Firm Journal

Early access to KiwiSaver now available for those with life-shortening conditions

At the end of July this year, KiwiSaver announced that savings accessibility will be changed for people with shortened life expectancies due to congenital health conditions.

Under previous rules, savings could not be accessed before the age of 65, however people with life-shortening congenital conditions can have a life-expectancy below this age. As a result, people with such conditions were not joining KiwiSaver, as it was a redundant retirement option for them, or had joined KiwiSaver and were not able to withdraw their savings when needed.

The change allows people with life-shortening conditions to withdraw their savings at whatever age they choose to retire, and enable them to support a comfortable retirement with the benefits associated with KiwiSaver. While part of KiwiSaver’s success as a retirement savings scheme has been credited to only being able to access funds after you turn 65, this system does not take into account different health and retirement situations. The update acknowledges citizens’ different living circumstances and aims to make the system fairer for people who may otherwise be at a disadvantage.

The new withdrawal policy has a set list of conditions outlined that would automatically qualify certain users to be able to access their savings early. People can qualify for withdrawal by providing a medical certificate or other related evidence to certify early access.

Posted on 9 October '19, under super. No Comments.

What you should know about using cryptocurrencies

In an increasingly technologically dependent age, it can be useful to keep up with new forms of currencies in the digital space. Cryptocurrency is internet-based, digital money that is not controlled by any central authority. Currently, the most prominent cryptocurrency is Bitcoin, which has a market capitalization of over 155 billion U.S. dollars.

How do you buy cryptocurrencies?
Ensure a cryptocurrency is legitimate and trustworthy by researching before you buy. Most of the time, it is a good idea to choose a popular one that is already widely used and trusted by other crypto users, such as Bitcoin. There are a number of popular websites and apps that simplify the process of buying cryptocurrencies. Once you have purchased cryptocurrencies, you can store them in a digital crypto wallet for security and easy accessibility.

Benefits:

  • Fast: Transaction speeds are usually fast, making things like paying bills and shopping online easier.
  • Low Fees: There are generally minimal to no transaction fees in crypto exchanges, so using cryptocurrencies can be a good way to avoid online banking fees and charges.
  • Anonymity: Making transactions online with traditional banking methods generally requires information such as your name, credit card number, phone number and address. However, cryptocurrencies allow you to be anonymous in these transactions by only showing your crypto ID or a nickname of your choosing.

Drawbacks:

  • Security risks: While it is harder and more technical to steal digital money as opposed to physical cash, cryptocurrencies are still susceptible to skilled hackers and scams. Because cryptocurrencies are decentralised with no authoritative control, any loss of cryptocurrency due to theft or scams cannot be recovered.
  • Value instability: Cryptocurrencies tend to fluctuate in price and value, which can reduce their reliability as you can never be certain how much they will be worth the next day.
  • Lack of merchants: Many companies have not taken the step to adopt cryptocurrencies as a form of payment, so it can lack usefulness in everyday transactions.

Posted on 30 September '19, under money. No Comments.

Budget-friendly ways to promote your small business

Promoting your business can seem tricky to navigate and expensive, especially when there are budget and staff restrictions to think about. However, there are a number of ways to promote your business easily and cost-effectively.

Blog content:
Posting well-written and relevant blog content on your website can help boost website traffic while capturing the trust and engagement of potential customers. Regular content that aligns with the interests and needs of your audience will generally work best in gaining profile views.

Social Media:
While social media may seem like an obvious channel to keep running on as a background form of promotion, it can be worthwhile to invest more time and resources to get the most out of your business’s social media presence. Keeping the aesthetics and content of your social media pages regularly updated and relevant can be a great way to establish a brand image and gain attention from your target audience.

Email Marketing:
Growing your mailing list can be a great way to establish customer loyalty and to encourage customers to remember your business and revisit your website. Websites like Mailchimp and Benchmark are free email marketing services that are easy to use with predesigned templates.

Posted on 30 September '19, under business. No Comments.

