When Charities can Provide Housing

Providing housing can be charitable, but it needs to be connected to a charitable purpose. What does this mean? Charitable purposes must have a public benefit and not just create private benefits for people who aren’t in need. Case law says that housing is a basic need and right, but home ownership itself is not.

Many amazing registered charities achieve their purposes, like relieving poverty or regenerating urban or rural areas, by providing a variety of housing options throughout Aotearoa.

You can check out: Sector-Showcase-Design-Island-Child-Charitable-Trust-2-1.pdf (charities.govt.nz) that provides transitional homes for whānau experiencing homelessness.

Charities can, and do, support people into housing in a huge range of ways – whether it’s emergency housing, cheaper rentals, or home ownership. However, not all groups that support people into homes qualify as a charity. Having a purpose to make it easier for people to own homes is not itself charitable. If your group intends to offer a home ownership programme, we recommend getting in touch before you apply and we can discuss whether your group might qualify for registration.

Source:  Charities Services website, accessed 21 June 2022. Charities Services | Myth busting: when charities can provide housing

Got questions? Please get in touch! Charities Services.

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Buying or Selling a Business

Buying or selling a business is significant for both the buyer and seller. Tax is treated differently depending on whether the sale involves assets or shares. Both asset and share sales can be a mix of taxable and non-taxable parts.

It’s important to set up your business sale or purchase the right way so that you:

• get the right entitlements
• pay the right amount of tax
• get the right after-sale profits and allowable deductions.

The information here is a general overview of different tax obligations for common situations you should be aware of.

Getting these wrong can lead to an unexpected tax bill, so it’s best to talk early with a tax professional to make sure you get the details of your sale right from the start.

Source: https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/buying-or-selling-a-business

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

New Guide on Accounting for koha

The Charities Services recently created a new guide on their website that looks at how to report koha.

This new resource is aimed at helping charities report on receiving and gifting koha in their annual performance reports  

Koha can be hard to account for, as the way it is given, and what could be considered as koha, can vary greatly. This resource explains the concept of koha and provides step-by-step guidance to help charities report on it more easily.

What is koha?

While koha can be described as an “unconditional gift”, the way koha is given and what is given as koha can vary widely, and this changes how it will be reported. The purpose of this guide is to help you think about how to report koha in your performance report. We have also included some examples of how you could account for different types of koha.

On this page we separate between koha and payments for a good or service. Koha is often given by manuhiri (visitors) to tangata whenua (hosts) in the pōwhiri process. While koha may help with the costs incurred by tangata whenua, the manuhiri are giving koha because it is customary to do so, not as a result of a financial transaction.

Some examples of koha are:

• gift of money to a marae.
• gift of art with the intention they sell it.
• gift of whiteware to a marae to use in their facilities.

Some people refer to koha as the cost of goods or service, such as the payment for renting out or staying at a marae.

When and how do I record koha?

When recording koha you first need to know if the koha given was cash, or non-cash. Then look at whether anything was provided in exchange, which would be considered a Receipt from providing goods and services. If it was not cash, consideration needs to be made if it was significant to the charity.

The word “significant” on this page is an accounting term. It’s used to refer to something you expect to use for more than 12 months, or an asset large enough in value that not recording it could change the reader’s understanding of your charity/performance report.

We are not talking about things that are culturally significant, such as taonga. We are also not talking about things that may have cultural significance, but no monetary value or no way of being priced. If you think it’s important for readers of your performance report, then providing a Note with a descriptive list of significant taonga may be an appropriate way of acknowledging the mana of those that have donated taonga to your group. If your charity is gifted taonga that is also significant from an accounting perspective (e.g. a high value piece of art), you would still need to record this as income and an asset.

Source: https://www.charities.govt.nz/teaomaoripages/financial-reporting/how-to-report-on-koha/

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Land Purchase – When Not to Claim GST

Do not claim GST on residential land purchased unless you are sure you are going to sell it. If you do claim GST and convert to a rental, the sale of the property will always be subject to income tax even if you sell it to an associated entity in the meantime. By claiming the GST you are notifying IRD that you purchased the property with an intention of resale.

Source: Tax-e-mail Issue 2201

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Seven top tips to close off the financial year

The end of the financial year can be an exhausting and stressful time for small businesses.

Start this new financial year by utilising automation to stay on top of your bookwork. Take photos of receipts and send them to Xero, create invoices on your mobile, complete bank reconciliation daily and form habits to keep you up to date and in control.
Often you are so focused on the day-to-day running of your business, the less exciting aspects, like bookkeeping, can be swept to one side.  As the calendar ticks over towards March 31 there can be a lot of pressure.
Throw in the complications of Covid-19 and preparing for the EOFY has become an increasingly complicated process for SMEs. Business owners will have to account for changes brought about by a year marked by lockdowns, uneven cash flow and general economic uncertainty, but it doesn’t have to be that way. By investing in good accounting software like Xero, SME owners can take control of the process and keep their focus on the business.

