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December Update

In this month's business world update:



2020 has been a stressful year in business so we're doing our bit to help you be your best business by giving you some much needed certainty and relief.
 

Proposed Tax Changes


Following the result of the election and current tax commentary we're expecting to see the following changes:
  1. The new top personal tax rate of 39% for income earned above $180,000 applying from 1 April 2021.
  2. Integrity measures introduced to support the new 39% rate and address issues like the potential for people to shelter income in trusts to avoid the top tax rate.
  3. Increased IRD disclosure requirements for trading trusts from the 2021 tax year.
  4. Getting the flexi-wage scheme up and running by the end of the year (essentially a wage subsidy programme that assists employers to hire and help people with training or mentoring to gain the skills for a job)
  5. Closing loopholes so multinational corporations pay their fair share
  6. Sick leave extended from 5 days to 10 days.
In anticipation of the 39% tax rate change, we will contact all clients in the new year that have companies with excess retained earnings to consider declaring dividends before 31 March 2021.

If you think this will have an effect on you, contact us to have a chat
More Details - Hunter McLeod

Resurgence support payment proposed


The Government has announced a package to support businesses and individuals in the event of a change in COVID-19 alert levels.

The package contains a proposal for a one-off resurgence support payment which businesses can apply to Inland Revenue:
  • The one-off payment will be $1,500 plus a $400 payment per employee up to a total of 50 FTEs.
  • Businesses will need to declare a drop of 30% or more in income over a 14-day period as a result of an increase from Alert Level 1 to Alert Level 2 or higher.
  • They must have been in business for at least six months in order to apply.
Legislation containing the measure is expected to be introduced early next year. For more information see the Minister of Finance's media statement.
See The Media Statement

The First Major Trust Law Reform In 70 Years


The Trust Act 2019 comes into force on 30 January 2021. Under the act the Trustee obligations have changed. 

The requirements of a Trustee are higher and more onerous. No longer can trustees plead ignorance to the new Trust laws, as Trustees are now expected to understand the new trust requirements and adhere to them. New Trustee duties are now formalised and set out in legislation. 

Indemnity Clauses are Void – The new Act places restriction on indemnity clauses – where a trustee is dishonest, demonstrates wilful misconduct or is grossly negligent, a Trustee cannot rely on exclusion from liability under the indemnity clause.

Information Required for Beneficiaries:

As a minimum, trustees are now required to provide beneficiaries with basic Trust information. This is a positive obligation on trustees to provide this information that applies even if the beneficiary has not requested any information about the trust. See basic Trust information here

What Does This Mean for Trustees?

For trusts existing before the Trusts Act, you will need to consider the following:
  • If you’re willing and able to undertake the increased obligations;
  • If you’re comfortable with the increased information provided to beneficiaries as greater transparency will mean that infomation that some trust owners might prefer to keep private will no longer be private;
  • If you are still willing to be a trustee of a trust given the obligations imposed on you;
  • If the reasons for setting up the trust are still relevant;
  • If the trust will offer the same protection; and
  • If the trust will still be cost-effective with the extra trust compliance requirements as compliance duties will increase the time and cost of administering some trusts, meaning some are no longer cost-effective.
  • Who the beneficiaries are and what information they could be entitled to.
  • Removing beneficiaries that do not fit with the purpose of the trust (i.e. some final beneficiaries could be appointed under a will instead).  
If you have a Trust, we advise you contact us or your trust lawyer to discuss the new rules and ensure the Trust is still necessary.

  
For More Information On The Changes - Click Here

Small Business Cashflow Loan Scheme


Proposed Changes
The following changes will be made to the Small Business Cashflow (Loan) Scheme:
  • Currently no interest is charged if the loan is repaid within one year. This will be increased to two years.
  • Currently the loan can only be used for core operating costs. This will be broadened so that the loan can be used, for example, on capital expenditure.

In addition applications for the loan can now be made until 31 December 2023, an extension of three years.

These changes are expected to be made before 31 December 2020.
 

Talk To Us Today
Apply For The SBCS

Christmas Shutdown

Our office will be closed from 22nd December and reopening on the 6th January

HOW DOES SANTA'S ACCOUNTANT VALUE HIS SLEIGH?



Net Present Value.


 
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Disclaimer:

The above information is of a general nature only. The information contained in this document does in no way constitute legal advice and all readers should contact Hunter McLeod for advice relating to your specific circumstances



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