Waikato Business News April/May 2018

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26 WAIKATO BUSINESS NEWS April/May 2018 How to work with graphic designers and live to tell the tale Poor design in marketing and advertising comes as much from poor briefing and client decision-making as is it does shoddy design work. Graphic designers, as clever as they may be, are not psychic. Well, there might be one somewhere, but designers can’t read your mind. You need to give them some clues. Picture this. You’re on a date with your new beau (or belle) and it’s your birthday. He asks what you’d like to drink. “Surprise me,” you say, some- what cruelly. It’s fine, you’ve been out a few times, he knows you’re not a beer drinker, he can tick that off the list. He’s seen you drink wine, but that’s a bit safe for a special occasion. Better be generous on such a big day, he stresses. Mojito? Cosmopolitan? He plumps for a margarita, not knowing your embarrassing history with tequila and that your ultimate treat is a shimmering glass of birthday bubbles. Poor fella. But how was he to know? You may think that giving a designer a relatively free rein will result in a creative solution that your target audience will relish. But leaving too much to assumption and guess work can also lead you along the totally wrong path. If you’re running your business and you’re not used to this kind of process, get help. It can be one of the most exciting things you do in your business, bringing your messages to life in a way that will win you customers, followers or supporters. But, when you’re too close to the detail, you need some objectivity. In agencies, they often refer to graphic designers as ‘creatives’, for very good reason. They take a brief, use that incredible creatively-wired brain and turn it in to something magical. My absolute favourite part of the process is when designers first share their ideas with you and you see how they’ve turned words on a page - facts, goals, parameters, themes - into something that you just know that your audience will relate to and love. It can be a totally uplifting moment. I’ve been known to skip around a meeting room or even wipe away a tear. Another agency term for design folk is ‘fruits’. Not just because they’re often the vibrant and colourful people, but because they’re frequently sensitive, tender souls. But that’s a good thing. It’s what gives them those amazing human insights that we mere mortals can sometimes be lacking. It’s because they have that extra inch of understanding and empathy that they can more easily transport themselves in to the hearts and minds of the person your design needs to TELLING YOUR STORY > BY VICKI JONES Vicki Jones is director of Dugmore Jones, Hamilton-based brand management consultancy. Email vicki@dugmorejones.co.nz resonate with. Let them make the most of these skills and let them challenge you. Allow yourself to be wowed. Equally, make it clear to them when the brief sits in a place that, for indisputable reasons, the solution needs to be achieved a certain way and when they have to play it safe. There’s nothing worse for a designer than getting fired up about a project that feels like a Ferrari, only to be told it is a Honda Civic. There’s nothing wrong with a Civic, so long as that’s what will appeal to your customers, and your designer should respect the difference. If they’ve been working with you a long time, it’s only natural that your designers start to think a little bit like you, or the decision-makers in your organisation. Sometimes this is a real advantage - you don’t have to go through hoops to explain everything from scratch every time. But it can also risk complacency. If a designer tries to push exciting new approaches but they are constantly pushed back, you’ll get the same old same old. And that responsibility, I’m afraid, sits with you. Keep them enthused. Sometimes I look at an advert or marketing piece and can tell where the client has had too strong a hand in the process. “Let’s just add this piece of extra info here”, or “use this photo because it reflects an important project for us even if it doesn’t really fit the original brief”. Or, the ultimate sin, something like “how about a splash of my favourite green”. Designers should debate these decisions but, let’s face it, when push comes to shove, you pay the bills. But the client isn’t always right. Sometimes you’re too close to it and need to look at life through their lens. So, to sum up, make it clear what your design needs to achieve and the parameters within which it needs to work. But allow yourself to be challenged. Creative approaches that resonate with your clients will ultimately have you cracking open the champagne, and not just on your birthday. BOOK NOW for Waikato’s newest event for women in business WOMEN OF WAIKATO will celebrate inspirational Waikato women whose stories will encourage and motivate others. Opportunities to connect with other women in business. Six fabulous speakers! • Raglan Coconut Yoghurt co-founder Latesha Randall • Rockstar plain language writing trainer Shelly Davies • Long-time comedian Jan-Maree Franicevic • REALiving coach and mentor Tracey Hancock • Yogi, photographer & leather artisan Kay Buchanan • Techweek ‘18 Waikato coordinator Jannat Maqbool Tickets are $225 (incl GST). Discount available for multiple ticket purchases. Each ticket includes tea, coffee, orange juice, morning tea, lunch, afternoon tea and an alcoholic/non-alcoholic beverage and nibbles during the drinks-and-networking session at the end of the day. Spot prizes galore! Thursday, May 17, 2018 at Woodlands Estate, Whitikahu Registration from 8.15am Seminar from 9am followed by networking event on site from 4.30-6pm Please note: there are no ticket sales on the day. To pre-purchase tickets email Candice at Dynamic Media candice@dynamicmedia.co.nz or phone 021 0867 4460 To keep up to date search ‘Dynamic Media’ or ‘Women of Waikato’ on Facebook A3608T
