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Interest.co.nz talks to Bryan Simpson

May 1st, 2013 | Posted by Accountants Auckland in Accountant in Auckland - (Comments Off on Interest.co.nz talks to Bryan Simpson)

“If you liked it, then you should’ve put a ring on it”.  Well, it seems, here in New Zealand, the government doesn’t like it and are about to stop it by putting a ring on it.  What am I alluding to?  I’m talking about the proposed tax changes which, if they go ahead, will mean you’ll no longer be able to use losses from your rental property against your other income such as salaries and wages.

Ring-fencing is simply the technical term, used by chartered accountants and tax-boffins to describe this approach.  In practical terms, for many people, it may be the end of receiving tax refunds from some of the tax paid on their wages.  Anyone who’s been using these tax refunds to help fund rental property cash-deficits may get a little ‘Antsy’ about all of this but it’s unlikely to be anywhere near the doomsday the media is making it out to be and here’s why:

  • Some would say the main hit has already been taken because the proposal isn’t entirely dissimilar to the changes which were made to depreciation not so long ago.  Prior to that, the depreciation claimed on buildings boosted many a tax refund and when the claim was no longer available, there was a significant downsizing of tax refunds for rental property owners.
  • Ring-fencing doesn’t mean your losses suddenly go ‘poof’ and disappear, never to be seen again.  Generally, the losses will simply accumulate until you’re ready to use them when the rental property becomes cash-positive and profitable.  Often, standard tests are required to maintain losses but thankfully losses don’t come with an expiry date.  It’s simply a matter of timing.

Finally, don’t forget the big picture.  From a commercial perspective, the tax position of capital gains remains unchanged.  Ring-fencing is unlikely to have any negative bearing on the capital gains made from selling the rental property.  Typically capital gains have been the primary factor in property investment and in many cases, these will still significantly outway any changes brought about by the proposed ring-fencing reforms.

 

______________________________    www.boutiquefinancial.com   _______________________________

Boutique Financial Chartered Accountants & Business Commentators

Copyright © 2018 Boutique Financial Limited Chartered Accountants Auckland All Rights Reserved. This publication must be read in accordance with the attached disclaimer and does not provide an exhaustive statement of tax law.

Airbnb giving IRD your details?

May 21st, 2018 | Posted by Accountants Auckland in Accountant in Auckland | Chartered Accountant Auckland | Chartered Accountants Auckland - (Comments Off on Airbnb giving IRD your details?)

There’s an old Frank Sinatra song that says “if you can make it here, you can make it anywhere”.   As a Chartered Accountant, I like to change this up a bit and turn it into “if they do it there, they can do it here”.  Something they’re currently doing over there (Denmark, in this case) and which I strongly suspect will soon start happening here, is Airbnb giving the IRD full details of your Airbnb earnings. 

The platforms are already in place here and the banks have been doing it for ‘yonks’.  Banks readily give the IRD full details of your interest and RWT deductions without you even knowing it.  Typically the information sharing goes the other way with the IRD having the ability to give your details to some government agencies including Statistics New Zealand.  On top of this, there’s been an incredible amount of activity in the area of overseas reporting obligations lately which is basically a way of sharing your information between countries.  America is particularly hot on this right now with the Common Reporting Standard coming into effect and although this may seem like something that couldn’t possibly effect you, you may well get caught if you’re an unsuspecting beneficiary of a family trust (even a discretionary one).

Thankfully, the IRD gives relatively clear direction on how to return your Airbnb income so it shouldn’t hurt too much unless you’ve somehow fallen into something incredibly complex like the GST regime or if you need to ‘fess up’ to the IRD through the Voluntary Disclosure process.

______________________________    www.boutiquefinancial.com   _______________________________

Boutique Financial Chartered Accountants & Business Commentators

Copyright © 2018 Boutique Financial Limited Chartered Accountants Auckland All Rights Reserved. This publication must be read in accordance with the attached disclaimer and does not provide an exhaustive statement of tax law.