Client Newsletter [June & July 2016]
The Government has announced that New Zealand will sign up to the global automatic exchange of information (AEOI) with effect from the 2018 year. The AEOI is modelled on the US Foreign Account Tax Compliance Act (FATCA). To date, 97 countries have signed up to the AEOI.
New Zealand financial institutions will have to determine the tax residence of their account holders from 1 July 2017 with the first reporting due in mid-2018. They will need to report foreign account holders to countries that have signed up to the AEOI. It is worth noting that as the aim of AEOI is to correctly identify customers for anti-money laundering rules, a financial institution is broadly defined and may capture private NZ companies and trusts.
Inland Revenue has also confirmed that it will automatically and retrospectively (reportedly after 1 Jan 2010) exchange tax rulings. Inland Revenue will share details of all private taxpayer rulings and unilateral transfer pricing rulings. This is to counter harmful tax practices and give tax authorities greater flexibility to move against such structures.
The exchange will be with countries who have signed Double Tax Agreements with New Zealand – NZ has over 50 tax treaties and tax information exchange agreements. This will mean foreign tax authorities will now have access to businesses’ commercial information provided in support of rulings. Although the AEOI will override NZ’s privacy legislation, Inland Revenue can suspend AEOI with another country if there is substantial non-compliance with information confidentiality and safeguards.
Both changes were recommended as part of the OECD’s tax base erosion and profit shifting work.
Phishing scams are attempts by scammers to trick you into giving out personal information such as your bank account numbers, passwords and credit card numbers.
A scammer contacts you pretending to be from a legitimate business such as a Government Department, bank, telephone or internet service provider. You may be contacted by email, social media, phone call, or text message.
A recent phishing scam has seen individuals and firms being contacted by individuals implying they are talking with a representative from Inland Revenue. The scammer asks for their IRD number or to confirm personal or bank details often under the pretext that a tax refund is due from Inland Revenue, that Inland Revenue need to verify your bank details or that due to a technical error your bank details have been wiped from Inland Revenue records.
Alternatively, the scammer may alert you to “unauthorised or suspicious activity on your account”. You might be told that a large purchase has been made in a foreign country and asked if you authorised the payment. If you reply that you didn’t, the scammer will ask you to confirm your credit card or bank details so the “bank” can investigate. In some cases the scammer may already have your credit card number and ask you to confirm your identity by quoting the 3 or 4 digit security code printed on the card.
If you provide the scammer with your details online or over the phone, they will use them to carry out fraudulent activities, such as identity theft or to access your bank accounts.
Protect yourself and never provide your personal, credit card or online account details. Make an independent check with the organisation they are calling from using their main website or phone their head office to confirm the caller is genuine before calling them back. If you receive a call from someone claiming to be from Inland Revenue and you are concerned about any aspects of the conversation, ask for their name and contact number and contact us.
Use-of-money interest (UOMI) rate change
Use-of-money interest (UOMI) is not a penalty. The purpose of UOMI is to:
(a) Compensate the CIR for the loss of use of money through taxpayers paying too little tax, and to compensate taxpayers for the loss of use of money through their paying too much tax; and
(b)To encourage taxpayers to pay the correct amount of tax on time.
Rates are reviewed regularly to ensure they are aligned with market interest rates.
Effective 8 May, the UOMI rates on underpayments and overpayments of tax changed. The new rates are:
- Underpayments – 8.27% (down from 9.21%)
- Overpayments – 1.62% (down from 2.63%)
Whether you sell services or goods, every business can benefit from an increased focus on marketing.
Tip 1: Find and develop your Unique Selling Advantage.
Why should I buy from you? What can you offer that differs from others? Remarkably, 90% of businesses cannot answer that question clearly or convincingly. If you want your business to grow, determine what you offer that the others cannot.
It can be lower price, longer warranty, wider range, extended trial periods, quicker, better quality, etc… It should be used in all your communications as it tells everyone what makes your business special and why they should shop with you.
Tip 2: Ask your Customers what they want.
What need, want or desire are you filling in your customer’s mind? Have you ever asked yourself what your customers really want or need in the product or service you offer?
Over 90% of businesses incorrectly think the customer’s sole focus is price – and occasionally service. If customers only wanted the “lowest price”, there wouldn’t be a wide variety of cars, houses, foods or clothing, etc… available. Customers often equate low price with low quality when what they are really looking for is what they perceive to be good value.
How do you find out what your customers consider valuable and important to them? Ask them! The answers may surprise and may not be what you expect.
Tip 3: Tell your Customers the “Reason Why”.
Whenever you make an offer, ask for a sale, reduce your price or make any other proposition to your customer – always tell them the reason why. The more factual, credible and believable the reasons, the more likely they are to spend with you.
Tip 4: Have “Add-ons”.
Don’t just make one-off sales. It is five times easier to sell something else to an existing customer than to convert a new one. The first sale is just a start. Every business can profit from repeat and add-on sales. Do it consistently and always test a few approaches until you find one that works best.
Even though you may not be contemplating selling your business any time soon, please take a moment to read our special newsletter on succession planning. It covers off some important issues that every business owner should consider on a regular basis.
Important: This is not advice. Clients should not act solely on the basis of the material contained in the Client Newsletter. Items herein are general comments only and do not constitute or convey advice per se. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Client Newsletter is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and should not be made available to any person without our prior approval. 03/2016.