Budget 2015 Explained

The seventh Budget from Finance Minister, Bill English is very much a balancing act with increases in benefits for some citizens offset by the removal of incentives for others.

Family Forecast

Fresh off plenty of political discussion around Child Poverty, the Government has introduced benefit increases for families with children by $25 per week after tax, the first non-inflation adjusted increase since 1972:

• Childcare assistance for low-income families will increase from $4 an hour to $5 an hour for up to a maximum of 50 hours of childcare a week for each child.

• Student Allowances for families with children will increase by $25 a week.

• Both the Working for Families (WFF) in-work tax credit and the WFF tax credit abatement rate will increase from 1 April 2016:

* Low-income working families earning $36,350 or less a year, before tax, will receive an extra $12.50 per week and some very low-income families will receive an extra $24.50.

* Working families earning more than $36,350 will receive more from WFF, but the amount is dependent on each family’s income and it won’t be more than $12.50 a week

* Families earning more than $88,000 a year will see slightly lower WFF payments, with the average reduction being around $3 a week

These increases have been tempered by part-time working beneficiaries needing to work 20 hours per week versus the 15 hours of the past.  Sole parents and partners of beneficiaries are also now expected to seek at least part-time work once the youngest child turns three, as opposed to five years previously.

Travellers Tax

A new Border Clearance Levy will be introduced from 1 January 2016, targeted to assist funding Biosecurity and Customs activity.  The levy is expected to be $16 for arrivals and $6 for departures. Almost half of arrivals and departures in the year to April were New Zealanders travelling for holidays, on business and for family reasons. Those that can afford to travel internationally are basically paying a new tax, raising $100m a year.

Slower out of the blocks

The $1,000 Kiwisaver kick-start incentive payment is no longer available for new sign-ups and will save $175 million in 2015/16.

Motoring ahead

ACC Levies will continue to reduce, In the 2014 levy round reductions were made to the Work and Earners’ Accounts. This year’s focus is on Motorists This includes reductions to the licence fee and a drop of 3 cents per litre off the petrol levy.

No longer flogging the dead horse

From 1 April 2016, the IRD will have more discretion around writing off penalties (not the core payment) for non-payment of child support.  The Government wanted to provide more tools for the IRD to work with parents on controlling and managing their child support debts.

GST tinker

Payments made to social housing providers will be GST exempt once legislation is enacted.

The Tax-man Cometh

The IRD are being given an extra $74 million over the next five years to beef up their investigative and compliance teams.  Historical data has shown that the IRD gets at least $7 extra for each $1 invested in reviewing tax payer compliance.  The Government is directing the IRD’s efforts towards property investment, a very political move given Auckland’s booming house prices.

 

Safe as houses

The focus in this budget is on damping down property speculation rather taking a slice off the family home.  There will be a two-year window for sales of residential property. If residential property is bought and sold within two years, it will be subject to tax. This does not apply for:

• tax payers selling their family home
• inherited property, and
• property that is being transferred as part of a relationship property settlement

The new rules will apply to properties bought on or after 1 October 2015. More detail is expected to come out in July. It’s important to note that if you intend to sell a property outside of the 2 year timeframe, the sale may still be subject to tax, as it may still fall within other rules relating to the taxation of property.

Land ownership

In addition, anyone buying or selling land, both New Zealand residents and non-residents, will have to provide an IRD number as part of the land registration process. All sales of land, other than sales of the main family home, will be subject to this requirement. In addition to providing a New Zealand IRD number, non-residents will also have to:

• provide their country’s equivalent of an IRD number, and
• open a New Zealand bank account

 

Boosting business

$345million has been targeted for business growth, with initiatives of

• $80million for R&D Growth Grants
• $25million to establish Regional Research Institutes for scientific research
• $113million for New Zealand’s higher education system

Unfortunately the balance of business growth initiatives are more around enforcing compliance, such as assisting councils with resource management and water care reforms and  enforcement of employment laws. The main area affected for businesses in New Zealand will be around those involved in Property.

What does this mean for me?

The budget was very much one that focus on social services and support in New Zealand.  $375 million on ACC, $790million on Child Hardship, $939million on Capital Investment (infrastructure), $305million on the Social sector and $122million on Housing.

Bill English said the Government wanted to target the 60-80,000 families who were most vulnerable in society and after looking at various options concluded that raising the benefit levels themselves is the most effective means to achieve this.

Running Accountants!

   Taupo – a beautiful lake, amazing views of Ruapehu, Tongariro and Ngauruhoe, central to the North Island and outdoor central for tourists and locals a like.  And for some strange reason, thousands of people go there once a year to run/walk around it!  CTCW are sending two (!!!!) teams down this weekend to participate in one of the several huge events that Taupo puts on.  We have over 27 staff, family and friends going down to slug it out during the night and complete the 155km course sometime on Saturday afternoon.  Needless to say, there may be a small but happy party following the efforts.  Again – we are raising money for the South Auckland Health Foundation in our last big drive for the financial year.  Feel free to make some donations to a very worthwhile cause – making Accountants sweat!  Email Diane on mclaughlin@ctcw.co.nz she will be happy to take your money on behalf of SAHF.