Updated government tax policy work programme 2019-20

In August this year, the government released an updated tax policy work programme for 2019-2020. The updated version is aimed to encourage productive investment and maintain the quality and efficiency of the tax system. Some of the key workstreams covered in the programme include:

Land:
The current land protocols will be reviewed in an aim to improve the efficient use of land and the taxation of land is fair and supports productive investment. This includes clarifying holding costs for taxable land, facilitating compliance with existing land rules, and taking measures to improve revenue collection by improving information flows.

Business:
The government aims to focus on prioritising economic performance and minimising the impact of the tax system on businesses by reducing compliance costs. The programme deals with increasing the integrity and neutrality of the system and improving the economic achievements of small businesses and firms.

Environment/Sustainable Economy:
This workstream will look at how different tax regimes could make positive environmental impacts, noting where greater environmental taxation could change behaviour and raise money for environmental purposes. This includes a review of the Emissions Trading Scheme and revising the Waste Disposal Levy.

Posted on 30 September '19, under tax. No Comments.

Dealing with a bad day at work

Bad days can happen to the best of us, but that doesn’t stop work from needing to get done. Whilst working when you’re feeling down is the last thing you want to do, here are a few ways to pick yourself up and carry on with tasks you need to do.

Take a break:
Stepping away from the office to think can drastically improve your mood and help you look at the day more clearly. Going for a walk or sitting in the park on your lunch break can help you feel relaxed and better energised to go back to work. Even stepping out of the office for a moment to the bathroom can help remove yourself from a stressful situation. Don’t let yourself think about what has gotten you into a slump, think instead of what you can proactively do once you return to the office.

Express emotions appropriately:
Expressing your emotions is ok and necessary to feel better. It can be very easy to rant to colleagues or friends when you are feeling rough but there is a line between venting and gossip. Strong emotions such as anger can see you act out instead of thinking a problem through. Try to observe the problem through an objective lens before discussing it with colleagues or management and keep it strictly professional. This can help you to communicate better and avoid getting caught up in office politics.

Learn from the day:
Problems or unforeseen circumstances are opportunities to learn and grow. After a particularly trying day, take a moment to reflect on what didn’t go so great and possible reasons why. Evaluating what went wrong can help you to better understand how to avoid doing the same thing in the future, teaching you to be proactive, rather than reactive.

Posted on 24 September '19, under business. No Comments.

Introduction of new KiwiSaver Bill

The Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill contains proposals to simplify and modernise the administration of KiwiSaver. The Bill proposes a number of changes to improve the administration of the KiwiSaver scheme, facilitating faster transfers of funds, improving the administrative efficiency and enhance members’ experience with the scheme.

The implementation of a new information technology project known as Business Transformation (BT) has allowed Inland Revenue (IRD) to detect more clearly what rate of tax that people should be paying on their KiwiSaver accounts and other investment savings.

Though the New Zealand tax system has a broad-base, low-rate framework, the IRD has identified that approximately 1.5 million people have been paying the wrong prescribed investor rate (PIR) on their KiwiSaver accounts and other managed funds.

Currently, KiwiSaver investors and others with savings in Portfolio Investment Entities must be the ones to notify savings providers of their appropriate PIR tax rate. As many individuals do not do this step, they are charged the default rate of 28%. The tax paid is final and any overpayment cannot be refunded.

The proposed law will allow for the IRD to notify the provider to correct the PIR from 1 April 2020. The IRD has also announced that from mid-July it will begin contacting taxpayers who are on the wrong rate.

Posted on 10 September '19, under super. No Comments.

Spring clean your finances

When it comes to your money, whether it be loans, insurance, savings or superannuation, having a ‘set and forget’ attitude can be detrimental to your long term finances. Checking in on the different aspects that make up your finances every now and then to see if they need freshening up is a good way to ensure you are getting the most out of your money.

Your budget:
Since a person’s income and expenses will change over time, making sure your budget is up to date can help keep track of your spending and calculate how long it will take to reach your savings goal. This is also impacted more by day to day and surprise expenses you may incur so regular assessment will better your planning.

