Gilmore Taylor Associates Ltd Blog

 

 

If you want to succeed in business, understand that Cash is King. Your business can't survive without cash.

The following six takeaways are essential for business success:

1. Protect your cash position, by knowing what it is. Build a cash flow statement and always keep it up to date. If you foresee shortfall, start at once to fix it. 
2. Create a cash buffer as an insurance against unexpected difficulties.
3. Protect your cash position against revenue shocks, by maintaining a balance equivalent to at least two months of operating expenses
4.  Be realistic with revenue expectations. Take action now if it looks like sales are not going to get you to breakeven.      
5. Credit checking upfront will reduce the risk of customer non-payment. Follow up with clear payment terms agreed in writing. Communicate regularly with customers. And automate where possible.
6. Every dollar you spend reduces cash reserves. The best way to protect your cash is to create a budget for the spend you know you need, and stick to it.  

      

      .

     

       

ACC Have just launched a new digital service for their small to medium business customers to manage their ACC levies online.

For more information or to create a log in, follow the link below:

https://www.acc.co.nz/myacc-for-business

A good read - article by HRINZ

There has been equal parts fanfare and scaremongering following the introduction of the Health and Safety at Work Act 2015, which took effect on 4 April 2016.  One of the key changes from the previous legislation is the focus on the top table of organisations, particularly the obligations and liabilities of directors and chief executives.  This has resulted in a lot of uncertainty and questions, and reportedly led to Peter Jackson resigning as a director of Weta Workshop.

The Act establishes a number of "duty holders" each of which is required to perform their statutory duties in order to ensure workplace health and safety.

The primary duty holder is the person conducting a business or undertaking ("PCBU").  The PCBU will typically be a legal entity, such as a company or partnership.

An "officer" of a PCBU has a duty to exercise "due diligence" to ensure that the PCBU complies with its duties.  The Act sets out the reasonable steps that an officer must take in order to satisfy the due diligence duty.

Under the previous legislation, the officers, directors, or agents of a body corporate or Crown organisation only became liable if they had directed, authorised, assented to, acquiesced in, or participated in the failure of the body corporate or Crown organisation.  In essence, officers under the previous legislation had secondary liability.  Under the new Act, officers have primary liability – an officer could be found guilty of having failed to exercise his or her duty of due diligence regardless of whether the PCBU has failed to meet any of its obligations.  The implications of such a failure are also now much higher: a term of imprisonment of up to 5 years, or a fine of up to $600,000 for the most serious offence.

It is therefore important for organisations to take steps to identify who are its officers, and for senior executives to understand their obligations, including at the point they are recruited.  However, the process involved is not altogether easy.

Some people can be readily excluded from the officer classification.  Consistent with the fact that duties under the Act cannot be transferred, or contracted out of, someone who merely advises, or makes recommendations to an officer is not, themselves, an officer.  Helpfully, WorkSafe has also advised on their website that the mere inclusion of the word "officer" in a job title (e.g. a Police Officer) does not result in officer status.

Equally, some people can be readily included in the officer classification.  The first part of the officer definition in the Act defines officers by reference to the PCBU.  For example, if the PCBU is a company, any person who is a director of that company will be an officer; or if the PCBU is a partnership, any person who is a partner will be an officer.  Chief Executives will also be included by virtue of their specific inclusion in the second part of the definition.

It is the second part of the definition, however, that gives rise to difficulty in identifying a PCBU's officers.  It states that an officer includes:

…any other person occupying a position in relation to the business or undertaking that allows the person to exercise significant influence over the management of the business or undertaking.

There is a lot of room for argument as to the meaning of the words "exercise significant influence" and they have not yet been tested in the courts. 

Some guidance can be derived from Parliament's intentions in respect of the definition.  The Transport and Industrial Relations Committee, in its report on the Health and Safety Reform Bill, which recommended changes to the definition, stated that:

The designation 'officer' should be confined to people in very senior governance roles, such as directors and chief executives.  (Emphasis added).

WorkSafe says that "officers have a duty because they make policy and investment decisions that can affect workers' health and safety."

A recent decision of the Industrial Court of the Australian Capital Territory (McKie v Al-Hasani and Kenoss Contractors Pty Ltd (in liq) [2015] ACTIC 1) considered a different definition of officer, but is nevertheless of interest.  In concluding that a project manager was not an officer, the Court placed significant weight on the distinction between "operational" roles, which are not officers, and "organisational" roles, which are.

All of the guidance indicates that officers will be a reasonably narrow band of people at the top of an organisation.  However, care needs to be taken in conducting the classification exercise.  It is also important to remember that an internal decision as to who is an officer will not ultimately trump the statutory definition.  Accordingly, where there is doubt, it may be preferable to have everyone at your organisation's top table acting as though they are officers because the consequences of getting it wrong could be significant.  

NZ Budget 2017 Infographic.pdf

 

New parental leave rules

Tax and contractor law change

From 1 April 2017, the way contractors pay their taxes will change, giving you greater choices and making it easier to get tax right.

Recruitment companies will be required to deduct withholding tax from all payments to you from 1 April 2017. The default rate is 45%, the new change is that it now effects those contracting through companies.

Sole Traders:                 

If you work directly for any business and are not required to have tax deducted by the hirer, you elect your own rate with the minimum being 10%.

Both you and your payer must agree to this approach. If you both agree, complete the new tax rate notification form (IR3330C). The benefits of choosing the right rate means you are less likely to have a tax bill at the end of the tax year.

Companies:

If you contract through a company and you're not an employee receiving salary or wages you will need to complete an IR330C and give to your payer. They will deduct tax from payments made to you from 1 April 2017. This is the same whether you are self-employed, a sole trader or a company.

On this form, you are required to pick the rate you would like tax to be deducted at. New Zealand tax residents can pick any rate from 10% up to 100%.

 If you complete the form but don't pick a tax rate, the labour hire business will deduct tax at 20%. If you don't complete the IR330C, the no-notification rate of 45% will be deducted.

New Zealand tax residents can't apply for a certificate of exemption for these payments, but you may be able to apply for a 0% special tax rate instead, this includes companies. This means you must now include all the relevant details for the payments on your employer monthly schedule, even though no tax is deducted.

Interest changes for underpaying provisional tax:

Use of money interest is charged if your year end-of-year earning is higher than projected in your provisional tax bill. From the 2018 tax year, new rules on when this is charged mean fewer people will have to pay it.

Please contact us www.gilmoretaylor.co.nz if you would like to discuss any of these changes and how they may affect you.

Daylight Saving Ends Sunday 2 April

This year Daylight Saving ends on Sunday 2 April.  At 3.00 am clocks are put back one hour to 2.00 am. Under the Time Act 1974, employees who are working during the time when Daylight Saving ends will work an additional hour and should get paid any extra hours worked. Daylight Saving begins again on Sunday 25 September 2017.

From August 2016, territorial authorities (city and district councils) can put in place local policies that allow shops within their area, or parts of it, to trade on Easter Sunday.

All shop employees have the right to refuse work on Easter Sunday without giving a reason to their employer.

A shop opening for business on Easter Sunday in an area where there is no local policy in place (and no exemption from shop trading restrictions or ability to open with conditions) will be in breach of shop trading restrictions.

Far North District Council has made a policy that shop trading is permitted on Easter Sunday in the whole of the Far North District.

The Whangarei District Council has decided not to make a policy for 2017 and will revisit again in 2018.

Our new building signage is underway at last, watch this space...