READ - Perriam & Partners

Perriam & Partners Ltd
Chartered Accountants & Business Advisors
BEHIND THE NUMB3RS—2015
Unit 4, 35 Sir William Pickering Drive, Christchurch
03 358 3108 fi[email protected] www.perriams.co.nz
February 2015 - Issue 55
THE TAX SHELTER—AT PERRIAMS
Tradionally a Tax Shelter is where one would hide their wealth and can o$en be
associated with tax avoidance schemes.
Purpose With Profit
Next me you visit our premises you'll spot our new innovaon and the wealth of
talent and experience that we have hidden behind our own Tax Shelter.
Tax planning requires at mes some creave thinking so our newly established
Tax Shelter will allow our staff to create the “haven” they need to ensure that you
pay in tax what you need to pay—no more and no less.
Sir William Pickering Drive
PLAN NOW TO MAKE
2015 YOUR BEST YEAR YET
WELCOME BACK—OUR CLIENTS—OUR COLLEAGUES—OUR STAFF
A WINNING FORMULA
A warm welcome back to you all for 2015. What are you looking forward
to? What aren't you looking forward to?
This year Perriams will connue its strategy to be the
best we can be and remain focused on delivering quality
services to our clients.
You should be refreshed from your Christmas break (and we hope that you
managed to have one), and be ready for the challenges that this year will
bring.
This also underpins our vision;
This year we have decided to share with you our A-Z right from the very
start. We hope these thoughts offer some interesng views, a bit of
inspiraon, some acon but mostly our insight as to what might be ahead.
TALENT WARS
One of the most common complaints or concerns we field from our clients
across all industries and business types is “how do we (Perriams) aract, retain
and movate good people?”
“Purpose with Profit”
It is a simple fact that Perriams is nothing without its
people. That includes all members of our 2015 Team
who have a vital part to play in aiming to deliver to you
an outstanding service. Our mission;
To have the best people
Provide the best service
For the best value
To each client each and every day.
Strategies for 2015:
This is not an easy task. As you know, volumes have been and connue to be
wrien on the subject.
Whilst it is not the purpose of this publicaon to discuss all of the possibilies
available to business owners to aract, and retain good people, what is clear, is
that an employer must offer something that competors do not and then
deliver this.
Make sure you can idenfy what this is and good luck on your recruitment drive
this year.
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Be responsive
Be mely
Be recognized as a great Employer
Connue to increase our knowledge base
Enjoy the work we do for all of our clients
Perform
Be Thankful
CONTENTS IN THIS ISSUE
1.
Tax Shelter
Welcome Back
A Winning Formula
Talent Wars
3.
Expenses You Cannot Claim
Marke7ng
Top Tips For The New Year
2.
A Fun Workplace
Succession Plan
Mathema7cal Logic
Affixa7on With Technology
4.
Would You Buy Your Own Business
2014 Staff Share Market
Kiwisaver—Q & A
Ageing Workforce Is On The Rise
All informaon in this newsleer is, to the best of the author’s knowledge, true and accurate. No liability is assumed by the
author or the publisher for any losses suffered by any person relying directly or indirectly upon this newsleer.
You are advised to consult professionals before acng upon this informaon.
February 2015 Page 2
A FUN WORKPLACE = HIGHER PRODUCTIVITY
MATHEMATICAL LOGIC
There are a growing number of New Zealand companies taking on board
the philosophy that a fun workplace equals happy workers and higher
producvity.
This comes from 2 maths teachers with a combined total of 70 years
experience. It has an indisputable mathemacal logic. This is a strictly
mathemacal viewpoint. It goes like this:
Your business this year needs to provide a place that your staff enjoy
coming to. This may include a nice kitchen (smoko room) and perhaps
even a place to play a bit of table tennis or pool.
What Makes 100%? What does it mean to give MORE than 100%?
Ever wonder about those people who say they are giving more than
100%? We have all been to those meengs where someone wants
you to give over 100%. How about achieving 103%? What makes up
100% in life?
Provide forms of gratude as an employer and you should expect to
benefit from some good old hard work and quality results.
It is a well known fact that our younger people in the work force expect a
bit more from their workplaces so don’t fall into the trap of what you had
or didn't have—you're not them.
The important issue here is finding the things that will make your
employees feel good about themselves so they can produce the goods and
work well within your environment. Be sure to consult with your team first
before any implementaon is put in place so that you can ensure that they
have bought into your philosophy too.
