Please Let It Rain!

This time last year I wrote about the beneficial impact to the New Zealand economy of the wet summer as city folk complained about the lack of sunshine during January and February 2012.

Twelve months on and the tables have turned.  Sun worshippers and beach goers have had their wishes come true this year with summer recording exceptionally high sunshine hours. Now it is the turn of the farmers to suffer as the country is engulfed in a drought.

Auckland and Northland, amongst other regions, have been declared drought zones and the forecast for rain over the next month or so doesn’t look promising.  Many dairy farmers have gone down to once a day milking and beef and sheep farmers are selling stock due to lack of grass. The combination of drought conditions and the high dollar has resulted in a difficult summer for the rural sector.

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Rezoned Land Tax

grant_brownlee_med_2I read with great interest a New Zealand Herald Article by Brian Rudman published on 25 February 2013 entitled ‘Rezoning profits may go back to the community’.

According to his article, Auckland Council is undertaking a financial assessment of proposals on how to benefit from the increase in property values arising from rezoning.  He mentions that Vancouver Council policy is that 70 to 80 per cent of the increase in value should be used for community amenities, including affordable housing. Developers negotiate a levy with the council based on the rezoning gain.
In the context of the soon to be released Auckland Unitary Plan and the apparent buying frenzy happening in central Auckland I thought it was timely to explain an often forgotten piece of Income Tax legislation that seeks to tax gains arising from the rezoning of land.

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Tax Avoidance and Voluntary Disclosure

Tax Avoidance – voluntary disclosure deadline looms Inland Revenue has announced that taxpayers who may have reduced their income tax obligations through an income diversion arrangement have until 31 March 2013 to take advantage of Inland Revenue’s concession to make a voluntary disclosure. Inland Revenue’s Group Tax Counsel, Graham Tubb, has said that “If people…

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Holiday Homes – New Tax Rules from 1 April 2013

The Government is to tighten the rules for tax deductions relating to holiday homes, charter yachts and aeroplanes known collectively as ‘mixed use assets’ (ie there is a portion of private and business use of the asset).  These rules will apply from 1 April 2013 for most forms of ownership (i.e. personal, trusts, partnerships and ‘close companies’ – companies controlled by 5 or fewer persons).

The proposed changes are aimed at limiting the general deductions that can be claimed on a mixed use asset for the time that the asset is neither rented nor used privately but is available for rent.
It is proposed that expenses that are not directly attributable to either private use or taxable use will be required to be apportioned. The most common example will be holiday homes that are rented occasionally, though all mixed use assets are caught by the proposed rule change.
“Income Earning Expenditure” remains fully deductible as it relates solely to the use of the asset to derive income and has no private element (e.g. advertising expenditure).

“Deductible Apportioned Expenditure” is calculated as:

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Taxing Matters – Kiwisaver, Student Loans, Child Tax Credit and Tax Filing Dates

Significant Tax Changes from 1 April 2013

Three important tax changes take effect from 1 April 2013:

KiwiSaver Contribution Increase
From 1 April 2013 KiwiSaver employer contributions increase by 1% from 2% to 3%. The 2% employee contribution rate will also increase to 3%, employees contributing at the 4% or 8% rate will not be affected by the rate increase.

Student Loan Payments Increase
From 1 April 2013 the employee Student Loan Repayment Rate increases from 10% to 12% for all New Zealand-based borrowers earning over the repayment threshold ($19,084).

Tax Credit Changes for Children
As part of the Government’s 2012 budget, the tax credit for children was removed from 1 April 2012.

When the tax credit was in place children were able to earn a minimum income, tax free to the amount of $2,340.

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Staff News – March 2013

The Road to the United Nations UHY Haines Norton Managing Director Grant Brownlee and wife Gail were proud parents when daughter Victoria attended the Top Scholars’ Awards Ceremony hosted by the Governor-General, Lieutenant General, Sir Jerry Mateparae at Government House in Auckland during February 2013. Despite Grant and Gail both being Chartered Accountants they haven’t…

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