April 2024 - Bay of Plenty Business News

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8 BAY OF PLENTY BUSINESS NEWS April 2024 Tax changes taking effect this month March was a busy month on the tax development front, where we finally got the detail of some important property related changes, plus some other bonus changes that were introduced at the last minute before the legislation was passed. Some of these will impact forecast tax payments for the current tax year, others may impact decisions around buying or selling property, and we look at the key changes below. Removal of commercial building depreciation As expected, the ability to claim tax depreciation on commercial buildings has been removed with effect from the start of the 2024- 2025 tax year. For businesses with a March balance date, this will be from 1 April 2024, but for December balance dates for example it applies from 1 January 2024. There are some exceptions to the rule for buildings that are expected to have a useful life (in Inland Revenue’s eyes) of less than 50 years – this includes things like coolstores and farm buildings for example. Fitout of commercial buildings also remains depreciable provided these items are separated out from the building structure cost. If you have not separately depreciated fitout of commercial buildings acquired since 2020 it will be possible to request that a portion of the total cost be allocated to fitout and amend the relevant tax returns, provided the market value of the fitout can be established. Interest deductibility for residential investment property restored Interest payments on mortgages for residential investment property will be phased back in, although not as quickly as the National Party had campaigned on. From 1 April 2024 80% of interest will be deductible, with interest being fully deductible TAXATION BY ANDREA SCATCHARD from 1 April 2025 onwards. The exception to this is for new builds where interest remains 100% deductible in all years. Bright-line test back down to two years As campaigned for by the National Party, the ten-year bright line test for residential property will be reduced to two years. This will apply from 1 July 2024, meaning that properties bought before 1 July 2022 will not be subject to the bright line rules if a conditional agreement for sale is entered into on or after 1 July this year. There are also some taxpayer favourable changes to the way the main home exemption operates (to revert back to looking at the predominant use of the property) and the extension of rollover relief for transfers between associated persons. Changes to the tax treatment of disposals of trading stock at below market value In response to perceived over-taxation, the rule that treats trading stock disposed of for less than market value to be deemed as having been sold at market value has been removed for donations of trading stock to charities and for other disposals in the course of business (such as for marketing purposes). The market value rule could still apply though where trading stock is donated to entities that are not charitable (this could include individuals and non-profits that either can’t or haven’t registered as charities), unless there is some benefit to the business that is donating the stock. Trustee tax rate de minimis threshold The trust tax rate rose to 39% from 1 April 2024 (or the equivalent start to the 2025 tax year), but a last-minute change to the legislation allows the 33% rate to continue to apply to trusts with trustee income up to and including $10,000 (after deductible expenses). This lower rate is also extended to certain types of trusts, regardless of income level, such as disabled beneficiary trusts and deceased estates. If you would like help understanding how these changes affect you, please contact a tax professional. Andrea Scatchard is a Tax Partner at Deloitte, based in the Bay of Plenty. She can be contacted on ascatchard@deloitte.co.nz Obstacles Connect Collaborate Deliver Advantage LAND FURTHER DEVELOPED TO BENEFIT RAUKOKORE AND WAIHAU BAY Future-proofing your business in a constantly changing environment. We’re here in the Bay of Plenty to help businesses elevate finance function performance and delivery. Connect with us to find out more about how we can help. deloitte.co.nz © 2024. Deloitte Limited (as trustee for the Deloitte Trading Trust). A Kiwifruit and Water Storage Development project in Raukokore and Waihau Bay continues to cultivate more economic development and employment opportunities with the most recent development being a further eight hectares of land developed in Waihau Bay. The project, which began with funding sought by Te Whānau a Maruhaeremuri Hapū trust, included two linked projects, the Raukokore/ Waihau Bay community irrigation scheme and the development of an initial kiwifruit orchard which would be irrigated by the Raukokore/ Waihau Bay irrigation scheme. The long-term strategy for the kiwifruit orchard development project was to see 200 hectares of low-returning Māori-owned land with high horticultural potential, located across multiple Māori land blocks in Raukokore and Waihau Bay, developed into kiwifruit orchards. The 30-year partnership with local iwi would see these orchards provide sustainable, permanent employment opportunities and economic growth for the area, with revenue generated from the high-value crops packing at SEEKA. The initial orchard, Wai o kaha, saw many local trusts and investors coming together to lend both land and $5,200,200 of funding towards the project. 40 hectares of kiwifruit were planted across five orchards, Tawaroa, Otaimina, Raekahu, Toopu and Orete. Produce company and local employer, SEEKA is investing in the Wai o kaha project and is also the orchard developer, which sees SEEKA planting the vines, running the orchard, and hiring local employees, which in turn provides benefits to the local community. The development project began in late 2020 with Tawaroa and Orete orchards followed by Otaimina orchard in 2021 and Raekahu and Toopu orchards in 2022. Seeka also provided a share of the funding for the Ngutupiri development, where a further 12 hectares of land was developed for kiwifruit in Te Kaha with the plants coming from a local Te Kaha nursery. The most recent joint venture between local landowners, investors and Seeka has seen the monetary investment of $2,100,400 provided for the Waihau Bay project. Seeka, who provided $1,050,000 toward the project, is also running the development from the ground up, with the produce company preparing the land with structures and shelters installed, ready to plant kiwifruit this winter.