Here's a lile mathemacal formula that might help you answer
these quesons:
If:
ABCDEFGHIJKLMNOPQRSTUVWXYZ
is represented as:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26.
Then:
What they are a$er may not amount to much and on your part a small
investment thereof for what are your major assets
should prove frui>ul.
H-A-R-D-W-O-R-K
8+1+18+4+23+15+18+11 = 98%
and
USE 2015 TO KEEP THAT AFFIXATION WITH TECHNOLOGY UNDER
CONTROL
Technology has improved so much and spread so widely across the
world that not even a business flight provides an escape from the
office and business stress.
You do however have to stop technology taking over your life and so
use 2015 as your quest to manage it carefully.
K-N-O-W-L- E-D-G-E
11+14+15+23+12+5+4+7+5 = 96%
But ,
A-T-T-I-T-U-D-E
1+20+20+9+20+21+4+5 = 100%
And,
Structure your me so you get the most out of your uninterrupted
hours—almost a rarity in our world today.
Allow yourself me to wonder or reflect and me to come up with
ideas. If you're connually on your devices, looking at and reading
everybody else's ideas then you’ll become stale. Flex your
imaginaon!
THE BUILDING INDUSTRY
Whatever happened to the “carpenter”?
B-U-L-L-S-H-I-T
2+21+12+12+19+8+9+20 = 103%
AND, look how far a*** kissing will take you.
A-S-S-K-I-S-S-I-N-G
1+19+19+11+9+19+19+9+14+7 = 127%
So, one can conclude with mathemacal certainty, that while Hard
Work and Knowledge will get you close, and AVtude will get you
there, it’s the Bullshit and Ass kissing that will put you over the top.
Now you know why some people are where they are!
What is the difference between a carpenter and a builder? Is there a
difference? For all you builders out there, perhaps a point of difference for
you could be that you market yourself as a carpenter?
FAST FOOD
YOUR BUSINESS—A BEHIND THE SCENES LOOK
Is it really fast food or does it need to get faster? Do you get
frustrated when you do venture out for a takeaway and then you
have to cue. What’s that all about?
Let people in behind the scenes! When people see how your business
works they develop an interest in what you do and they are more likely to
buy your product and support your service.
A behind the scenes look is also a powerful enhancement tool!
Build diversity—A diverse team helps that enchantment last.
People with different backgrounds, perspecves and skills keep a cause
fresh.
WHEN A HORSE IS LAID TO REST
Did you know that when a Sire is buried it is tradion to bury them
in a standing posion facing the main gate of the stud?
My pick for a trend going forward is that food will (does
need to) get faster.
SUCCESSION PLAN—RETIRING?
Only a third succeed in the transion:
Research shows that only one out of every three family-owned
businesses makes a successful transion from first to second generaon.
There can be many problems faced in small and mid sized businesses
that involve different family members so planning your exit strategy is
extremely important, parcularly so if a good deal of your rerement
fund is ed up in the business assets and value.
All informaon in this newsleer is, to the best of the author’s knowledge, true and accurate. No liability is assumed by the
author or the publisher for any losses suffered by any person relying directly or indirectly upon this newsleer.
You are advised to consult professionals before acng upon this informaon.
February 2015 Page 3
BEING AN “UGLY PROSTITUTE” ISNT A CRIME
CRICKET: AS EXPLAINED TO A FOREIGNER…(OR FEMALE!!!)
A disgruntled customer called police to complain that a prostute was
You have two sides, one out in the field and one in. Each man
that's in the side that's in goes out, and when he's out he
comes in and the next man goes in unl he's out. When they
are all out, the side that's out comes in and the side that's been
in goes out and tries to get those coming in, out. Somemes
you get men sll in and not out.
not as prey as she claimed when they met in a car park in the dark.
The caller, who has been warned for wasng police me, contacted emergency
services saying she had breached Britain's Sale of Goods Act, reported the Telegraph.
Under this law, the purchase needed to be of sasfactory quality and fit for purpose.
A police spokesman said the man called on a Tuesday, about 7.30pm, saying she had
made out she was beer looking than she really was.
"When he raised this issue with the woman concerned, she allegedly took his car keys,
ran away from the car and threw them back at him, prompng him to call police,” the
spokesman told the Telegraph.
