to increase their price to reflect a change in the GST rate and GST must be charged at the higher price.
The second issue centred around insurance, in that if you van was broken into on the 27th August 2010, claim lodged on the 2nd September 2010 and duly settled on the 13th October 2010, the amount of GST to return on the claim would be 12.5% not 15.0%. The law on GST claims paid by insurance companies is precise, in that the GST Act says that time of supply is the day on which the payment is received from the insurance company, no matter when the claim happened or was entered into, so in that particular case GST would have to be returned at 15.0%.
Looking at some other forms of transactions ….
Baron has entered into a contract with Anthony’s building company, to build a new family home. The first three instalments have been paid to Anthony’s company prior to 30th September 2010, leaving only the last instalment (lets assume $28,000) to be paid on 28th October, plus there are retentions of around $5,000 to be paid in January 2011. What rate of GST will the next instalment and retentions be paid at?
The GST rate will be 15.0% and will apply to the October 2010 and January 2011 instalments, even though the contract may have been for a fixed price sum.
Karen runs a gym, where a number of members pay in advance for the next quarter, the next quarter, starts in October, some members pay prior to 30th September 2010 for services they will receive from October to March, what will be the GST rate?
Clearly the time of supply is the payment, so those payments that happen prior to 30th September will be at 12.5%.
Nici also runs a gym, where she has the philosophy that it is better for members to have the benefit and so she charges them in arrears. Her quarter ends 30 September and members pay October / November for that quarter. What GST rate will they pay?
The same rules apply in terms of payment and so, because payment is after the 30 September 2010, they will have to pay at 15.0%.
Tracey sells a jacket to Frances for $550.00 on the 7th September 2010. Frances elects to put the jacket on Hire Purchase and the agreement is for 36 monthly payments of $23.00, which comes to $828.00. What rate will the GST be charged at?
Time of supply occurs at the time the agreement is entered into. All hire purchase sales should be included in the taxable period covering the date the hire purchase agreement is entered into regardless of the accounting basis that is used, therefore the agreement would be entered into in the August / September return and GST would be at 12.5%.
Next week we will talk about Gift vouchers, local body rates and a supply of goods under an agreement to hire e.g. photocopier
Government Change
During the week the Government relaxed its stand to transactions, which were completed in September but not invoiced till October. The original intention was that all invoices raised after the 1 October would have to be at 15.0%. The change is now that come the 1st October 2010, you can still invoice at 12.5% for work completed in September, but the extension only applies to 11th October 2010.
A Challenge !!!!!
A client raised two issues to last weeks newsletter, the first of these related in part to the above comment about transactions having to be invoiced at 15.0% come 1st October 2010. However, the argument centred around progressive payments in that his belief was that if you received a progressive payment on the 25th September 2010 that would have GST at 12.5% and if you received the final payment on the 5th October 2010 that would also be at 12.5%. The Government change aside, the right to charge the higher GST is covered by section 78(2) of the GST Act 1985, which says that even though a contract may have been for a fixed price, this part of the Act allows suppliers to increase their price to reflect a change in the GST rate and GST must be charged at the higher price.
The second issue centred around insurance, in that if you van was broken into on the 27th August 2010, claim lodged on the 2nd September 2010 and duly settled on the 13th October 2010, the amount of GST to return on the claim would be 12.5% not 15.0%. The law on GST claims paid by insurance companies is precise, in that the GST Act says that time of supply is the day on which the payment is received from the insurance company, no matter when the claim happened or was entered into, so in that particular case GST would have to be returned at 15.0%.
Looking at some other forms of transactions ….
Baron has entered into a contract with Anthony’s building company, to build a new family home. The first three instalments have been paid to Anthony’s company prior to 30th September 2010, leaving only the last instalment (lets assume $28,000) to be paid on 28th October, plus there are retentions of around $5,000 to be paid in January 2011. What rate of GST will the next instalment and retentions be paid at?
The GST rate will be 15.0% and will apply to the October 2010 and January 2011 instalments, even though the contract may have been for a fixed price sum.
Karen runs a gym, where a number of members pay in advance for the next quarter, the next quarter, starts in October, some members pay prior to 30th September 2010 for services they will receive from October to March, what will be the GST rate?
Clearly the time of supply is the payment, so those payments that happen prior to 30th September will be at 12.5%.
Nici also runs a gym, where she has the philosophy that it is better for members to have the benefit and so she charges them in arrears. Her quarter ends 30 September and members pay October / November for that quarter. What GST rate will they pay?
