A Quick Update on Accounting Updates
“People are very open-minded about new things, as long as they're exactly like the old ones.” —Charles F. Kettering
There has been lots of change in the accounting world over the past while, mostly due to the government changes to help businesses with the effects of Covid.
Following is a short summary of the changes that have taken place so far this year. If you have any concerns, please contact us to discuss.
There have been a number of wage subsidies or relief subsidies released. The common misconception on these was that they were tax-free, but this isn’t the case. Please don’t hesitate to contact us in regard to any of these.
Low Value Assets
Previously, if you purchased an item of equipment this could be written off fully in the year you purchased it if the value was under $500 (excluding GST). During the 2021 financial year (which we are doing accounts for now) the value increased to $5,000 (excluding GST) thus giving people higher expenses, less profit, and less tax.
For the 2022 year, this amount has decreased down to $1,000 (excluding GST).
Depreciation on Commercial Buildings
Depreciation on commercial buildings has been reintroduced from the 2021 year. If you have a commercial building where you previously claimed depreciation, we are now required to start claiming depreciation again.
While this means less profit and less tax in the years you own the building, when you sell this can mean an income of depreciation recovered and some extra tax to pay.
If you are thinking of selling your commercial property, please get in touch with us to discuss potential tax obligations.
Ring-Fencing Residential Losses
If you own a residential rental property or properties, any losses you make are no longer deductible against other types of income you earn. The loss can only be carried forward to future profits made by the rental property.
Top Tax Rate Increase
The top tax rate for individuals is increasing to 39%, and there are new rules around being able to deduct interest on residential rentals. We will keep you updated about this over the coming year.
As a farmer, Christine understands our business and how farmers and growers operate.
We use Rural Accountants to provide a full accounting service to an orcharding partnership which operates a number of orchards with a wide spread of varieties and management systems. Rural Accountants are always timely and accurate, and their annual financial accounts are extremely easy to understand and very grower-friendly.
Rural Accountants is a real asset to our business.
The team at Rural Accountants pretty much manage all our administrative tasks for the group including payroll and tax planning, ensuring we don’t pay any more than necessary. They are at the forefront of technology and have helped us get up and running with Xero and Figured which is much more efficient than the way we used to work.
Christine is very knowledgeable, great to deal with and knows our business well. She is also a sheep & beef farmer so knows the industry really well and understands our needs.
Rural Accountants keeps us on track through strategic and forward planning meetings throughout the year. Christine knows our business inside out so she can deal with our questions instantly.
What Our Customers Think
I used to work out my GST and process it manually which would take me at least a full day every two months. Angelina then set up reconcilliations rules and other quick tools, and showed me how to do all my reconcilliations and process my GST returns through Xero which now takes me no time at all!