TAX TIDBITS
Issue Seven, April 2006
In this months issue:
Motor Vehicles
Kiwisaver
IRD Numbers
MOTOR VEHICLE LEASES
The Government is about to pass new legislation which will have the effect of removing the tax benefits of leasing vehicles under 9-5 or Flip Leases (referred to as “Flip leases”). The proposal being that Flip leases will become subject to Fringe Benefit Tax (“FBT”) from 1 April 2006.
The Bill also includes changes to the way FBT is calculated with respect to motor vehicles, namely changing the method of calculating FBT from 24% of cost price to either 20% of cost price or 36% of tax net book value (TNBV).
If you fall into any one of the categories listed below, we recommend that you contact us immediately to discuss the impact of the proposed changes and how best to structure your affairs from 1 April 2006. The categories are –
- You currently have a Flip lease in place with your company/trading trust/employer;
- You or your company currently owns a vehicle that is subject to FBT; or
- You are likely in the future to own or lease a vehicle that will become subject to FBT.
- The Government is about to pass new legislation which will have the effect of removing the tax benefits of leasing vehicles under 9-5 or flip leases
KIWISAVER
Kiwisaver is the new voluntary savings scheme proposed by the government to be introduced on 1 April 2007. All New Zealanders below the age of 65 may opt into the scheme with any contributions made locked in until reaching the age of 65, unless serious hardship warrants an early withdrawal.
Contributions are deducted from gross wages at a default of 4%, however, 8% can be requested. An employee who earns $50,000 p.a would have weekly deductions under the scheme of $39 (at 4%). Kiwisaver participants can also choose their own savings scheme/investment risk profile and apply for contribution holidays after meeting the minimum period of 12 months entry.
IRD NUMBERS
From 1 April 2007, IRD and GST numbers are to change with the IRD to add another digit to all new and existing IRD and GST numbers. A zero will be added to the start of all existing numbers
eg 12-345-678 will become 012-345-678. Any taxpayers applying for IRD or GST numbers after 1 April 2007 will be issued with 9 digit numbers.
Upcoming events at HWI:
FREE Seminar: Keeping Better Financial Records - Tips and tricks on how to improve your bookkeeping.
Wednesday 12th april 2006 at 9am, email Mark at maldridge@hwi.co.nz for details or book online at www.hwi.co.nz
Disclaimer
Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or reply on it without first seeking professional advice.
