Coombe Smith Blog
New taxation rules were introduced in 2007. The rules are complex, and we have provided this information to help simplify the interpretation and provide some guidance. However, for taxation advice relevant to your personal circumstances, we always recommend that you talk to us - your tax adviser.
If you invest in your own name the key thing to look at is the total value of your overseas share investments. If the total is over $50,000 and they went up in value (including any dividends received) then you may need to pay some extra tax. If they fell in value (including the dividends) then there will be no extra tax.
If you invest via a Family Trust then the $50,000 limit is not relevant. Tax will be paid on the gain in the value of the portfolio regardless of its size and there will be no tax if it fell in value.
There are several levels of complexity with the new tax rules. We have mentioned only the most relevant in relation to your investments. Read more…
Test of Business
The word "business" for the purposes of the Income Tax Act 2007 includes any profession, trade, or undertaking carried on for profit. Consequently, the fundamental notion of the concept of a business is the exercise of an activity in an organised and coherent way to attain the end result of a profit.
The question of whether a taxpayer is in business involves two aspects. These are the nature of the activities, which must amount to a profession, trade, or undertaking, and the intention with which the taxpayer engages in those activities (the venture must be carried on for profit). An intention to make a profit is sufficient, even though, when looked at realistically, there seems to be no real prospect that that goal can be attained. Read more…
Overseas Income
If you receive overseas income and are a tax resident in New Zealand, you shall be taxed in New Zealand on your worldwide income.
Tax Residence
In New Zealand, a person's liability for income tax depends on the person's residence status. The concept of residence for tax purposes is based mainly on the "permanent place of abode" test or on a quantitative test.
The rules for determining an individual's residence for tax purposes are: Read more…
OM-IP investments have traditionally been a popular investment with kiwis, although they are managed in Australia, and are denominated in Australian Dollars. Many kiwi investors will be unaware that OM-IP investments are, in fact, not tax resident in Australia, but in the Cook Islands. At first, this is not extraordinary news, but the tax implications could be onerous, if you have an OM-IP investment. Read more…
Sales focuses on the interaction between people. Many people fear being seen as a ‘salesperson’. Use the tips below as a refresher or pointer on how to sell more comfortably.
- Focus on the customer/client:when selling it is 90% about what the customer wants and only 10% about you!
- Listen:customers want to be heard and respected, listen well.
- Be positive:if you can’t be positive about your product or service, don’t try selling it!
- Build rapport: make the customer comfortable by building rapport through eye contact, body language, even the handshake.
- Be confident: practice may not make perfect, but it certainly helps you to improve. Build your confidence through practice or through attending clubs like Toastmasters
- Be balanced: many people focus so much on the details of their product and service that they don’t focus enough on the sales process. Tell them what they need to know – not all you know.
- Don’t overstretch: only agree to sell what you know you can deliver. Most clients are happy to start smaller and build up, but they rarely forgive you for knowingly overselling!
- Have fun: sales is a game, treat it as one and enjoy the selling process!
Do you have overseas earnings stashed in an Overseas Bank Account?
If you do, the Inland Revenue Department are looking for you. On 11 October 2011, Inland Revenue published a Revenue Alert which deals with the issue of New Zealand tax residents accessing income held in an offshore bank account using an offshore credit or debit card. Read more…
When is a market salary unable to be paid?
Following on from the Penny & Hooper case, there are however times when a market salary cannot be paid.
Examples of this :
- The business hasn't made enough money to cover a market salary, but what profits there are have been paid out to the worker; Read more…
Penny & Hooper - The History and the Result
The Supreme Court has dismissed the taxpayers’ appeal from the Court of Appeal’s decision reported as C of IR v Penny and Hooper (2010) 24 NZTC 24,287 and held that the fixing of the taxpayers’ salaries at artificially low levels so that the incidence of tax at the highest personal rate was avoided constituted tax avoidance.
Background
The taxpayers practised as orthopaedic surgeons. Initially, they each conducted their practice on their own account but then restructured their practice arrangements. The restructuring of Mr Hooper’s practice occurred in 2000 and that of Mr Penny’s in 1997. Each set up a company to purchase their practice. The companies were owned substantially by the taxpayers’ family trusts. Thereafter, each taxpayer was employed by their respective companies at a salary the Commissioner considered artificially low. The balance of the practice income in each case was treated as company income and paid by way of shareholder dividend to the family trusts. Read more…
The Corporate Trustee Model - A Better Way
The use of Family Trusts has been around for a long time; hundreds of years in fact. However, the use of a Corporate Trustee is fairly new. I will not claim to have thought of the idea, but I am a big fan of the Corporate Trustee model.
The concept of Family Trusts is simple: You want to get rid of assets, to own less. You do this by selling the assets to someone else; however, you want to retain some control over them. A Family Trust allows the ownership of your valuable assets to be in someone else’s name while you still have the use of them. Read more…
We live in a price-focused world. Everyone is out to get the best deal.
The bigger retail organisations spend big dollars on promoting their sales through the media and it would seem to the ordinary businessperson that this is the way to conduct business. "We'll make it up on the volume" you hear them say. Do not be fooled by this - not at all. There are some good and legitimate reasons to discount, such as obsolete or seasonal stock or specific cash flow requirements. There should be specific cut-off points for these strategies.
