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Summer 2024 / 2025 Newsletter

Wed, 20 Nov 2024 03:17:02 GMT

Our latest newsletter has been posted

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Online platform GST looks to stay

Tue, 09 Apr 2024 01:29:28 GMT

Online Platform GST looks to Stay (AirBnB / Short term rentals)

The new government appears not to be removing the GST charges to be made by online platforms (companies finding customers for you through their website).

From 1 April 2024, online platforms that offer the following services will charge your customers GST:

Ride sharing and ride hailing
Food and beverage delivery, such as Uber Eats
Short stay and visitor accommodation.

If not registered for GST

If the government received all the GST, this would be unfair because there is GST in the expenses incurred in providing the services – for example, rates and insurance paid on short-term accommodation. As a consequence, some of the GST will be paid to you to compensate you for the GST claim you are missing out on, and some to the Inland Revenue.

The online platform will pay you an extra 8.5% and it will pay the balance of the GST, being 6.5%, to Inland Revenue. Obviously this is going to increase the price of the services, which might put some pressure on the amount you charge.

If registered for GST

The platform will pay all the GST to Inland Revenue. As a consequence, you will treat your income from the online platform as zero-rated income. You will claim GST in the usual way.

Gains on Fixed Interest Investments

Tue, 09 Apr 2024 01:29:28 GMT

Gains on Fixed Interest Investments

Sometimes you can buy an investment at either a premium or discount. For example, you decide to buy $20,000 worth of XYZ bonds because you think they’re paying a good interest rate and you are comfortable the company will be around to pay back. This means XYZ Ltd will pay you at some stated date $20,000 and in the meantime they will pay you interest.

What happens if you buy the bond from somebody, perhaps a sharebroker, for $19,750? You have bought at a discount of $250. Inland Revenue says when you get this money back you have to also account for the $250. You have made a profit of this amount and you have to treat it as taxable income. They would also agree if you had paid $20,250, you could claim back, as an expense, the extra $250 you paid.

What they do in practice is to add up all the money you have ever received from the investment and deduct all the money it has cost you – the difference is taxable income. This is because some of these arrangements are more complicated than described above. Inland Revenue calls this process making a “base price adjustment”.

You should also note that bigger investors, particularly those with fixed interest-type investments exceeding $1 million, are expected to spread the premium or discount over the term of the investment. This means that if, for example, you bought your investment on 1 February 2024 and it was going to mature on 1August 2026, you would be investing for 30 months.

The correct way to apportion the premium or discount is to take the total number of days and apportion over each financial year. For the year ending 31 March 2024 this would be 60 days in this example.

simmonds-ball-engert

Summer 2024 / 2025 Newsletter

Our latest newsletter has been posted

Online platform GST looks to stay

Online Platform GST looks to Stay (AirBnB / Short term rentals)

If not registered for GST

If registered for GST

Gains on Fixed Interest Investments

Gains on Fixed Interest Investments ﻿

Gains on Fixed Interest Investments