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Question & Answer | Q & A July August 2011

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ACC for non permanent residents? (Pub: 19 Jul 2011)
Q I have a question regarding an
employee who has just finished
their maternity leave but had some
ongoing complications regarding the
birth and is unable to come back to
work for a while. Is she able to claim
ACC even though she is not a permanent
NZ resident?

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Accounting: what account does IRD interest and penalties go into? (Pub: 20 Jul 2011)
Q I am completing end of year
adjustments for our company. We
have paid Interest & penalties to IRD
during 2010-2011 tax year. I have put
these in the accounts as an expense
which shows on the company's Profit &
Loss Statement. You cannot claim these
as an expense as I have been informed
by IRD. So I now have to do a journal
entry but I am not sure as to which
account I would now allocate these to?

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Are repairs on an empty rental property tax deductible? (Pub: 20 Jul 2011)
Q A client has a rental property that
has required major repairs due
to water damage in the floors from a
hidden leak. The repairs have taken 6
months to be completed for which time
they were unable to have tenants due
to the state of the property. Insurance
did not cover any of the costs. Are they
able to claim the deductibility of the
expenses while there were no tenants?

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Can a builder claim the GST back after the April 1st changes? (Pub: 20 Jul 2011)
Q We have a client who is a builder
(GST Registered) and has
purchased a section to build a dwelling
on then sell off as a spec home.
The contract to purchase the section
was entered into in Jan 2011 but title
has just come in May this year.
From the 1 April we are aware there is a
zero GST between registered persons.
The Developer who is registered for GST
has confirmed the original contract is
inclusive of GST and requiring the full
amount to settle.
Could you please confirm it is
acceptable in this situation to claim the
GST back for the builder?

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Contract Services to my old Company? (Pub: 19 Jul 2011)
Q I subscribe to FBA and I have
just been reading your May/June
Business Advisor. I am very interested
in the article "A New Take on Setting up
a Company".
I own and operate a fairly small servicebased
company.
I have now sourced a new product that
has great market potential and sourced
from a communication provider that
clients will be locked into a contract for
1 or 2 years. I am just in the throes of
marketing this new product and I am
in talks with a very big New Zealand
company to use our services and this
new product. I am wondering if I should
set up a new company to supply the
new system to clients and then contract
the services side of it onto my existing
company.
I would be really interested in your
thoughts on this...

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do i charge GST on overseas expenses? (Pub: 19 Jul 2011)
Q We have expenses that were
incurred overseas (so no GST has
been charged or claimed by us).
I am on-charging these costs to another
company in NZ – do I charge GST on top
of the amount incurred?

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Do i treat foreign land tax like rates? (Pub: 19 Jul 2011)
Q I have a client with an Australian
rental property. She has paid
A$20,721 land tax. In her NZ tax return
do I treat land tax like rates and claim it
as an expense?

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Does a Company need to pay FBT on Childcare expenses? (Pub: 19 Jul 2011)
Q FBT: One of our staff members
needs to travel due to his work
duties and he needs to hire a nanny to
look after his children.
The company pays the childcare costs
to nanny on behalf of this employee.
Does the company need to pay FBT on
the childcare expense?

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How can we repay a loan with shares? (Pub: 20 Jul 2011)
Q Our business has a small loan
owing to my father & we are
looking at converting this into shares in
lieu of paying this out. Could you advise
how we go about this.

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Is the premium payment for income protection deductible? (Pub: 20 Jul 2011)
Q Can you please confirm whether
the premium payment for income
protection insurance is deductible
or not?

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Is there any penalty if i gift my loan to a trust? (Pub: 19 Jul 2011)
Q As gift duty is abolished from
1 October 2011:
Is there any claw back if I decide to gift
the rest of my loan to a trust?

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Land Vendor not registered for GST, buyer is, can he impute for GST? (Pub: 20 Jul 2011)
Q Under the New GST rules. A client
wishes to purchase lifestyle block
of land with residence )curtilage and
house $400k, 6 hectares of land for
small farming valued at $95k. Profit
has been estimated on farming block.
Purchaser registered for GST. Vendor is
not registered. Can client inpute for
GST claim?

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Mother paid for daughters' home, does it count as a rental property? (Pub: 20 Jul 2011)
Q I have a client who has helped her
daughter out in getting her into her
own home.
The daughter had $60K deposit but the
banks would not loan her any money for
a home since her income is low.
The mother has bought the house in her
name and the mortgage is also in the
mother's name.
The mother has also had to top up the
deposit by another $60K.
The daughter lives in the home alone
and pays all of the mortgage and other
outgoings.
Does the mother have to include this
income as rental income since she
has no intention of selling the home
and receives no money from the
daughter personally as it all goes to the
expenses?

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My client has come up short on tax payments, will he be charged penalties/interest (Pub: 20 Jul 2011)
Q Our client is a provisional tax payer
and paid his provisional tax in the
usual three installments for the 2011 tax
year. Now on completing his accounts
for the 2011 year we have discovered
that his terminal tax in the 2011 year is
more than what was calculated when
we asked him to pay his provisional tax.
That is the installments that he paid
fall short by a little bit. Our question is
will he be charged penalties/interest
on the amount that was paid short. His
provisional tax was calculated on the
2010 RIT less 5%. divided by three.

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