Family Business ~ Insight | How many people use LinkedIn?

Have you ever wondered how many people actually use LinkedIn? Do you have a professional presence on LinkedIn but wonder if it’s a site worthy of spending your time on?

LinkedIn has been a subject that has been discussed a lot around the Covisory office this year. We’ve been through what’s the point, how do we use it to when and how often… We’ve decided that LinkedIn is definitely a place we will be building Covisory Partners presence in 2014 so please look us up via our emails or Covisory Partners and link to our company page and to the team.

Looking at the latest statistics LinkedIn has definitely grown and moved on from the original perception that it was simply a resume site. LinkedIn is now the premier site for Business People worldwide as they use LinkedIn as an effective business building tool.

Just look at the top 10 countries for LinkedIn and then compare this to their entire population – LinkedIn is definitely making huge steps.

Top 10 Countries With Most People On LinkedIn [November 2013]

  1. USA – 84,851,462
  2. India – 20,959,886
  3. Brazil – 14,623,515
  4. UK – 12,772,853
  5. Canada – 8,095,417
  6. France – 6,103,611
  7. Italy – 5,651,460
  8. Spain – 5,076,834
  9. Mexico – 4,895,155
  10. Australia – 4,688,775

 

In November you may have noticed that the New Zealand LinkedIn population had reached the 1 million mark (that’s 22.5% of the population of NZ ) and 259 million worldwide. (http://www.nbr.co.nz/article/linkedin-claims-1-million-nz-users-149203)

Family Business ~ Insight | You’ve been Hacked!!

Sadly, in late November Covisory Partners Limited and its mail account was hacked.  How this happened is not really necessary save to say that we have very tight and secure procedures around email accounts and our correspondence with clients.  The scam was very sophisticated, and very very well implemented.  Our particular case has been referred to the police and they are following leads internationally.  Our bank also noted that it was one of the most sophisticated schemes that they had ever seen.

What it does show that despite how vigilant we are, that being hacked sadly is one of the factors in life.  What we did do was that we acknowledged that it had happened and we got in touch with you all immediately.  Sadly, the person who was hacked and ultimately led to us being hacked, didn’t take the same initiative or responsibility.  We took all steps immediately to do exactly what needed to be done and as a result the impact of being hacked was minimised.

You may still continue to get some emails from us and anything suspicious should not be opened and you should contact us first, particularly if it is unexpected.  Sadly for us the email we received was in a form that we typically get from clients and we had no idea that it was anything other than a genuine email from a client.

While many people were quick to say that the new modern world is a lot riskier, it does bring to mind situations in the past where I have seen fraud (and we are talking about fraud here not just the obtaining of email addresses) was perpetuated by the theft of cheque books in the mail, or the washing of cheques with brake fluid.  Fraud has always been a part of our world and to many it is easy money.  All that is changed in the modern world is the technology and the way they go about it.

Once again we apologise for any inconvenience that our being hacked has caused you.  We have taken all steps to resecure our email and to protect your data.  If it makes you feel any better, and it was of little help to us, many users of xtra had their email accounts hacked on the xtra server only a matter of a week or so after we were hacked.  It seems no matter how big or secure you are, no fortress is actually impenetrable.  Welcome to the modern world.

Family Business ~ Insight | Yet another tax bill!

The Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill was introduced to parliament in late November.  This is in effect the annual repairs and maintenance type bill that we have come to expect at this time of year.

There are however a number of things in here that readers will need to be aware of that can affect them.  These are as follows:

1.    Employee allowances, particularly with regard to accommodation.

A summary of the new features is as follows:

  1. Payments will be tax exempt provided that the new location is not within reasonable daily travelling distance of an employee’s home; and
  2. there is either a reasonable expectation that the employee’s secondment to that work location will be for a period of 2 years or less, in which case the payment will  be exempt for up to 2 years; or
  3. the move is to work on a project of limited duration whose principal purpose is the creation, enhancement or demolition of a capital asset and the employee’s involvement in that project and is expected to be for no more than 3 years, in which case the maximum exemption period is 3 years; or
  4. the move is to work on Canterbury earthquake recovery projects, where the maximum period is extended to 5 years if the employee starts work in the period starting on 14 September 2010 and ending on 31 March 2015, and to 4 years if the employee starts work in the period 1 April 2013 and ending 31 March 2016.  The maximum period reverts to 3 years where the employee starts work after 1 April 2016.

2.     Black Hole Expenditure

As announced in the 2013 government budget, certain types of black hole expenditure will be made tax deductible.  This is because these expenditures do not give rise to a depreciable asset, and at present cannot be deducted for taxation purposes.  Typically these will relate to applications for resource consents and patents.

