Bookkeeping in the digital age
Inland Revenue’s Business Transformation (BT) programme is encouraging a shift towards digital filing. The BT programme involves updating Inland Revenue’s current platform for administering tax and social policy schemes to a more modern computer system (START). The idea is to make tax compliance more seamless. This includes making it easier for bookkeepers and tax agents to carry out compliance work for their clients.
The third edition of the Master Bookkeepers Guide provides information on digital filing as well as a new chapter on basic income tax principles, and how to calculate and file income tax returns for individual and companies.
The questions and answers below touch on some of the issues covered in the latest edition of the New Zealand Master Bookkeepers Guide.
Practical bookkeeping Q & As
Angela looks after the payroll for a company (“DM Limited”) with three employees. DM Limited has PAYE deductions of $65,000 per year on average. The company has filed its employer monthly schedules in paper form in the past. Angela is aware that payday filing is mandatory from 1 April 2019 but that employers may choose to adopt it early.
What are some of the things Angela should be aware of if DM Limited was to adopt payday filing prior to 1 April 2019?
If DM Limited chooses to adopt payday filing prior to 1 April 2019, Angela will need to file the company’s employment information and the IR345 employer deductions form electronically, either –
- by file upload in myIR, or
- by directly filling in the forms on screen in myIR, or
- directly from payroll software (as the company doesn’t currently use payroll software, it will need to consider whether this is a viable option).
Importantly, DM Limited will not be able to file paper returns during the transitional period if it adopts payday filing early. The electronic filing threshold will reduce from $100,000 of PAYE and ESCT per year to $50,000 from 1 April 2019. Therefore, the company will also not be able to file in paper form from 1 April 2019 unless an exemption is granted.
If DM Limited opts into early payday filing, it will not be able to switch back to monthly filing without Inland Revenue’s agreement.
The last employer monthly schedule prior to adopting payday filing will be due on the usual due date (this could fall in the first month of payday filing).
Repairs and maintenance
Mauricio owns a two-bedroom apartment in Wellington which he has always rented out. Mauricio’s daughter, Maria, is starting university in Wellington and will be living in the apartment indefinitely.
The current tenants vacate the property and Mauricio incurs some expenses in having the apartment professionally cleaned, repainting the walls and repairing the oven which had stopped working.
Can a deduction be claimed for the expenses?
In this case, the costs are not deductible because the rental activity has ceased and the house is no longer being used to earn rental income. In other words, at the time the expenditure was incurred, it did not have the necessary connection to assessable income.
Preparing depreciation schedules
Should I, as the bookkeeper, prepare a depreciation schedule, and is it up to me to record the depreciation in the management accounts or is it the responsibility of the external accountant?
In some cases, the accountant or tax agent is responsible for calculating the depreciation, preparing the depreciation schedule and advising the bookkeeper of the amount of the depreciation expense. The bookkeeper subsequently records this amount in the management accounts.
In other cases, the bookkeeper is responsible for preparing the depreciation schedule and recording the depreciation in the management accounts.
The bookkeeper should consult with the external accountant to determine who is responsible for preparing the depreciation schedule and for recording the depreciation.
Barry is a sole trader who provides consulting services in the building industry. Barry travels to Australia to attend a client meeting. At the meeting, which is held in a café, Barry purchases coffee and savouries.
Can Barry claim a deduction for the cost of the coffee and savouries?
The cost of the food and drink can be claimed in full. Entertainment (including the cost of food and drink) that is consumed outside of New Zealand is not subject to the 50% limitation rule. Therefore, Barry can claim a full deduction for the coffee and savouries.
New Zealand Master Bookkeepers Guide
The new, third edition of New Zealand Master Bookkeepers Guide provides up-to-date information on a range of accounting and taxation issues that tax agents, bookkeepers, accountants and business owners need to be aware of when dealing with their clients.
Taking a very practical approach, the guide covers all the bookkeeping essentials with numerous worked examples, diagrams, checklists, tables and FAQs.
Ready to find out more?
Order your copy of the New Zealand Master Bookkeepers Guide now!