NEWS

NZTE Business Capability Development

NZTE and its network of business partners can provide small businesses the support and training they need to build management capabilities and grow their business.

The partners work with local businesses and provide a range of advice and access to funding and support for assisting them to grow their business. Support available includes:

NZTE Capability Development Vouchers, which the managers of eligible small businesses can use as partial payment for the cost of management capability building services—up to 50% of the cost of the training.
Research and development funding via MSI’s TechNZ programme of funds and services. The aim is to make it easier for business owners and managers to understand what steps they should take to grow their business, and where to find information and assistance to do so.

Capability Development Vouchers

Small businesses may qualify for vouchers to help pay for services such as training workshops, courses and coaching that build the management capabilities of their owners, operators and key managers. To qualify, businesses must consider the following:

Have fewer than 50 full time employees
Be operating in a commercial environment
Be registered for GST in New Zealand
Be privately owned or a Maori Trust or corporation
Demonstrate a desire to innovate and grow
Have undergone an assessment with a Regional Partner

What can the vouchers be used for?
Vouchers may be used to help pay up to 50 percent of the cost of services (up to a maximum value of $5000 excluding GST) from registered providers that improve management capabilities. Brian E. Prestidge & Associates is registered to accept NZTE capability development vouchers, with courses available in areas such as:

Business Planning
Finance
Business Systems
Managing Resources

Infusion Regional Partner of the Year 2012!

At a recent awards night in Melbourne our firm was awarded the Infusion Business Software Partner of the Year for the Taranaki/Wellington regions.

This is awarded based on software sales, partner attitude and client feedback.

Our Computer Systems Department is expanding!

Due to increasing demand in this area and a strong belief in the importance of having a qualified and readily available support team, it is with pleasure we announce that Mark has just joined our team in the computer systems department at Brian E Prestidge & Associates. Mark comes from an accounting background in the metropolis of Wellington and is looking forward to utilising his knowledge in helping clients with setting up and supporting internal accounting programs.

Infusion Business Software is a significant part of our business in the systems department, and therefore Mark is currently undergoing extensive training in this program. Please feel welcome to ring or make an appointment for a visit from Mark... he would love to hear from you!

To download a copy of our latest Systems Department newsletter, click here

Online Backups

How safe is your backup?

Take a moment to imagine what would happen if all your business data were gone tomorrow. Does the thought make you queasy? If that’s not enough to make you sick, according to PricewaterhouseCoopers, seven out of 10 small firms that experience a major data loss go out of business within a year. Even if your data is recoverable, it can take days to deal with a major server outage when old backup technologies are used.

The only way to be really sure that your data is safe in the event of an emergency is to have it automatically backed up off-site. Here at Brian E Prestidge & Associates, we have come up with the solution for you. By partnering with a reputable IT firm which manages servers in multiple sites across New Zealand, we have been able to secure a backup program which will take care of automatically backing up your critical business da-ta onto multiple servers across NZ.

The pricing is competitive and the security of your data is guaranteed. If you want to prevent your business from becoming a statistic, contact us today for more information.

Business Benchmarking

Ever wondered how your business performance compares to your competitors? Are they more profitable? Are your costs right? Could you be earning a higher return? Comparing your business to others in your industry is a good indicator of what your strengths and weaknesses are, helping you to focus on the areas with the greatest potential for improvement.

The Inland Revenue has recently released statistics showing typical profitability and liquidity measures within certain industries. These include Gross profit ratio, Stock turnover per annum, Salaries and wages/turnover ratio, Return on total assets, Return on equity, Current ratio, Quick ratio, Liability structure.
These give a very broad range, indicating that a business is outside of those parameters may require investigation.

More precise data—useful for planning and management—is available on request. We can also provide benchmarking data on a wide range of measures and industries based on Waikato University data; and benchmarks for dairy farmers are available from DairyNZ.

Sample IRD Statistics for Small Businesses ($60k -$300k annual turnover)
	Gross Profit %		Stock turnover /annum		Return on Equity
	Range	Median	Range	Median	Range	Median
Cafes & Restaurants	46 - 63%	55%	13 - 44	24	-15 - 5%	-3%
Takeaway food	37 - 55%	45%	16 - 53	29	-2 - 60%	17%
Painting and decorating	75 - 87%	82%	5 - 32	13	-1 - 147%	6%
Electrical services	55 - 84%	66%	7 - 33	15	0 - 96%	2%
Real estate services	N/A		N/A		-4 - 352%	32%

Closing the loop-holes around Tax Avoidance

There only two parts to any tax law: (1) the rules and (2) the exceptions. Recently these exceptions have been in the spotlight – showing how they have been exploited in tax avoidance arrangements; and their effect in reducing the fairness of the overall tax system.

Tax Avoidance

Particularly topical is the new Inland Revenue approach to tax avoidance. In a recent draft interpretation statement, the IR outlines its proposed move away from the technical letter of the law and its irregularities, to focus on the substantial nature of any situation and the intent behind the law.

“In short, it is to understand the commercial and economic reality of an arrangement, and to see whether that reality is within what Parliament would have contemplated for the provision used” [para 61]

The statement, while clarifying IR’s reliance on a hypothetical ‘parliamentary intention’ test, does little to clarify what a taxpayer’s actual position is. And tax law will continue to be comprised of two parts – this time (1) the rules and (2) Inland Revenue’s interpretation of the rules.

However, do be sceptical of any ‘tax saving’ scheme you may hear of . If you are considering a particular arrangement, discuss it with a tax professional and ensure it at least has commercial reality.

Non-cash benefits and Salary trade-offs

Most non-cash benefits provided to employees (e.g. use of a business vehicle or provision of interest-free loans) are subject to Fringe Benefit Tax (FBT), paid by the employer. This still has some problems:

Some benefits are excluded. Employers can offer employees these benefits and a lower salary; overall reducing their tax burden.
“Family income” used for Working for Families does not include these non-cash amounts, except when the employee is a shareholder of the company. Families receiving them get an unfair advantage.
Charities have an exemption from FBT. This includes gift vouchers given to employees, meaning staff can be paid in gift vouchers untaxed.

The best method to resolve these issues is still open for submissions, with the two proposed options being:

When a non-cash benefit is provided as a direct salary trade-off or the employee has specific right to the benefit, the value of these will be added to their salary and taxed through the PAYE system. Benefits taxed this way would then be excluded from the FBT calculation.

Change the FBT rules to include the currently exempt items. Employers would have to advise staff of the value of any fringe benefits they received, to include this in their total income for Working for Families.

With either of the proposed options, it is likely that the FBT exemption for charities will be reviewed, particularly for the provision of vouchers and similar.

0800 TAX ACCOUNTANT