Ring-fencing rental losses Labour’s pre-election manifesto proposed a commitment to increase the fairness of the tax system and improve housing affordability. In the six months since the Labour-led coalition entered Parliament, we have started to see changes filtering through. For example, the bright-line test which taxes profit derived on the sale of residential property has already been extended from two to five years, and the Tax Working Group has begun to seek views on a wide variety of tax issues. Inland Revenue has now released an Issues Paper proposing to ring fence rental losses, which is currently open for consultation until May 11. Draft legislation is likely to follow once Inland Revenue has considered the responses it receives from the public. Taxpayers commonly derive income from multiple sources, such as salary/ wages, business income, interest, dividends and rental income, to name a few. It has been a fundamental part of the New Zealand tax system that the total amount from each source, whether a profit or loss, is combined and a person is taxed on the net result. This aggregation allows losses incurred from rental properties to be offset against other income, reducing the total taxable income and the corresponding tax liability. Government’s concern is that this mechanism allows property investors to take on high levels of debt to finance their property investments, which gives rise to tax losses, effectively subsidising the rental portfolio through a reduced tax liability. The high-gearing offers an advantage over owner-occupiers because their equivalent interest cost is not tax deductible. The proposed ring-fencing rules contained within the Issues Paper seek to eliminate this advantage by preventing rental losses from being offset against other income. Instead, the rental losses will be ‘ring-fenced’ for use against future rental profits or any tax incurred on the future sale of the property. Excess losses remaining after a property is sold remain ring-fenced until rental income is derived in the future. Labour originally indicated that ring-fencing may be introduced on an individual property basis. Thankfully, the proposed ‘portfolio approach’ is more logical, enabling investors to pool their profits and losses from all residential properties, including overseas properties, with ring-fencing applicable to any overall loss from the portfolio. If enacted, the rules will apply to all rental properties irrespective of how they are held, e.g. the rules will apply to individuals, companies and trusts. There is complexity in the new rules because they can also impact people that don’t actually hold the rental properties. For example, if a person has borrowed to purchase shares in a company and that company uses the funds to purchase a rental property, the shareholder will normally be entitled to deduct the interest. In this situation, if 50 percent or more of the entity’s asset value is derived from residential properties the company will be classified as ‘residential property land-rich’. Amounts paid to the shareholder (eg dividends) will be classified as “rental property income” and their interest expense will be classified as “rental property loan interest”. The rental interest can only be deducted against rental property income derived from the company, or the individual’s other rental properties. Any excess loss will be ring-fenced to the person. The proposed 50 percent asset test is an arbitrary threshold. The paper does not specifically address whether the asset values will be based on the original cost of property, or market value. While we welcome the inclusion of a minimum threshold to ensure entities with minor residential property interests are not hit with excessive compliance costs, the way in which assets are valued will need to be further considered throughout the course of the consultation. The proposed rules rely on the existing definition of ‘residential land’, used for the purpose of the bright-line test. Thus, the rules will not apply to commercial property or property subject to the mixeduse asset rules. The paper recognises there is a concern that taxpayers may seek to reorganise their funding arrangements to get around the loss ring-fencing rules, for example re-arranging debts against their other business interests instead of TAXATION AND THE LAW > BY HAYDEN D FARROW Hayden D Farrow is a PwC partner based in the Waikato office. Email: hayden.d.farrow@nz.pwc.com rental properties. While there is discussion of introducing a specific interest allocation rule to combat this, the paper notes that the legislation is unlikely to include a provision of this nature, as it would lead to increased complexity and compliance costs that would be particularly harsh on smaller taxpayers. If enacted, the proposed rules are likely to apply from the start of the 2019 – 2020 income year and in a rare move, may be phased in over a two to three-year period, something not normally seen with tax law changes. For example, only 50 percent of a person’s loss might ringfenced in the first year. This will allow investors time to adjust to the new rules and have the opportunity to rearrange their affairs before they are adopted in full. The comments in this article of a general nature and should not be relied on for specific cases. Taxpayers should seek specific advice.
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Waikato Business News April/May 2018

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