3.     Fatca Disclosures

The Bill proposes new law whereby New Zealand financial institutions will be required to collect information in respect of their customers that are, or are likely to be, United States taxpayers.  This information will then be required to be sent to the Inland Revenue who will in turn transmit it to the IRS under the New Zealand/United States Double Tax Agreement.  In effect, it creates extra compliance on New Zealand financial institutions to collect information on behalf of the US IRS.

4.      De-registration of Charities

After some recent discussion papers regarding this, the law in relation to charities, particularly where they become de-registered, will be amended.  At present a charity is either registered or unregistered and as such this determines whether it receives tax exemptions or not.  The proposals will deal with situations where a charity becomes unregistered for failure to meet the requirements.

5.      Taxation of Land Related Lease Payments

This is the introduction of the law following the recent issues paper “The Taxation of Land-Related Lease Payments” released in April 2013.  Feedback has been received and basically the proposal is to go ahead largely with the original proposals without significant amendments.

In effect, the rules are trying to ensure that all lease payments are effectively receiving symmetrical tax treatment. Lease inducements will be taxable and deductible, usually over the term of the lease.

Family Business ~ Insight | Issues with the GST CZR Rules

The compulsory zero rating of land transactions between GST registered parties was introduced in an effort to both simplify what were typically large financial transactions and secondly ensure that there wasn’t a loss of revenue to the IRD in situations of insolvency.

The rules are basically simple and require that where there is a transfer of land from a registered vendor to a registered purchaser the supply is compulsorily zero rated (hence the CZR terminology).  In order to affect this, the vendor and purchaser state and warrant their GST registration status and their intended use for the property in terms of the purchaser in the sale & purchase agreement.

In theory these rules should work well but in practice it has been far from the case.  We have been involved in several cases where purchasers particularly have not understood the sale and purchase agreement they were executing, resulting in the fact that they have ended up paying too much for a property.  A couple of simple examples will show what we mean:

Market value of property $115 GST inclusive

Sale by registered vendor to unregistered purchaser $115 including GST of $15

If the sale was to a registered purchaser, then the sale needs to be for $100 plus GST (if any) which would be zero as in zero rated.  If it is for $115 either including GST or plus GST (if any) then the purchaser is effectively paying too much, being in reality $115 plus GST of 15% on top.

Strangely enough this can also lead to some interesting commercial consequences.  For instance, two identical pieces of land can be sold for $100 compulsory zero rated to a registered person and $115 including GST of $15 to an unregistered person, both by registered vendor.  At the Land Transfer Office and on the land title records, the two transactions are shown at different values, ie a lack of comparability of sales data.

Purchasers need to be particularly aware when they are executing these agreements that they understand how the GST provisions work.  Sadly, I have seen too many that don’t.  This can also particularly extend to real estate agents and in some cases even lawyers.

If in doubt, get advice. Nigel Smith and the Covisory Partners team are happy to help you with your questions.

Family Business ~ Insight | 2013: A Wrap

As 2013 draws to a close, it is inevitable that we all analyse what transpired in the year, what might have been and what was.

For us 2013 was a unique year.  I have never known anything like it in the well over 25 years I have been doing tax.  The main thing that was different for 2013 was the fact that the year was almost full on or full off, with not much in between.  For much of the year, we have been absolutely flat out and operating at peak capacity, only for literally the plug to be pulled and then for the next week the phone not to ring or emails not to come in; a most unusual situation.

Overall the year has also been good for a number of reasons being:

  • Our continued work with a number of key clients and their families on both business succession and inter-generational wealth succession.
  • We have won or settled all major tax disputes that we have been involved in for the year.  At the end of the year we only currently have two small disputes that have recently commenced.
  • A wide variety of interesting and challenging work, particularly internationally.
  • The chance to work with a wide variety of clients and their families across all aspects of New Zealand business and all aspects of tax and business issues.

While the drought had an impact at the start of the year, economically the year was certainly quieter than 2012 across the economy from the people we have talked to.  There has been a sniff of a pick up at the end of the year so here is hoping that 2014 will be a better year.  Maybe this is the new normal and it is something that we should get used to, and maybe it is like still believing in Santa Claus, that we all hope that tomorrow will actually be a bit better than it is today.

Finally, on behalf of Sally and I and the team at Covisory, I would like to wish you all a very Merry Christmas and a Happy New Year.  Christmas and the New Year holidays are one of the highlights of the year for all of us as we get to spend quality time with our families and friends and to relax and recover.  It is also a great time to look at the big picture issues of where we are going, what we are doing and what is happening in our business.

So for 2014, may it bring everything that you want of it.