April 2024 BAY OF PLENTY BUSINESS NEWS 9 EMPLOYMENT MARKET UPDATE Within a blink of the eye, somehow, we’re already into April 2024. The employment landscape in New Zealand has been in a state of transformation for some time now, steered by innovation in technology, global economic shifts, and societal changes. As we step into the second quarter of the year, we discuss the latest employment law changes and the upcoming landscape for Kiwi businesses. Minimum wage increase The Government has announced an increase in minimum wage rates from 1 April 2024. The adult minimum wage will go up by 2% from $22.70 to $23.15 per hour. The starting-out and training minimum wage will go up from $18.16 to $18.52 per hour. This reflects ongoing efforts to enhance worker well-being and address income disparities. 90-day trial period re-activation The Bill to extend the 90-day trial period to all Kiwi businesses, regardless of their size, was passed in December last year. Previously, these trial periods were exclusive to employers with less than 20 employees. Now, all employers can utilise the trial period and we can expect this decision to boost the confidence of Kiwi organisations looking to hire new talent. Repeal of Fair Pay Agreements Last December 2023, the Fair Pay Agreements (FPA) Act was repealed. The FPA Act was only in force for one year and no FPAs were finalised during this period. > In January, the Worker Protection (WPME) Act came into force. The repeal of this Act means that there is no longer any possibility for FPAs to be sought or bargained for. Immigration update 2023 was a busy and challenging year for Immigration NZ. A significant highlight saw it being the first full year of open borders since 2019. New visas were introduced, including the Recovery Visa to support the country’s clean up after the devastating Cyclone Gabrielle, and the Skilled Migrant Category to support our country’s workforce. In January, the Worker Protection (WPME) Act came into force. This Act introduces an offence and penalty regime to deter employers of migrant workers from breaching their legal obligations. Under the new WPME Act, Immigration Officers have the right to request documents (i.e. timesheets, leave records or any other document relating to the migrant employee’s employment), from employers regarding their migrant employees. Employers must then respond within 10 working days of these requests. If an employer fails to provide the requested documents in the required timeframe, the organisation may be issued infringement notices and can be up for high penalty fees. Immigration NZ announced earlier this year that the median wage would increase to $31.61 per hour. This increase applies to the following visa categories: Skilled Migrant, Green List Straight to Residence, Work to Residence and Parent Category. This means for migrants employed under these visa schemes, the wage threshold HUMAN RESOURCES BY KELLIE HAMLETT is the lowest hourly rate those employees can be paid in order to be granted the visa. It is noted, this increase does not apply to the Accredited Employer Work Visa (AEWV), which will remain at the current rate of $29.66 per hour. As our nation continues to navigate through challenging economic conditions, and a new coalition government, the road ahead looks challenging and uncertain. Yet, it also presents opportunities for growth and resilience and Kiwi businesses are no strangers to having to adapt and grow during challenging times. Talent ID are Recruitment Specialists and can support you through your recruitment process. Please feel free to talk to us about this by calling 07 349 1081 or emailing kellie@talentid.co.nz If you’re contemplating a change of career, why not consider owning your own franchise business? With direct access to over 30 well-known franchise brands in locations all around the country, it’s quite likely we have the business opportunity that perfectly fits your lifestyle. Iridium Partners help potential franchisees research, evaluate and navigate the franchise industry to find the perfect opportunity for you. Contact us today and get some balance back in your life. Call Meredith on +64 21 209 9496 info@iridium.net.nz www.iridium.net.nz
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April 2024 - Bay of Plenty Business News

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