When a man goes out to go in, the men who are out try to get
him out, and when he is out he goes in and the next man in
goes out and goes in. There are two men called umpires who
stay all out all the me and they decide when the men who are
in are out. When both sides have been in and all the men have
been out, and both sides have been out twice a$er
all the men have been in, including those who are
not out, that is the end of the game!
"An officer in the Solihull contact centre advised the caller that no offences had been
commied by the woman and that solicing for sex was in fact illegal."
TOP TAX TIPS FOR THE NEW YEAR - WHAT WILL INLAND REVENUE
BE LOOKING AT in 2015?
"Despite the man refusing to give his details, police have been able to idenfy him and
have sent him a leer warning him about his acons.”
Under the “at risk” areas for individual taxpayers. These include:
The spokesman said wasng police me carries a maximum sentence of six months
imprisonment.
Using Company and Trust ownership structures for business.
Though the Trust and top personal tax rates are now aligned at 33
percent, this connues to be an area of interest for Inland Revenue.
The arbitrage opportunity of using the 28 percent corporate tax
rate (resulng in a 5 percent tax savings) may be tempng but be
cauous.
EXPENSES YOU CANNOT CLAIM
There are three major areas in which you cannot claim business expenses. These are
disallowed under a provision of the Income Tax Act, which prohibits any deducon for
private or domesc expenditure.
Food
You cannot deduct as a business expense any claims for your own personal food. The
only excepon to this is purchase of food for entertainment purposes, or when you are
out of town on business (or perhaps rugby league players needing to put on weight!).
Health
There is no scope whatever for claiming a deducon of medical health costs, nor for
health insurance. There have` been some quite invenve (and humorous) claims over
the years under this heading. One was an English lawyer who tried to claim the costs of
his heart bypass surgery. The lawyer argued that without the operaon he would be
dead and if he were dead he could not earn assessable income. It was a good try, but
the claim failed.
Clothing
The only types of clothing that you can deduct from income are protecve clothing and
uniforms.
HOW DO YOU KNOW YOUR MARKETING IS WORKING?
The most important aspect to consider is measurement. If you don’t measure your
performance how do you know if you’ve been effecve? All markeng acvity can and
should be measured.
It is important to understand which markeng taccs work, how well they work and
adjusng your approach where necessary to achieve the greatest overall ROI on the
markeng budget.
The point to remember is that the cost of markeng acvity that is not measured
represents wasteful expenditure. The trick in measuring markeng acvity is to
understand what it is that each task is intended to achieve, and to know what the
result will be measured against.
All fairly straight-forward: have a plan, know what you want to achieve, know who you
want to talk to and how to get to them. If you take the me to think about each of
these carefully then you are on the right road to creang effecve markeng.
But if you'd like some help—there's always plenty on hand: just make sure you choose
an affordable opon for your business.
If you’re drawing a professional salary, it should reflect market
salaries for your industry or profession. Inland Revenue generally
requires your salary to be 80- percent of your business’ total profits
but calculang that salary, parcularly at the beginning of the year,
is surprisingly difficult. So any esmaon of salary should be
reviewed regularly to ensure it connues to be commercially
jusfiable.
If you own “mixed-use” assets that are available for rental or
charter – parcularly holiday homes and yachts – be aware they’re
now caught by new rules liming the tax breaks available from
private use of these assets. Previously, the cost of these assets
could be deducted and offset against other income; now taxpayers
must treat most of these costs as private expenditure.
Property development is sll firmly in Inland Revenue’s sights.
Despite Labour’s elecon loss and the shelving of a comprehensive
capital gains tax, some gains related to profits from developing and
selling property will be taxable under rules that have been in place
for some years. If you are unsure, please get in touch. It is easier
than you think to get this wrong.
Using tax havens, or exploing any mismatch in the treatment of
income between countries (so-called “hybrid instrument” or
“hybrid enes”) to reduce tax bills is another big-cket item for
Inland Revenue. Scruny can be expected even though the
outcome may ulmately be accepted. This is a good me to revisit
and update your advice to ensure you are on the right side of the
line. Things are changing fast and you must keep abreast of these
changes to avoid tax risk, and potenal huge tax and penalty costs.
If there is one overriding message for taxpayers – corporates of all
sizes and individuals – for the coming year, it is to ensure the tax
structure you choose matches the underlying reality of your
business. Clever tax plans can come unstuck if they lack commercial
reality or are unrelated to your actual business. Think of it this way:
tax avoidance is o$en described as very clever people doing things
that would otherwise be extremely stupid if it were not for the tax
benefits.
