Property Investors hit hard by 2010 Budget - But it is not all Bad News! 

Property Investors will no longer be able to claim depreciation on buildings begining with the year ended 31 March 2012.

The good news is that you can still claim depreciation on chattels and commercial building fitouts, you can still offset your losses against your other income, and there is no capital gains tax!

Further, for most investors, the lower depreciation claim will be more than offset by lower tax rates.

For those people with special tax codes, it is probably still worth while applying for them, but we can decide on a case by case basis.

LAQC's to be reformed

LAQC companies will become more like Limited partnerships, where the losses will still flow through to the shareholders personal tax return, but only up to the amount that the shareholder has invested in the company. This should be ok for a large number of companies, but it may limit the loss claimed for some others. This will not come into force until the 2012 financial year.

To find out how the depreciation changes will effect you personally, please just email andrew@betterbusiness.co.nz

GST to Increase to 15% - Is Your Business Ready??

From 1st October 2010 GST is going to increase from 12.5% to 15%. There are many things that businesses need to do, well before 1st October to seamlessly cope with this change. Things to consider are:

• Are you going take the opportunity to increase your prices by more than the increase in GST
• Could you use this as an opportunity to promote your business by delaying increasing your prices on 1st October?
• Review all advertising to ensure pricing reflects new GST rate. This incudes brochures and websites.
• For some businesses their customers need a long lead time to notify them of increases in prices eg supermarkets - ensure you give plenty of notice
• How will your accounting system cope, can you easily change the GST from a certain date?
• If you give credit and have accounts receivable in your business, can you cope with 2 GST rates? ie invoices issued before 1st October will be at a GST rate of 12.5% and invoices issued after 1st October will be at a GST rate of 15%, regardless of when you receive the money

Tax Cuts
Tax rates will be reduced from 1st October 2010, taking effect at the same time as the increase in GST

Threshold	Current rate	New rate 1/10/10
0 - 14,000	12.5%	10.5%
14,000 - 48,000	21%	17.5%
48,000 - 70,000	33%	30%
70,000 +	38%	33%

Company Tax rate reduces from 30% to 28% from next financial year - generally 1/4/2011, as does other savings vehicles such as PIE's and Unit Trusts.

The Trust tax rate remains unchanged at 33%

So in summary, a good budget for small business, and a budget that could have been a lot worse for property investors.

If you want to find out more about how this budget will effect you and your particular situation, just contact us.

Also visit our new Website www.betterbusiness.co.nz

Regards

Andrew Bosworth