Archive | August, 2010

Your Accounting System

31 Aug

The impact this change will have on your business may depend on what accounting system you are running. Being ahead of the game and knowing what to do will be the key as billing systems, purchasing systems, expense systems and accounting systems will be affected.

Some of the main issues may be:

  • Will your accounting system cope with 2 different GST rates at the same time?
  • Does your accounting software need to be updated?
  • Maybe it’s time for a complete health check of your GST systems?
  • Can your accounting software issue tax invoices, debit and credit rates at both old and new rates?
  • What changes will be required to POS and till technology?
  • When will GST rate compliant software updates be sent to you from your suppliers and how will you test those updates to make sure the new rates calculate correctly?
  • Do you have any internal excel spreadsheets or other templates where the GST rate is ‘hard wired’ in?  If so, each of these will need a careful review.

We think Xero is the answer, check them out www.xero.com

GST Periods Starting 1 October 2010

27 Aug

GST periods starting from 1 October 2010

You’ll need to use the new 15% rate from your next return onwards, if:

•    you file your GST returns monthly, or

•    you are a two or six-monthly filer that has a return period ending 30 September 2010.

GST periods that span 1 October 2010

If you are due to file a:

•    two-monthly return with the period ending 31 October 2010, or

•    six-monthly return with the period ending:

o    31 October 2010

o    30 November 2010

o    31 December 2010

o    31 January 2011

o    28 February 2011

you’ll need to use the:

•    12.5% rate for the period up to and including 30 September 2010, and

•    15% rate for the period on and after 1 October 2010.

The IRD will be sending you new returns that will help you through the transitional period. You’ll then go back to using your normal GST return. The returns will be printed with a red stripe to distinguish them from normal GST returns.

There’s a Fraction….

10 Aug

The speculation is over.  The rate of GST will be increased from 12.5% to 15% as of 1 October 2010.

The GST rate increase is consistent with Government’s commitment to a fairer tax system and a move away from personal and company tax rates that it considers harmful to economic growth.

Over the next three months (and beyond) we’ll be working hard to guide our clients through the various changes that need to be implemented as a result of the GST rate increase, some of them complex.

As always, taxation changes do present opportunities along with the usual challenges, so now is the time to consider those opportunities along with the raft of administrative changes you’ll need to consider.

New Tax Fraction
At the moment, with a GST rate of 12.5%, calculating the GST component of a GST inclusive price is as simple as dividing by 9.

Not so simple after 1 October.  When GST increases to 15% you’ll need to multiply by 3 then divide by 23.

For example: Let’s assume the price of an item is $1,000 plus GST, so that’s $1,150 including GST.  The GST component is $1,150 x 3 ÷ 23 = $150.

Have a practice and enjoy!

Journalists Love Crunch

9 Aug

The Crunch team sat down last week with Aimee Wilson freelance journalist who recently went through Crunch to file her end of year tax return.

“Crunch is perfect for me as I work from home and also look after my young son, so I don’t have a lot of extra time for visiting accountants when it comes to sorting out my tax return.  The online service means I can quickly and easily send the information away to the Crunch team and let them deal with it for me.”

Aimee was a straight shooter, fun to talk to and enjoyed being the interviewee for a change!