Morning Tea Threatens Waistlines

Waistlines are constantly under threat at Campbell Tyson Cooper White. Due to the culinary expertise of many of our staff events such as the recently held International Food Day have resulted in sumptuous feasts being prepared for morning tea. Such was the enthusiasm of the staff involved, lunch and afternoon tea were also catered for. Our active Social Club organise regular events, which combined with the usual birthday party shouts and length of service celebrations result in some pretty amazing morning teas.

As the impact of this wonderful food has become all too obvious for some of our staff (including the writer) other initiatives have been thrown into full drive by our staff. Our recent session with John Shackleton has resulted with more than 50% of the staff deciding upon “body shape” goals and the birth of dieting and exercise clubs amongst staff. We are in the process of organising our Round the Lake relay team for February next year as well as other fitness events. We also have budding half iron men, although this should be referred to as iron women as we are yet to have a man take up the challenge!

Needless to say, our staff are incredibly active, be this working with our clients, on the social scene, or involved in personal development.

Catch you next week.

Lincoln

One persons junk is another persons treasure.

CTCW Garage Sale

As I have mentioned in a previous blog our staff have made South Auckland Health Foundation our principal charity for the 2010 financial year.  Although we contribute to many other worthwhile causes, our staff were keen to throw as much behind this excellent cause as possible.  We have undertaken many worthwhile projects so far, such as bucket rattling at the Auckland Warriors’ matches, knitting garments for newborn babies, cake and sweet sales in our offices, and pestering our clients for donations to our general cash fund which will be used to buy new equipment for the Pukekohe Maternity Hospital.  We aim to raise over $7,500 by 31 March next year ($4,100 collected so far).  Our latest initiative to generate more cash for this wonderful cause was a garage sale and sausage sizzle on Saturday, 31 October.  As well as being a great opportunity to pick up some excellent bargains, we had some super people helping by contributing funds to the baby phototherapy wrap for Pukekohe Maternity Hospital.  It kicked off from 8.00 am (although the bargain hunters were there from 6.45!) in the car park behind our building on 17 Hall Street.  Our staff made an amazing effort and we have raised close to $3,000 from the garage sale alone!!!  Thank you to all those who contributed their time, goods and cash.

Watch this space for an update on our target!

Lincoln

The Bean and The Coffee Bean

I’m going to have to run a poll on visitors to our office. We consistently get told we make wonderful coffee and even have clients who come in specifically to have a cup. It’s amazing what a hot drink (and caffeine!) can do for your disposition and state of mind. I think we would have a staff riot on our hands if our machine broke down! We also have an excellent business and personal development library in our reception that we make available to our clients. With the weather we have been having this October, there are worse things than sitting having a nice coffee and reading some interesting literature.

Good news in the paper this morning with employment starting an upward trend with more people leaving the unemployment benefit than signing up. Whether it is a seasonal thing or further evidence of an improvement in state of the economy is too soon to tell, but improving property prices (up a small percentage) will see some people with more of a “spring” in their step.

Have a great week.
Lincoln

A Stitch In Time, Saves Lives.

Choosing just one charity to support when there are so many worthy causes is not an easy task.  For us, South Auckland Health Foundation (SAHF) answered a lot of our criteria.  The Foundation raises funds which assists the community in which we live and is committed to improving all areas of health.  It is a charity that was established by the late Terry Harris (an ex-Partner of our Firm) and our ability to be involved has special meaning to a lot of our staff.   It is also a Charity where our support could be more than just financial.

 SAHF has a knitting programme and we have a small but dedicated number of staff (see our last MyAccountant newsletter!) who knit hats, booties and cardigans, supporting SAHF’s effort to ensure new born babies leave South Auckland Hospitals with warm clothes.

 Generalisations aside, our largely female staff contribute many pre-loved magazines to the cause.  These are used in waiting rooms in an effort to provide current reading material.

 SAHF is able to undertake some large fundraising events and is supported by the Auckland Blues and the Warriors.  Volunteers to “shake buckets” or assist at these events are always wanted.  CTCW staff have been able to volunteer their time at an Auckland Blues game and coming up will volunteer at a local event – “Kids in Cars” to be held at Pukekohe Raceway on 11 October 2009 (see our “Upcoming Events” on our website).

 CTCW are also committed to raising $7,500 this year to provide our local maternity hospital with much needed equipment.  We are achieving this by organising bake sales at work, a very successful auction and have a few projects in the pipelines, including a garage sale.

 Supporting SAHF allows all the staff at CTCW to contribute to our community and in doing so, fosters a sense of pride in what we are able to achieve.  IF you would like to join our effort, get in touch with our coordinator, Diane McLaughlin and see what we can do together.

 Have a great week.

Lincoln

To bean or not to bean….

I don’t think the Earth has moved off its axis, but a Beanie is about to start using a blog!  A question I get asked sometimes is “what is it that Accountants really do?”.

   I think a lot of people have this picture in their heads of a bespectacled person sitting in a darkened room tapping numbers in to a calculator creating an ever-lengthening till tape.

  Although I have met that Accountant, that sort of person is glaringly absent from the Team at CTCW.  However this is my opinion and I feel duty bound to educate others on CTCW and the community we serve.  This blog seems like a great place to do it!  So strap yourself in, get your debits matching your credits (I’ll try to limit the Accountant humour) and follow me on a blog that will give you an insight in to the inner workings of an Accounting Firm.

Cheers

Lincoln