Audit News In Brief – Autumn 2019


NZ IFRS 16 in place this year

As alerted in our previous newsletter, NZIFRS 16 Leases applies for periods beginning on or after 1 January 2019. There is a significant change for those leasing assets or property and how it is accounted for in your financial statements. The change is not easy, and we recommend reporting entities that apply NZIFRS to immediately seek advice on the lease calculation.

 

Charities Act 2005 modernised

The Department of Internal Affairs (DIA) is undergoing a consolation process on how the current Charities Act is performing and what changes need to be made. Consultation is open until 30 April 2019. The consultation document released covers a variety of issues – including the functions and powers of the regulator, the ability to appeal regulator decisions, how charities report on their business operations and business subsidiaries, the role of charity advocacy, reporting requirements for charities, and more.

More information of the consultation process is on the DIA’s website.

 

Changes that will make it easier to claim donation tax credits

The Government has proposed changes to simplify the end of year tax processes for individuals. These changes are subject to legislation going through Parliament and are proposed to be in effect from the tax period commencing 1 April 2019. Donors will be able to file their donation receipts online during the year, no longer requiring an end of year return.

Charities Service has issued a guide on what the changes will mean for charities.

 

Tier 3 PBE standard updated

The PBE SFR-A (NFP) standard, which is applicable for Tier 3 not for profit entities, has been updated for reporting periods beginning on or after 1 Jan 2019. The changes are not significant but do require care when preparing the performance report. A couple of changes that will affect most clients include:

  • A compulsory signoff page to indicate when the performance report is approved and authorised for issue. “The performance report is authorised for issue when it is signed and dated by the body or individuals with the authority to approve the performance report for issue.”
  • Short-term investments such as term deposits that mature within 90 days are no longer classified as cash.

 

Payday reporting from 1 April

On 1 April 2019 a new payday filing system will become mandatory for any NZ employer who withholds more than $50,000 of PAYE and Employer Superannuation Contribution Tax (ESCT, e.g. KiwiSaver) per year. Paper filing will remain available for smaller entities who do not exceed this threshold, although they may also opt in.

The details submitted to Inland Revenue will remain substantially the same, with additional information required in respect of ESCT payments, the pay cycle frequency, pay period start and end dates, and the payday date. There will also be amendments to the way information is collected for new employees, allowing electronic onboarding for new starters.

IR’s electronic system supports three ways of collecting the employment information. The most straightforward option is direct filing from compatible payroll software, bypassing the need for files to be uploaded through the ‘myIR’ system. Alternatively, information can be submitted electronically or manually through the employers online ‘myIR’ account.

Generally, payday filing will require employment information to be submitted within two working days of each payday. For a business with a combination of employees paid both monthly and fortnightly, the filing deadline will be within two working days of both the monthly and fortnightly payday. However, for IR56 taxpayers, or employers below the $50,000 threshold, the deadline will be extended to within 10 working days of each pay date, with an option to submit a single monthly report.

Despite the increased reporting frequency required by payday filing, PAYE payment dates and methods of payment will remain the same. This means employers will continue to pay PAYE monthly or twice monthly, as they currently do.

Although the increased reporting frequency may appear burdensome at first glance, there is an opportunity for payday filing to reform payroll processes, becoming an integral part of the general accounting system rather than an additional monthly task. This integration will work best for software systems that can upload directly to IR.

If you have any questions from any of our In Brief articles, please get in touch.

Published Autumn 2019.

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