Newsletter February 2009
Welcome
In our last newsletter we informed you of changes we have made to ensure that you receive a 100% commitment to your business from all of us here at MCI & Associates. Following on from that we would like to ask your help in identifying the areas where we are doing well and the areas we can improve on.
If you have any issues that you’d like to talk about, you are always welcome to call our Practice Manager, Annette Kendall.
90 Day Trial Period
Effective from 1 March 2009, the Government has passed legislation granting employers the right to dismiss an employee within the first 90 days of employment with no right for the employee to lodge a personal grievance against the employer.
As with any legislation, it is not as simple as it sounds. The probation period provisions only apply where the employer employs “fewer than 20 employees”…“at the beginning of the day on which the employment agreement is entered into”. However, in some cases the point at which an employment agreement is entered into can be unclear. The method of counting staff will become critical as once the employer hits the 20 staff threshold, further employees will not be subject to the provisions.
The requirement for an employer to employ fewer than 20 staff for this protection to apply may lead to debate. Small private businesses often include family members as employees, although they might not be actively involved in the business in the same way as other employees. The cleaner who comes in for two hours each day will be included in the headcount, as will job sharing part-time workers.
The changes to the Act do not protect the employer from a grievance for unjustified action. That means that if the employer changes the employee’s role or reduces their pay, the full procedural requirements still apply.
Help After a Redundancy
As part of the National Party’s election platform, it promised an assistance package to help workers made redundant as a result of the current economic climate. The “ReStart” package has now been put in place and commenced from 1 January 2009.
The package is intended to assist individuals whose employment positions have been eliminated by their employer. It does not apply to individuals who have been fired, or who have completed a fixed term or seasonal contract. The package can also apply to the previously self employed as long as they are now eligible for the unemployment benefit.
On a financial level the package comprises two types of payment (both non-taxable) that an individual can receive for up to 16 weeks:
• “ReCover” - For parents with one to three dependent children the “ReCover” payment is $60 per week and a further $15 for each additional child, and
• “RePlace” - complements the accommodation supplement, and can be up to $100 per week. People who receive a redundancy payment of more than $25,000 are not eligible for “RePlace”.
However, a person whose redundancy payment exceeds $25,000 may be eligible for the Accommodation Supplement. A person's assets are taken into account when determining eligibility for the accommodation supplement. Only the portion of a redundancy payment in excess of $25,000 is taken into account for this purpose.
The “ReCover” and “RePlace” payments are only available to one spouse in the family. This means that a person who has been made redundant is not entitled to either of these payments if their spouse or partner is already receiving them.
The “ReStart” package also consists of assistance with finding a new job through support to develop a CV, interview preparation and career planning. This element of the package is referred to as “ReConnect”.
In order to be eligible for “ReStart” assistance, the individual must:
• be a New Zealand citizen or permanent resident and usually live in New Zealand
• have been made redundant from a full-time job
• be looking for a full-time job
• have been working for the six months before being made redundant, although not necessarily with the same employer, or
• have been self employed and now entitled to the unemployment benefit.
For an individual, full time work consists of 30 hours or more per week, for a solo parent 20 hours or more and for a person in a relationship, 30 hours or more when combined with those of their partner.
Under the package, an individual who has been made redundant will have 20 working days to apply for assistance.
New Thresholds for Small and Medium Sized Enterprises (SMEs)
New compliance thresholds were introduced in the July 2008 Tax Bill to provide some concessions for SMEs. Some of those thresholds have been adjusted further and new measures introduced by the new Government as part of its relief package for small to medium sized businesses, generally with effect from 1 April 2009. These concessions are meant to assist SMEs to reduce compliance costs. These changes are set out in the following table.
| Area of compliance | Original threshold | New threshold |
| PAYE - Taxpayer able to file once a month if total PAYE/SSCWT deductions below this level. | $100,000 | $500,000 |
| FBT - Taxpayble able to file FBT returns annually if PAYE/SSCWT deductions below this level. | $100,000 | $500,000 |
| Use of Money interest safe harbour - residual income tax threshold below which use of money interest will not be charged. | $35,000 | $50,000 |
| GST registration - GST registration required for turnover able this level. | $40,000 | $60,000 |
| GST 6 monthly filing - 6-monthly filing allowed for turnover below this level. | $250,000 | $500,000 |
| GST payments basis - Payments basis allowed for turnover below this level. | $1.3M | $2M |
| Low value trading stock valuation - No stock revaluation required if estimated closing stock is below this level. | $5,000 | $10,000 |
| IRD use of money interest rate - Reduction of the interest rates on overpaid and underpaid tax. (This change is effective from 1 March 2009.) |
14.24% underpaid 6.66% overpaid |
9.73%
4.23% |
| Legal fees - Total level of expenditure under which full amount is deductible irrespective of whether item is of a capital or revenue nature. | $0 | $10,000 |
Staff News
This month we welcome Jade Goode, our new accounting junior. Jade has impressed us with her attitude and willingness to learn. As well as accounting duties, Jade will be helping out with reception when Francie and Jess are busy or on leave. We look forward to seeing her progress through the ranks in years to come.
Deb Jewiss left in January to take up an exciting opportunity as office manager for a local company. We wish Deb all the best and thank her for her valued input over the past few years.
The structure of our firm provides a clear pathway for employees to progress their careers. Someone with an interest in accounting but little or no practical experience is able to begin work as an accounting junior such as Jade has done. We then provide on the job training to progress them to a senior accounting clerk level.
We provide assistance for staff wishing to gain formal business qualifications and currently have a number of staff who are studying extramurally. For staff who hold a business degree there can be opportunities to move to the position of Associate. Some accounting firms have differing criteria as to what defines an Associate. Our Associates have business degrees and are required to be either qualified as a chartered accountant or well on the way to gaining that qualification. Our Associates are seen as up-and-coming principals and Esther is recognised by the New Zealand Institute of Chartered Accountants as being able to practice in her own right.
We are supportive of our staff who undertake the commitment to extramural study. Over half our staff either hold or are studying towards tertiary qualifications and our staff alone have a combined 155 years of practical experience. All of this means that we are able to provide a valuable resource for you to draw upon. We have a vast knowledge and experience of both what is tried and true and also what is up and coming in today’s business environment.
Principals, Associates & Staff
Ian McKenzie Principal
Simon Curran Principal
Neil Ivamy Principal
Moira Paewai Principal
John Dodson Consultant
Esther Davis Associate
Warwick Gernhoefer Associate
Annette Kendall Practice Manager
Alison McKenzie Admin Manager
Gloria Hayward Accounting Manager
Administration Staff
Francie Edgington Receptionist
Gay Warrington Typist/Admin
Jessica Ross Reception/Admin
Jo Duff Wages Clerk
Karen Brooks GST Clerk
Leah Curry GST Clerk
Accounting Staff
Anna Clark (on maternity leave)
Beth Fowler
Bronwyn Irwin
Fallon La Dette (on maternity leave)
Jade Goode
Janine Boyden
Kirsten Akast
Maryanne Kroot
Ray Phillips
Sarah Stephenson
Sharyne Wimsett
Sherynn Harold
Staff Profile – Gay Warrington
This year Gay Warrington celebrated 35 years of service for Beard Dodson Ivamy and MCI & Associates combined. A great feat in this day and age and we are fortunate to be able to draw on Gay’s years of experience in administration.
Gay is responsible for keeping company and trust records up-to-date and is great at ensuring all of our i’s are dotted and t’s crossed.
If you have any questions about the newsletter items, please contact us, we are here to help