The same rules apply in terms of payment and so, because payment is after the 30 September 2010, they will have to pay at 15.0%.
Tracey sells a jacket to Frances for $550.00 on the 7th September 2010. Frances elects to put the jacket on Hire Purchase and the agreement is for 36 monthly payments of $23.00, which comes to $828.00. What rate will the GST be charged at?
Time of supply occurs at the time the agreement is entered into. All hire purchase sales should be included in the taxable period covering the date the hire purchase agreement is entered into regardless of the accounting basis that is used, therefore the agreement would be entered into in the August / September return and GST would be at 12.5%.
Next week we will talk about Gift vouchers, local body rates and a supply of goods under an agreement to hire e.g. photocopier
3 Months Free Xero !
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- Three months Xero subscription - FREE!!
- Two hours of our time - convert your existing accounting package
Was won by Edwin Brown of Napier.
Wednesday, September 1, 2010
XERO - Free for September 2010
Have you updated your existing accounting package? Was there a cost?
Xero has already commenced the process of the GST updates and the cost to you if you were a client is NIL. If you haven’t updated your software and you are still thinking about it, we would strongly recommend that you consider Xero.
Contact Sarah today 833 6295.
Xero has already commenced the process of the GST updates and the cost to you if you were a client is NIL. If you haven’t updated your software and you are still thinking about it, we would strongly recommend that you consider Xero.
Contact Sarah today 833 6295.
GST Tax Changes - What you Need to Know Part 2
This week we will address the following issues …
Work done in September, invoiced in October
Question
Lets assume that you have done work in September and through month end cut off etc, the invoices aren’t raised until Monday the 5th October, should these invoices be invoiced at 12.5% or invoiced at 15.0%.
Answer
All invoices issued on or after 1 October 2010, must be issued at 15.0%. The solution is to make sure all invoices for September are invoiced in September.
Insurance Claims
Mike is a registered electrical contractor, who pops into the pub for a beer on Friday 27 August. While in there someone breaks into his van and pinches some of his gear. He puts a claim in on Thursday the 2nd September and is paid out on Wednesday 13 October 2010. (Insurance company was a bit slow to pay out because of some past dubious claims).
Question
Should Mike pay GST on the money received at 12.5% or 15.0%
Answer
The time of supply is the day on which the payment is received from the insurance company and GST output tax must be accounted for in the period in which payment is received, so in this case Mike has to return GST based on 15.0% and not 12.5%.
Layby Sales
Sarah has a birthday on Thursday 2 September 2010 and decides to treat herself to a new laptop, which has layby terms available of four months. Sarah elects to pay:
• 25% now
• 25% on the 30th September
• 25% on the 31 October and
• 25% on the 30 November.
Question
As far as the October and November payments go, will Sarah pay GST at 12.5% or 15.0%?
Answer
With Layby sales, each transaction shall be treated for the purposes of the Layby Sales Act 1971 as a layby sale made at the time when the last of those agreements was made. So that means Sarah will have to pay the extra GST at 15.0% on the October and November sales.
Work done in September, invoiced in October
Question
Lets assume that you have done work in September and through month end cut off etc, the invoices aren’t raised until Monday the 5th October, should these invoices be invoiced at 12.5% or invoiced at 15.0%.
Answer
All invoices issued on or after 1 October 2010, must be issued at 15.0%. The solution is to make sure all invoices for September are invoiced in September.
Insurance Claims
Mike is a registered electrical contractor, who pops into the pub for a beer on Friday 27 August. While in there someone breaks into his van and pinches some of his gear. He puts a claim in on Thursday the 2nd September and is paid out on Wednesday 13 October 2010. (Insurance company was a bit slow to pay out because of some past dubious claims).
Question
Should Mike pay GST on the money received at 12.5% or 15.0%
Answer
The time of supply is the day on which the payment is received from the insurance company and GST output tax must be accounted for in the period in which payment is received, so in this case Mike has to return GST based on 15.0% and not 12.5%.
Layby Sales
Sarah has a birthday on Thursday 2 September 2010 and decides to treat herself to a new laptop, which has layby terms available of four months. Sarah elects to pay:
• 25% now
• 25% on the 30th September
• 25% on the 31 October and
• 25% on the 30 November.
Question
As far as the October and November payments go, will Sarah pay GST at 12.5% or 15.0%?
Answer
With Layby sales, each transaction shall be treated for the purposes of the Layby Sales Act 1971 as a layby sale made at the time when the last of those agreements was made. So that means Sarah will have to pay the extra GST at 15.0% on the October and November sales.
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