Waitomo News Farming Feature
With Spring rolling around, it is a busy time for farmers with more mouths to feed on the farm and plenty to do. In a lot of ways this is good news for accountants who can get on with the job of preparing financial accounts without too much interruption from our busy farming clients! This month’s article focuses on some of the questions that we have been asked by our clients over the past month or so.
Providing Short Stay Accommodation
Some farmers and land owners can end up with a spare house on the farm which, rather than renting it out on a long-term basis, they are using for short stay or Airbnb type accommodation. This can be an excellent way of earning additional income for the farmer, while keeping options open with the house, should it be needed in the future for an employee. The key area of difference between long-term and short-term accommodation is that short term accommodation is subject to GST, while long term accommodation is not. This would mean for a GST registered farming entity, GST needs to be declared on this income. For non-GST registered entities, if the short stay accommodation income generates a turnover of greater than $60,000 per annum, then the entity will be required to register for GST.
Off-Road Petrol Rebates
Most farmers are now well aware of the opportunity to receive a refund of excise duty, which is charged on petrol purchases. The refunds apply where that petrol is not used on a public road, for example, for farm bikes and quads, or any other unregistered farm style vehicle. Petrol rebates can also be received where petrol is used for petrol powered pumps, mowers, chainsaws or petrol generators. A recent search I did on Google saw several companies in New Zealand that administer the petrol rebate service.
Paid Parental Leave
Paid parental leave is paid by the Government where time is taken off work to care for a baby or child that has come into your care. Paid parental leave is paid where the caregiver has worked an average of ten hours a week in at least 26 of the weeks in the year before the child is born. It is important to note that you can get paid parental leave if you are self employed. The amount of paid parental leave depends on what was being earned in the year before the baby is born. The minimum payment of paid parental leave is $177 a week before tax, with the maximum $586 a week before tax. Currently paid parental leave is paid out for 22 weeks and after the 1st July 2020 this increases to 26 weeks.
KiwiSaver – Prescribed Investor Rates
A prescribed investor rate (PIR) is the rate used to calculate how much tax people pay on their KiwiSaver income. Depending on the person’s income, the PIR can be either 10.5%, 17.5% or 28%. Generally, the 10.5% rate is only available if your taxable income has been $14,000 or less in one of the last two years. If a person’s taxable income in either of the last two years was less than $48,000, then the PIR rate should be 17.5%, and if the income is above $48,000 then the PIR rate is 28%. It is now more important than ever to ensure that your PIR rate is correct. If it isn’t then the amount of income from your KiwiSaver needs to be included in your tax return. The IRD had a major computer upgrade in April and all of this information they now hold for every tax payer in New Zealand, so if the correct tax is not being paid on your KiwiSaver investments, you will end up paying for this as the Inland Revenue Department will send you a bill. If in doubt talk to your accountant or KiwiSaver provider.