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  Katikati Mural Town - HERITAGE TOGETHER - KOTAHITANGA, TAURANGA CITY & WESTERN BAY OF PLENTY, AOTEAROA NEW ZEALAND







February 2021

CONTENTS: 

  • Covid-19 Short Term Absence Payment "STAP"
  • Covid-19 Resurgence Support Payment "RSP"
  • Fringe Benefit Tax exemptions (Employee goods & services) - Update
  • Trust Beneficiary Balances
  • Rental Property Ring fencing
  • Bridge Club!
COVID-19 Short-Term Absence Payment "STAP"  COVID-19 Resurgence Support Payment "RSP"

How to Stop a Cough at Night - BENADRYL® The STAP is available from 9 February 2021 for businesses, including self-employed people, to help pay people who cannot work from home while they wait for a COVID-19 test result. The requirement being that the individual:

-       cannot work from home, and

-       has to stay home while waiting for a COVID-19 test result.

The STAP is a one off $350 for each eligible worker. You can only apply for it once, in any 30-day period (unless a health official or doctor tells the worker to get another test).

Anyone who is unwell should call Healthline on 0800 611 116 or talk to their doctor or health provider. Businesses should encourage their workers to do this if they're unwell.

 

About COVID-19 symptoms and spread | Ministry of Health NZ Healthline 0800 611 116 | KidsHealth NZ
The Government announces whether the RSP will be activated each time the COVID alert level is increased from level 1.

Once activated, the RSP will be available nationally even if the alert level isn't increased across the whole country.

For the current/recent alert level increase eligible businesses can apply to IRD for the RSP between 23 February 2021 and 22 March 2021.

To be eligible for the RSP, businesses must experience a 30% drop in revenue or more over any 7-day period during the increased alert level – as well as meet a range of other criteria.

https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/eligibility-for-the-resurgence-support-payment

Eligible businesses and organisations can apply to receive the lesser of:

-       $1,500 plus $400 per fulltime-equivalent employee (maximum of 50) or

-       Four times their actual revenue drop.

Applications can be made up to one month after the return to alert level 1.

Accumulus can apply for the RSP on behalf of our clients, if we have the authority to apply and hold a record of that authority.

FRINGE BENEFIT TAX EXEMPTION (Employee Goods and Services) - UPDATE

In our January News we made the comment that there was no GST claim on voucher purchases however this is not always correct.

Whilst the majority of vouchers are sold with no GST component (exempt), if you do receive a receipt or an invoice for the purchase of a voucher, which does include GST, then there is indeed a GST claim to be made.

TRUST BENEFICIARY BALANCES

The income tax act has been amended so that from the current 2021 tax year any beneficiary of a Trust with a balance of over $25,000 owing to them at the end of the year should be paid interest by the trust on that balance (at rates specified by IRD) or risk being deemed to be a settlor of the Trust.

This is the creation of taxable income to the beneficiary with potentially no expense deduction to the trust unless it can be demonstrated that the beneficiary loans are being used to fund the taxable activity of the trust.

The concept is that by not receiving interest on balances owing to them the beneficiaries are making gifts to or settling assets on the Trust.

In genuine family trusts this will not apply to mum and dad who will for tax purposes already be settlors of the trust by way of having introduced assets to the trust.

The impact will be on their children who may well over the years have had balances owing to them created by the distribution of income, which has not been physically paid out in cash or payments on the child's behalf.

As far as we are aware the negative consequence in being a settlor could be to deny or reduce benefits where the child's income may affect benefit entitlements to working for families or student allowances and also if there are property transactions in the trust or by the child there may be a possibility of one being tainted by association with the other.

Likely not a problem in many or most cases but perhaps worth avoiding just to avoid any uncertainty. (Another anti avoidance measure that will likely mainly trip up the innocent?!)

RENTAL LOSS RING FENCING

For the 2020 tax year Rental ring fencing rules were introduced which mean that "deductions" ie a net loss from residential rental properties cannot be offset against other income e.g. wages. Losses can only be offset by income from the residential rental(s).

There are two methods for determining how "losses" can be offset:

  •  by individual property which only allows losses to be offset against income from the same property and,
  •  by portfolio, which allows the income and losses for all the properties in the portfolio to be offset against one another.

 Once either the individual property is sold or the whole portfolio is sold any remaining loss can then be offset against other income.

There is an exception to this if at any stage there is a tax free sale of a property in a portfolio. (ie a property that is exempt the brightline tax because it has been held for more than five years) In this situation any remaining loss in the portfolio is tainted and cannot be used to offset other income.

However the tainted losses are not necessarily irretrievably lost because if subsequently further rental properties are purchased the loss is again available in the new portfolio.

Generally the default is the portfolio method however we do review each situation individually. If you are considering selling a rental or would like any additional information about how these rules can affect you, please contact us.


 

BRIDGE CLUB  

The Katikati Bridge Club is holding an open day on Sunday 28 February between 2 and 4pm in the Memorial Hall Lounge to try and get names for people who would like to:

-       attend lessons once a week over 12 weeks, starting soon depending on interest,

-       and/or join the Bridge Club.

Contact:     Beth Mann               021 262 1074           arbeth.mann@gmail.com

               Robert Knyvett         027 262 8788

Card Game Bridge photos, royalty-free images, graphics, vectors & videos | Adobe Stock
 Cumulus Clouds: Low, Puffy, Fair-weather | WhatsThisCloud

 From the team at

Accumulus