Thank you for your support
and business loyalty for 2008. Everyone at Withers Tsang & Co
would like to wish you a very joyous festive season and a prosperous
2009!!!
Our office will close for holidays on 23 December 2008 (Tuesday) at
2.00 pm. We will reopen on 12 January 2009 (Monday).
PLAN AHEAD
IRD has made many administrative changes in the 2008 year.
Amidst the usual holiday pay and creditors commitments during the
festive period, for the first time, taxpayers have been lumbered the
burden to pay the 2nd instalment Provisional Tax on or before the 15th of January.
It may be cliche but the message is planning.......plan your cashflow
now. See our important dates section of this
newsletter for some key items to consider.
MORTGAGE
BREAK PENALTIES - WHAT ARE THE ISSUES?
In a falling interest rate climate we are fielding a lot of calls about
the merits of breaking fixed rates to go floating or re-fix at lower
rates. The following is a summary of the considerations.
Generally, the break penalties are designed to compensate the bank
for the interest they won't now earn over the remainder of the fixed
period, i.e. the bank won't lose.
So the amount of interest to be saved by going floating will often be
less than the penalty to do so. Typically, the further the
interest rates fall, the greater the penalty.
Having said that though, if interest rates continue to fall after the
decision to break has been made, the penalty is a fixed cost but the
savings continue to grow.
Another important consideration is whether you can pay cash for the
penalty or must add it to the loan. If you add it to the loan
but choose not to plow your new interest savings back into reducing
your loan, the compound interest effect of financing the penalty over
the life of the loan will generally outweigh any short term savings.
If you wish to add the penalty to the loan but your loan to value ratio
is tight, you will need to be sure the bank will approve the extra
lending.
If cash flow is your primary motivation for breaking the loan, the
option of capitalising the penalty may still be appropriate but it is
unlikely to be financially advantageous.
Finally, the break penalty is essentially an extra interest charge,
and provided the loan is funding income earning assets and the decision
to break the loan is motivated by increasing the overall net income
from the investment, the penalty will generally be tax deductible.
Before deciding to break a loan, clients should seek a written quote
from their bank and calculate the savings a lower interest rate will
allow over the remaining fixed term, and compare these
amounts. Note - The bank's penalty quote is often only valid
until 3.00pm on the day it is given so decisions must be made quickly
before the numbers alter.
Anyone wanting assistance with these calculations is welcome to contact
us.
INTRODUCING TMNZ
Will you struggle to meet your provisional tax obligation during this holiday? Would you like to only pay the interest on the tax due for now and defer paying the core tax liability in 12 months time?
If cash flow is important to you, then read on....
Introducing TMNZ - Tax Management New Zealand, a registered tax intermediary, who is able to meet your tax liability on time and avoid incurring late payment penalty.
How it works....
- You work out when you will have the money to pay the full provisional tax
- Pay a tax finance fee to TMNZ (equivalent to paying interest on your tax bill but at a % lower than IRD use of money interest %)
- You then pay the full tax amount outstanding, up to 12 months later.
- TMNZ will assure your tax payment would be treated as if you've paid on time
To find out more, please ring one of our senior accountants who will be able to assist you. Please also refer to the back of the provisional tax payment slip for details.
Kind regards
Withers Tsang & Co
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GST due dates
If you are GST registered,
your October/November 2008 GST return will also be due on 15th January
2009.
Please complete your GST return before you go on your holiday.
PAYE due dates
If you are an employer and
file fortnightly PAYE returns, then the due date for fortnight ending
31 December 2008 will be 15 January 2009.
Change in provisional tax due
dates
IRD has changed the due date for the 2nd instalment of 2009 provisional
tax.
The new due date is 15th January 2009 (Thursday).
Our tax admin team will be posting the IRD payment slip to you by 5th
December.
For those of you who are on "profit watch", our accountants will make
contact with you to work out the appropriate tax liability.
SET UP BILL PAYMENTS
If you are going away for the holiday period OR you will not be back
before 15th January, to avoid being charged late payment and late
filing penalties, please remember to:
Either
Post your cheque & payment slip before you go on holidays (DO
NOT send post dated cheques to IRD, they will still bank it regardless
and if it bounces, they may not represent it).
Or
Set up internet bill payment (post dated to go on 14th January 2009).
CHARITIES/NON PROFIT ORGANISATION
THAT YOU HAVE SUPPORTED
Continuing the Withers Tsang tradition, we have again made donations on
your behalf to the following charities and non profit organisations
instead of giving out corporate gifts.
- Auckland City Mission
- Special Christmas Children's Party
- Starship Children's Hospital
- Westpac Rescue Helicopter
- Radio Lollipop
- Society for disadvantaged children
- Neurological foundation
- KIDS foundation
- Lions - Starship Bone Marrow unit + vans for Autism kids
- Brain injury Association
- Camellia House
DONATION REBATES
Following on the theme of giving, there had been major tax changes for
the better in relation to donations rebate starting from the current
2008/2009 income year,
As an individual taxpayer, there is no longer a $630 maximum rebate
threshold. You can now claim 1/3 of your donations as rebates up to
your maximum taxable income.
Private companies (with 5 or fewer shareholders) are also able to claim
donations in the company books as an expenses provided it does not
exceed the company's net taxable income for the year.
CONTACT
US:
Withers Tsang & Co Limited
24-26 Pollen Street
P O Box 47-145
Ponsonby
Auckland
New Zealand
Telephone: 64 9 3768860
Fax: 64 9 3768861
Email: info@wt.co.nz
Web: www.wt.co.nz
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