FOOD FOR THOUGHT

From our experience, many businesses consistently fail to give Fringe Benefit Tax (FBT) the attention it deserves; a decision that will inevitably hurt business profitability. The correct treatment of FBT is a strategic issue that business leaders are ultimately responsible for. Following a recent review, the Tax Department has made clear its intentions to crack-down on incorrect FBT compliance.

The IRD is in the process of transforming its operations to make it faster and easier for New Zealanders and businesses to pay the right tax and receive the entitlements they should.

The Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 introduces new rules that will allow companies engaging in intensive research and development activities to cash out their tax losses for research and development expenditure. The new rules underpin the Governments Business Growth Agenda around encouraging business innovation and recognises that research and development is a key element in this process.

SMEs are estimated to make up 97% of enterprises in New Zealand and employ 30% of the workforce, excluding self-employed. Put simply, SMEs play a critical part in the economy and at a time when businesses are striving to better use resources, it is pleasing to see the Government announce a largely positive and pro-business tax package as part of the Inland Revenue’s Business Transformation and as one of the many measures we will see in Budget 2016.

At a time when the tax landscape continues to change, it appears an old established rule dating back to the 90’s has become one of the focuses of the New Zealand Tax Department's current compliance programme.

As many readers now know, a new wave of tax compliance has been imposed on taxpayers who purchase residential properties. Unfortunately, for the unsuspecting few, this could lead to a visit from the Tax Department. So as the dust settles on the new property tax rules what do taxpayers need to be aware of and what is the likely future impact of the changes?

Making savings with your FBT can save you a few thousand a year - and being smart around how you make available company vehicles to employees is one option. Graham Lawrence reports.

An effective way to attract, retain and incentivise your key people is by creating an employee share scheme. We introduce three popular employee share scheme options that every business should consider.

Armed with a favourable tax case the IRD embarked on a mission to tax overseas individuals who still had property investments in New Zealand. According to the IRD they were still New Zealand tax residents...so exactly what is a New Zealand tax resident in their eyes?

Many businesses will soon be starting to assess all the non-cash benefits provided to employees to determine whether or not Fringe Benefit Tax needs to be accounted for in their March quarter FBT return (due before 31 May). Graham Lawrence provides a useful guide to Fringe Benefit Tax to help businesses avoid making mistakes that could hurt profitability.