TAX TIDBITS
Issue Twenty-Six, August 2008
In this months issue:
2008 Budget...what’s in it for small business?
Breakfast Seminar
2008 Budget...what’s in it for small business?
Many of you will by now be aware of the personal tax cuts that were promised in the Budget.
However, what was the actual detail and what was in the Budget for small business owners?
Personal Tax Cuts
The Government has announced there will be personal tax cuts from 1 October 2008 which will kick off a three year program of reducing personal income tax.
The lowest marginal rate of 15% will drop to 12.5% from 1 October 2008.
It was also announced that the thresholds will be increased and will continue to do so over the next few years.
From 1 October 2008, the tax rates and thresholds will be as follows:
|
$1 - $14,000
|
12.50%
|
|
$14,001 - $40,000
|
21.00%
|
|
$40,001 - $70,000
|
33.00%
|
|
$70,001 and over
|
39.00%
|
The Government will also increase “Working for Families” payments to assist low income earners.
For individuals using the “safe harbour” method of calculating provisional tax, use of money interest currently applies when residual income tax exceeds $35,000.
This threshold will increase to $50,000.
Other Tax Matters
Following on from the Governments' discussion document last year on reducing the compliance costs for small businesses, Dr Cullen has signaled the following initiatives will be included in a June tax bill.
It is expected most of these changes will take effect from 1 April 2009.
Goods and Services Tax
The threshold for which GST registration is required will increase from $40,000 to $50,000.
Currently GST registered taxpayers with taxable supplies over $250,000 must file GST returns on a monthly or two monthly basis.
The ability to file GST returns on a six monthly basis will be extended to those registered taxpayers with taxable supplies of less than $500,000.
Employers
Filing PAYE returns and making payments twice a month can be an administrative burden to many employers.
The threshold at which PAYE must be paid in two installments is to be increased from $100,000 of gross wages to $250,000.
Employers paying less than $250,000 of gross wages will also be able to file annual FBT returns, rather than quarterly (the current threshold is $100,000).
Low Value Stock
There are special rules for businesses with low turnover and stock of less than $5,000.
Currently if turnover is less than $1.3million, businesses can estimate the value of their closing trading stock as being the same as their opening stock, if they can reasonably estimate that the value of the stock is less than $5,000.
This stock value will increase to $10,000.
Other initiatives
The Government is also looking at simplifying the record keeping requirements for business motor vehicles and simplifying rules for legal and entertainment expense deductions.
Changes are planned for the financial arrangement rules and who can account for income on a cash basis.
Further international tax reforms are also on the horizon with planned changes to the Controlled Foreign Company (CFC) rules.
Breakfast Seminar
Are you confused by financial reports? We can fix that at our upcoming seminar Wednesday 27th August 2008 at 9am (2 hours), email Mark at
maldridge@hwi.co.nz
for details or book online at
www.hwi.co.nz
under the heading SEMINARS
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. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
