Hugh's Views
Alert for Builders & those involved with Property Development
Use the right Prescribed Investor Rate
Culture is Important
Changes in the Wind
Meet Karen Owen
First Aid for Workplaces
Student Loans - 10% bonus
GST Reminder
Outstanding 2009 Returns
Tax Calendar
Disclaimer
HUGH’S VIEWS
As we go into the last quarter of 2009 it is good to be able to stop for a moment and reflect on the last few months
As usual the 3 rd quarter of our calendar year was full on and it is about this time of the year we come up for air and have a look around to see what has worked and what hasn’t and are we all still here.
We have had significant movements in our team this quarter which is a bit unusual for us, as our work force has been pretty stable over the years. However we had our “three movements” so no doubt we hope we will be okay for a while. Details of these are in a section elsewhere in this newsletter. We have filled two of the positions and as I write this we are commencing to advertise for a reception/administration/word processor.
Work is running pretty much similar to last year based on returns filed. We are comfortably inside IRD requirements which is also helpful. We have just completed a review of our business model and processes. Some of the outcomes of that review are discussed later in the newsletter. This was a really interesting and rewarding exercise carried out by our management group and we are heading towards next year with a number of thoughts to make our processes and systems more effective for both our clients and our practice.
You may be aware that the Government has established a group to carry out a wide ranging and extensive review of our tax system. We await with some interest to see the results of this. There will no doubt be some issues arise, hopefully not as many that followed the last significant review in the early 1980’s.
Our practice has recently joined the Principa Alliance. This is a very forward thinking group of Accountants who believe there is more than producing tax returns to being an accountant. The group has a huge amount of resource for business coaching and development work and I am looking forward to using these with a number of our clients to help develop the potential of their business.
We are also using this material to enhance our own practice so you may notice a few changes about the place and in the way we do things.
Outside the office interesting things are happening. Patti Haig had the best gross score in a recent Alexandra Ladies 9 Hole Golf tournament. Paul Checketts and I participated in a ride around the Dunstan Lake organized by Cromwell Rotary in support of the Mental Health Awareness week. We survived!! (we were in a team of 4) Meanwhile George Flannery is in serious training for a 190km bike race around Lake Taupo in November.
Just for something different I am off to Melbourne for a three day Cycle Victoria Happening. Not to ride a bike I can assure you. Neville Grubb and I are off to promote the Central Otago Rail Trail and Trail Journeys, hopefully to every one of their 40,000 members.
Hugh
ALERT FOR BUILDERS & THOSE INVOLVED WITH PROPERTY DEVELOPMENT
The new associated persons tax rules have been passed into law last month.
Structures that have worked well in the past may no longer protect capital gains on property from the tax man.
If you are a builder, or are in any way associated to a builder or property developer, you need to give our tax specialist Mark Tait a call. He can tell you about these new rules, and how they apply to you and your “associated” parties.
USE THE RIGHT PRESCRIBED INVESTOR RATE
Some of our clients may be using the wrong rate for PIE income.
If your income is less than $38,000 (or the PIE income when added to your income does not also exceed $60,000) for either the 2008 tax year or the 2009 tax year, you are entitled to use a rate of 19.5%. If you let the PIE tax you at 30%, you cannot get the overpaid tax back.
Occasionally clients are going the other way. They are selecting a 19.5% rate when it should be 30%. These people have to put their PIE income into their tax returns and pay the rest of the tax. If you pay a top tax rate of 33% you could have paid only 30% in the PIE.
If you are retiring and reducing your taxable income as a result, it pays to check that you have your PIE investments being taxed at the correct rate based on your new lower income level, otherwise you will pay too much PIE tax and won’t get it back.
CULTURE IS IMPORTANT
There are many attributes to creating a successful long-term business.
These include listening to team members, customers and suppliers; learning from their comments and making changes if necessary. Virtually every week something is changing in business. To be successful, you need to keep on top of the ever-changing business climate. Business operators need to encourage loyalty from their team members, suppliers and customers. These people will also expect loyalty from management, directors and owners.
The use of marketing tools such as the following all help management get important feedback on their products / services:
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Databases on customers
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Surveying customers on what they like and don't like about your business
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Keeping web pages up to date
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Testing the market for reaction to new products and services
Most successful businesses create strategic alliances with other people in their industry, either suppliers, similar businesses in other geographical areas that are not direct competitors, or allied organisations. Strategic alliances can significantly contribute to your knowledge base on what is happening in business.
But all these attributes fade into insignificance if there is no culture within the organisation. Culture affects every aspect of the business, shareholders, directors, management, team members, customers and suppliers. Culture is the hidden success: the icing on the cake, the attitude of team members going that extra distance to satisfy customers' requirements. It’s a supplier making an extra late delivery to you when you need those supplies. It’s customers who might be prepared to overlook a late delivery because of their overall satisfaction in dealing with your business.
Culture relates to the image that your business creates in the market place:
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How people communicate
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Is the telephone answered in a professional business manner?
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Are telephone calls replied to?
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Are emails responded to?
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Are products delivered on time and at the required workmanship?
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Is quality a major issue in the business?
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Are staff pleasant and presentable?
Culture then is one of the major attributes of a business that will help hold the business together and will give the business that extra strength and perseverance to battle through and survive harsher economic circumstances.
CHANGES IN THE WIND
They say that when times get a bit harder it’s a good time to have a look at how we do things. It is not just a coincidence that over the past six months or so we have been looking at our business model and what we can do to improve it. This is particularly relevant bearing in mind that George Flannery is going to become a Director of our practice from 1 January 2010 and we are planning on Mark Tait taking up a Directorship from 1 April 2011. This means that within 18 months what has been a single “partner” accounting practice will become a three partner one albeit for a hopefully reasonably short period.