Perriams will ensure that your structure
meets all these tests.
All informaon in this newsleer is, to the best of the author’s knowledge, true and accurate. No liability is assumed by the
author or the publisher for any losses suffered by any person relying directly or indirectly upon this newsleer.
You are advised to consult professionals before acng upon this informaon.
February 2015 Page 4
STAFF—2014 SHARE MARKET CHALLENGE
THE STAFF ROOM
In August of 2014 all the staff parcipated in a share market challenge.
A place where everyone belongs. People make up over 50% of
our cost so anything we can offer to make the workplace
beer for our staff goes without saying.
Each had $10,000 of “play money” to invest over 3 months (September
2014—November 2014). You could do one trade at the end of each
month if you wished.
Perriams are! This year we are going to create a staff room
which our staff will find hard to get away from.
We announced the results just prior to the Christmas break and we
thought we would share with you our top three share market Gurus;
AGEING WORKFORCE IS ON THE RISE
Sam + $754.00 (annualised return 30%)
Sally E + $712.00 (annualised return 28%)
Karen +$632.00 (annualised return 25%)
This is not something that might happen, it is something
that is going to happen.
Prize money—Sam $100, Sally Evans $70 and Karen $40.
For your interest Sam’s por>olio consisted of the following stocks;
•
•
•
•
•
Auckland Airport
Fonterra
Mighty River
Synlait
Wynward Group
Well done Sam!
The female staff certainly came out on top over the males and our winner
was one of our very knowledgeable members from the admin team. The
lesson here? Perhaps it is “never underesmate your admin team”.
Feel free to contact Sam, for some 2015 ps!
Since 2011 the percentage of people 65 and over has
nearly doubled. As of 2013, 22% of those aged 65 and
over were in the workforce and by 2031 this number is
expected to rise to 31%
As a test to these projecons based on our current
workforce Perriams will be just knocking on the door of
31%.
IT’S A FUNDAMENTAL TRUISM
It’s a fundamental truism of business—you need to
differenate if you want to be successful, unless you are in a
market where everybody wants what you sell and you then
just have to be in place - and that’s not many of us.
WOULD YOU BUY YOUR OWN BUSINESS?
KIWISAVER - Q & A
Q. Can I sll contribute towards Kiwsaver and send money
into my Kiwsaver account if I move overseas?
It’s amazing how few know the value of their own business, even an
approximate value, or that there may well be a queue of buyers if their
business came to the market. There is always a demand for good
businesses. This demand comes from several independent sources;
migrants looking to meet immigraon requirements, returning NZ expats, companies growing through acquision, individuals looking at
leaving their jobs and owning a business, just some examples. Because
businesses are most o$en valued on the basis of ROI (return on
investment), the actual mulples of earnings have not really changed, yet
over the years in some cases these can increase due to a shortage of
good available businesses.
Determining the likely selling price for your business and what drives this
value is important. With the right informaon you can make an informed
decision about whether you should connue to own your business, buy
another business, rere, or do something enrely different.
Value drivers are varied - but the following tend to be the most
influenal; barriers to entry, risk profile, sunrise or sunset industries,
customer base, locaon, likely buyer demand, ease of operaon, how
long the business has been operang and comparable market evidence.
All of these factors will determine what mulple of earnings a buyer
might be prepared to pay.
A.
Yes you can make one off or regular contribuons
whenever you like, One thing to bear in mind however
is that you wont be eligible for the member tax credits
for the me you are based overseas.
If you’re moving permanently to countries other than
Australia it is sll possible for you to withdraw your KiwiSaver
funds a$er you’ve lived outside of New Zealand for a year.
Once you’ve signed a statutory declaraon and provided
evidence that you’ve le$ New Zealand for good you'll be able
to withdraw your Kiwisaver funds, except for any member tax
credits.
Should you decide to return to New Zealand further down the
track you can re-join Kiwisaver but you won’t get another
$1,000 kick start payment.
Please note that regular contribuons to your Kiwsaver
account whilst you are absent from New Zealand could impact
on your tax residency status so you should always discuss this
opon with Perriams first.
If you are considering selling your business, it is also important to
consider whether you would in the first instance buy the business
yourself?
All informaon in this newsleer is, to the best of the author’s knowledge, true and accurate. No liability is assumed by the
author or the publisher for any losses suffered by any person relying directly or indirectly upon this newsleer.
You are advised to consult professionals before acng upon this informaon.