3 law changes that may affect your business in 2019

Date: 1st February 2019

Over recent months we’ve seen a number of diverse law changes, and some more coming up, that will most likely affect your business in some way. The changes relate to how you claim motor vehicle related expenses; the Employment Relations Act, particularly unions in the workplace; and a new Anti-Money Laundering and Countering Financing of Terrorism Act.

Motor vehicle expenses

speedometer kilometre rate

If you’re a sole trader or in a partnership and use your own vehicle for business, you can claim your running costs as an income tax deduction. Traditionally, if you own a company you’re liable for FBT any time you provide non-cash benefits, like motor vehicles, to your staff. Recent amendments to the income tax legislation, however, now allow close companies to use the kilometre rate (where one or two motor vehicles are provided to shareholder employees for their own use) to calculate deductions for motor vehicles instead of paying FBT.

Here’s a summary

You can now claim a deduction based on a kilometre rate method. This method uses set rates, which are divided into two tiers:

  • First tier – recovery of both the vehicle’s fixed costs and its per kilometre running costs, for the first 14,000 kms.
  • Second tier – recovery of the vehicle’s per kilometre running costs only, after 14,000 kms.

The following rates per kilometre will apply for the 2017/2018 income year:

 Vehicle type  First 14,000 kms  After 14,000 kms
 Petrol or diesel  76 cents  26 cents
 Petrol hybrid  76 cents  18 cents
 Electric  76 cents  9 cents

 

As an aside, note where employees are reimbursed for work travel using their own vehicle, a transitional rate of 76c/km is available for the 2018/2019 income year to calculate their tax-free reimbursement amount.

The legislation can be tricky, but with a little advice from an expert (like us!) you can rest assured you’re paying the correct amount of tax and staying onside with the IRD.  Get in touch if you’d like to talk this through or check out more details at the IRD website.

Employment Relations Act amendment

employees at work

On 12 December changes to the Employment Relations Act came into effect that aim to improve fairness in the workplace and deliver decent work conditions and fair wages. These are the changes:

  • Union representatives can now enter workplaces without consent, provided the employees are covered under, or bargaining towards, a collective agreement.
  • Pay deductions can no longer be made for partial strikes.
  • Businesses must now enter into bargaining for multi-employer collective agreements, if asked to join by a union.
  • Employees will have extended protections against discrimination on the basis of their union membership status.

Learn more about these changes, plus other changes (including changes to rest and meal breaks and trial periods) coming into effect on 6 May 2019 at the Ministry of Business, Innovation and Employment website.

Anti-money laundering

clean laundry hanging out to dry

If you’ve seen the film The Wolf of Wall Street, you’ll be familiar with the concept of money laundering – an illegal process where ‘dirty money’ received from criminal activities is passed through legitimate businesses and made ‘clean.’

In response to a growing number of laundering incidents in New Zealand, the government has made changes to the law, which now affect accountants and small businesses like yours. We’re now required to put new preventative measures in place to help tackle money laundering and financing of terrorism.

What does this mean for you?

We might need to ask you for more information about your business than we have in the past, especially if it involves large cash transactions ($10,000 or more in one transaction). You may also be asked for additional information about your identity.

If you’re a real estate agent or your business involves sports and race betting or dealing in high value goods, take note – the anti-money laundering legislation will extend to you from this year.

To find out more about what the changes mean for your business, get in touch or go to the Ministry of Justice website.



Posted in: Latest News