Many of you will know that I have been planning my succession for some time, and bringing George and Mark into the practice is the first of a number of steps that will eventually see me stepping out of an ownership role and working for the practice in a consultancy role. Before some of you get too excited about my imminent departure let me assure you that I intend to be involved for a number of years yet, but in a manner that will see me doing more advisory and hopefully coaching and mentoring work rather than compliance. Actually I’m not supposed to be doing tax returns now so it will be a welcome relief to most!
To enable the new structure to be successful we have needed to review the way we do some things and the roles that each of us will take in the practice over the next few years. Over the next few months before our “2010 season” starts we will be working on some new processes in relation to how we do our clients “Annual Accounting” work. We started on this task this year but have a way to go before we get to where we want to be.
To achieve what we want within our practice we are setting out to achieve a more efficient way of doing our “annual work” One of the major steps is to reduce the emphasis on the time it takes to do things and focus on what value the work we do brings to our clients. While I am aware that there a number of our clients who cannot see any value arising from the annual exercise we do, if you had the time I could probably muster a pretty reasonable case.
We expect to put more pressure on ourselves by committing to a fee for carrying out your annual work, a week prior to commencing it so there are no surprises at the end of the job. Where there is a good reason that the price may need to change, (and it will happen) there will need to be agreement about anything additional charged.
For the large majority of our clients it is unlikely to make any difference to what your costs are. We will be communicating with you in the new year as to how this will work for you, and be assured if there is anything you do not understand or if you have any issues with what we are doing we will be happy to discuss them with you.
One of the other major tasks for me is to continue with the process of passing over the responsibility for the compliance work for a large number of my clients. The intention is that either George or Mark will take responsibility for ensuring that your compliance work is done in conjunction with one of our Accounting Technicians who has been working with you in the past. I will, in all cases be available to discuss any non compliance issues that may arise from time to time so I am not intending to abandon anyone.
I can assure you that this is not an easy task, having done a similar exercise a couple of years ago. The relationships that I have developed over the years with my clients ensure that any transition of responsibility is not easy. It is necessary however and I am sure we can achieve this over the next couple of years. I have absolute faith in both Mark and George being able to look after your requirements with input from me as and when required.
For those of you who I have more contact with in areas such as management, mentoring and coaching issues, nothing will change. I still have to make a contribution to the practice like everyone else, and I will now be in a position that I can improve my contribution in this area as I will have more time to commit to developing our coaching and mentoring services. I also have a commitment to pass on as much of the knowledge that I have gained over the past 35+ years to my new partners.
We have plenty to do in our so called down time and we are all looking forward to the challenges ahead. We look forward to receiving your support to ensure that the changes benefit everyone involved.
Hugh
MEET KAREN OWEN
Hi my name is Karen Owen, I have 13 years experience working in a Chartered Accountants environment most of that time based in Cromwell.
I am competent in MYOB Accountants Office and BankLink doing GST returns, preparation of financial statements, rental statements and tax returns.
I am currently studying at the NZ Open Polytechnic for my NZ Business Diploma having successfully completed 8 of the 12 papers, I have gained a Diploma in Accounting and am still working on the Small Business Diploma. My end goal is to become a qualified Accounting Technician.
I live in Clyde with husband Adrian and have 2 grown sons.
FIRST AID FOR WORKPLACES
The Department of Labour have recently produced a practical “guide” containing lots of good information on First Aid for Workplaces.
There is a legal requirement for workplaces to provide first aid facilities, and to have procedures for dealing with emergencies, under the Health & Safety Act.
The new guide will be useful for employers, the self employed and people who hire contractors.
A free copy can be downloaded from the website www.dol.govt.nz
STUDENT LOANS - 10% BONUS
Early repayments of $500 or more in any tax year off a student loan will earn a 10% bonus. In some cases it may be worth accepting the offer. However, don’t overlook the time value of the interest free loan, particularly if you have a mortgage.
GST REMINDER
Each GST due date we seem to have a few clients who struggle to get their information to us in a timely fashion. The risk here is that the GST Return is filed late with the Inland Revenue and incurs late filing penalties. In an attempt to overcome this problem we have tightened our target date for getting GST papers out to all of our clients by the 14th of the month it is due. This gives clients two weeks to review and send back the GST paperwork and answer any queries we may have.
OUTSTANDING 2009 RETURNS
As we approach the end of the year it is timely to remind those clients, who have not yet brought their papers in, to “get a move on”!
We will be sending out reminder letters in the next few weeks, so if you get one of these please assist us by gathering your papers and getting them into us as soon as possible. That way we get work done in a timely manner, and you get your returns filed on time, and everyone is happy, including the tax man!
TAX CALENDAR
28 October
1st Installment of 2010 Provisional Tax for those who pay GST twice a year
GST due for those who pay six monthly (all March balance dates)
30 November 2009
1st Installment 2009 Provisional Tax (June balance date
DISCLAIMER
We don’t claim to know it all, so with that in mind here’s what we’re obliged to say; this newsletter has had input from a variety of sources, people and publications. For all input we are grateful. Grateful and careful. Whenever we can, we do our very best to ensure all the information contained in this newsletter is accurate and timely. If there’s something here you plan to place some considerable reliance on and we haven’t made the implications totally clear to you, get in touch and we’ll clarify it for you.