TAX TIDBITS
Issue Twenty-one, Nov/Dec 2007
In this months issue:
Trusts, Companies & Non Cash Basis Individuals with Term Deposits
PPSR Renewals
Fringe Benefit Tax - Low Interest Loans & Christmas Gifts
GST Returns
Christmas Break
Trust, Companies & Non Cash Basis Individuals
with Term Deposits
The income relating to a financial arrangement such as a term deposit must be spread over the term of the investment unless certain conditions are met. One of these conditions is where the individual meets the Cash Basis conditions;
- Income and expenditure under all financial arrangements for the income year does not exceed $100,000, or
- The value of all financial arrangements on every day of the income year does not exceed $1 million
Where these conditions are not met an accrual is required to adjust for interest earned up to year end. This accrual can result in timing complications for Resident Withholding Tax.
If you do not meet the Cash Basis conditions and you have investments maturing between now and March 2008, we suggest that you consider reinvesting with a maturity date just prior to 31 March 2008. This will avoid the Resident Withholding Tax timing complications.
PPSR Renewals
The Personal Properties Securities Register (PPSR) was implemented in New Zealand in May 2002. The closure of the transitional period from the previous registers in October 2002 saw a number of securities being registered at the last minute. The maximum term of registration on the register is 5 years, hence a significant number of Financing Statements expired in October 2007.
The Companies Office Website ( www.ppsr.govt.nz ) provides free tools to help you to identify Financial Statements that are due to expire and guides you through the renewal process.
Fringe Benefit Tax - Low Interest Loans & Christmas Gifts
FBT is not payable if you provide Christmas Gifts to employees provided you meet the requirements of the General Employee Exemption and Maximum Employer Exemption.
General Employee Exemption
- The value of the gift is less than $200 per employee, per quarter.
- If the value of the gifts exceeds $200 for a quarter the full value of the gift is subject to FBT.
Maximum Employer Exemption
- The maximum exemption an employer can claim is $15,000 per annum.
- If the value of the benefits for all employees exceeds $15,000 for the current and the three preceding quarters, the employer must pay FBT on the total value of the goods and services benefits in the current quarter.
Please contact HWI if you require assistance calculating the fringe benefit liability for low interest loans or Christmas gifts provided to employees.
GST Returns
The GST returns for the period ended 30 November 2007 are due to be filed no later than 15 January 2008. We request that all GST returns to be prepared by HWI Limited be forwarded, along with the supporting documentation, to our offices no later than 17 December 2007 to ensure that the returns are completed by due date.
Christmas Break
This is the final Tax Tidbits newsletter for 2007. The next newsletter will be issued in late January 2008. We wish to take this opportunity to wish all readers a safe and happy Christmas and a prosperous New Year.
HWI Limited will close for the Christmas break on Friday, 21 December 2007 and reopen on Monday, 14 January 2008. Some staff will be in the office during the week commencing 7 January 2008. If you require accounting assistance during this week please do not hesitate to contact Chris Henderson on 307 8507 (Direct Dial).
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.