Your savings:
Spring is the perfect time to reconsider the type of savings product you currently have and whether the return you receive on your savings is at the best rate out there. For those with a term deposit that is about to mature, consider whether there is another savings account that pays higher interest or if another term deposit is a better option.

Your superannuation:
To get to know your superannuation better this Spring, find your latest super statement and check the following:

  • If you have multiple super accounts: consolidating all of your super accounts to just one will save you fees and make it easier to keep track of.
  • Investment options: consider the best investment option for each stage of life when choosing super investments. How close an individual is to retirement can affect how aggressive or conservative they want their investment strategy.
  • Contributions: consider how much you are currently contributing to your super; the sooner you start contributing extra, the less you have to give up each week to make a difference in the long-term.

Posted on 3 September '19, under money. No Comments.

Changes to IRD interest rates

From 29 August 2019, the interest IRD charges when tax is unpaid or underpaid is increasing from 8.22% to 8.35%. This is often referred to as use of money interest (UOMI) AND applies to most tax obligations such as income tax, PAYE, FBT, withholding taxes and GST. The new rate comes as part of the Order in Council changes made on 1 July 2019.

Along with the use of money interest rates payable on underpayments of tax being increased, the rate of interest for overpayments of tax will decrease from 1.02% to 0.81%. Late payment penalties will also apply if a taxpayer does not pay on time. IRD late payment penalties work as such:

  • One per cent the day after payment was due.
  • An additional four per cent if the tax, including late payment penalties, is still outstanding after seven days.
  • A further one per cent every month after.

The last IRD interest rate change was in March 2017. The new rates are based on the floating first mortgage new customer housing rate and the 90-day bank bill rate. Both are determined by the market and can move independently of each other and the Official Cash Rate.

Taxpayers can be entitled to a deduction for their UOMI payments for the interest paid on underpayments of tax, provided the deduction is made in the year the UOMI is paid.

Posted on 3 September '19, under tax. No Comments.

Quick fixes to boost email marketing

While email marketing remains one of the most effective platforms for businesses to reach clients on a personal level, it does not always deliver the results you may be after. If you’re finding that email marketing isn’t going as well as you had hoped, here are five simple ways to improve your campaign:

Experiment with your “from” name:
Seeing “from” information that isn’t clearly related to a person or place that clients know, is often a red flag for individuals who are becoming increasingly wary of email spammers. Make sure your recipients know they’re getting emails from someone they actually asked to hear from by making your “from” information as obvious as possible.

Target behaviour:
While segmenting an email list by demographics can produce results, it is much more effective to segment subscribers by their behaviour. Send clients targeted messages based on their service or purchase history, send loyalty offers to those who consistently open your emails or re-engagement campaigns to those who never do.

Remember mobile optimisation:
With approximately 53% of emails being opened on mobile devices, using mobile-friendly layouts and graphics will help with continued engagement. If the content doesn’t appear properly on a mobile device, chances are the subscriber will be less likely to open another email. Make sure images do not look stretched or take too long to load and use appropriate ratios on all platforms.

Posted on 28 August '19, under business. No Comments.

Short-term vs long-term financing

Maintaining healthy cash flow can be challenging; between ongoing expenses and bills, poor cash flow can severely impact your customers, staff and bottom line. Business owners need to understand the differences between short and long-term financing when developing a cash flow strategy.

There are various sources of financing available, with each being useful for different situations. Choosing the right source and mix is key for good cash flow, with financing options often being classified into two categories based on time period: short-term and long-term. To find the right plan for you, determine your needs and then match a financing option to meet those needs.

Short-term financing:
Short term financing, or working capital financing, looks at needs that arise in relation to financing current assets – for a period of less than one year. Working capital is the funds that are used in the day-to-day trading operations of a business. Short-term financing can help you to pay suppliers, increase inventory and cover expenses when you do not have sufficient cash on hand.

Long-term financing:
Long-term financing options can help you invest in overall improvements to your business, for a period of more than 5 years. Capital expenditures, such as upgrading equipment, buying additional vehicles and renovating are funded using long-term sources of finance.

Posted on 19 August '19, under money. No Comments.