Catch up on paperwork

Technology can help get your paperwork up to date, catalogued and, crucially, in the same place. Software like Hubdoc allows you to import all your financial documents (receipts, emails) and magically extracts the data to Xero. All the documents are then stored online, and you can search and access bills and receipts from anywhere.

Look to the cloud

Make your accountant’s job easier by using a cloud-based accounting platform, which will help you (and them) complete your year-end accounts and tax returns quickly and simply. Xero has tools for managing invoicing, bank reconciliation, simple inventory, purchasing and bookkeeping, making it a popular choice for SMEs wanting a painless end to the financial year. Much of it is automated, so it’s like having a virtual employee who does a lot of the work for you.

Know your worth

Manage your deductions by figuring out what you can claim.  Have a chat with your accountant about how you treat any money you have received from government subsidies and understand what the Government is providing in terms of Covid-19 relief, if there are any changes to levels. Record personal expenses and business expenses separately, so that you don’t lose sight of small business costs paid in cash or with a personal card, because they add up. Start the new financial year with separate credit or debit cards – one for your business and one for your personal expenses.

Goodbye bad debt

If you are still chasing invoices from the financial year it may be worth writing them off as a bad debt. Think about whether your accounting software can take the hassle out of chasing payments by sending online invoices or automated reminders, so you get paid on time. Alternatively, consider offering the client a small discount if they pay before the deadline to close the books.

Write it down

Know the key dates on the financial year calendar and don’t leave anything to the last minute. Get familiar with important dates for the upcoming tax year and set reminders in the diary in order to avoid costly penalties for missing deadlines and late payments. Those penalties can really sting – and take a bite of your profits for the new financial year.

Ask an expert

Talk to an expert. Getting some time to speak to an accountant or bookkeeper can make a big difference and they can offer invaluable guidance on write-offs, rebates and potential deductions. Yes, it’s hard for businesses to plan for a whole year ahead in the age of Covid, but talking to an expert and setting up some simple goals can really help.

Get a plan

Set next year’s game plan because once you’ve got all your up-to-date information your accountant is in a good position to help you budget and talk about your taxes. They can also help put a strategy in place for the new financial year and forecast for different scenarios.

SOURCE: CONTENT BY XERO 25 Mar 2021

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Introduction to AML for clients

We want to advise you of law changes that have applied to accountants and their clients from 1 October 2018.  These laws already apply to lawyers, banks and financial service providers; and are known as AML (anti-money laundering and Countering Financing of Terrorism Act 2009).

AML has been in place in New Zealand since 2013 and in addition to applying to your relationship with us from 1 October, will apply to your relationships with any real estate agent you deal with after 1 January 2019.  This reflects New Zealand’s commitment to the international initiative to counter the impact that criminal activity has on people and economies within the global community.

From 1 October 2018, accountants are required to have measures in place to help them detect money laundering and the financing of terrorism, as it is considered that accounting firms and the services they offer may be attractive to those engaging in criminal activity.

As an accounting firm, we need to assess the potential risk we face from money launderers and those financing terrorism and must identify potentially suspicious activity.  To make that assessment, we need to obtain and verify information from existing and potential clients before we are able to perform accounting services for them.  This is known as “client due diligence”.

What we will need from you

Client due diligence requires us to undertake certain background checks before providing services.  We must also take reasonable steps to make sure the information that we receive is correct.  We will need to obtain and verify information from you.  This information includes:

*  Your full name;
*  Your date and place of birth; and
*  Your address.

To confirm these details, we will need documents that include photo identification like your passport or current driver’s licence and also documents that show your address, such as bank account statement or utility bill.

If you are seeing us about a trust or company, we will need to collect information relating to the trust or company and also the people associated with it (such as directors, shareholders, trustees and beneficiaries).  We will identify these people where possible, but we will be relying on you to help us in identifying all persons for whom we need to carry out due diligence.  We will make this as easy as possible by providing you with detailed guidance on what we need.

In some cases, such as where the client is a trust, we will need to ask for information on the source of funds and wealth for a transaction.  Again, we will make this as easy as possible by giving you detailed guidance on what we need.

What happens if you cannot provide the information required?

If you are unable to provide the information we require, it is likely that we will not be able to act for you.  Even if you have been a client for a long time, we are still required to gather documentation and verify your identity.

If you have any queries or concerns about these new requirements, please don’t hesitate to contact us.