Archives for August 2010

 

Not so long ago, before the digital era, the printed word was expensive to create.  Back in the day, it may have taken 1,000 journalists, editors, typesetters, printers and the like to publish a daily newspaper.  A dedicated army of newspapermen with life-long careers and ink in their veins.

Every column inch cost big money, so every word was precious.  Cost was a major constraint requiring the writing of concise, clear, tight copy.

Then along came the digital age.  Entire trades became obsolete.  Who has come across a Typesetter recently?  Suddenly it was possible to produce the printed word cheaply.  And by the time the blog came along, the creation of words was instant and inexpensive.  Now there are more published words online than you could possibly read on almost every topic.

Yesterday I heard Bill Bennett present at Word Camp NZ.  Bill is a pre digital-era Fleet Street journalist turned blogger – and he certainly got me thinking.  Bill argues that the new constraint in publishing is no longer cost – but the fact that readers are time poor. 

There is a correlation between the length of a written work and the willingness to read through to the end.  And this is exacerbated by people reading 25% more slowly on-line – and tiring quickly when reading from a screen.

Bill suggests a return to the principles of newspaper writing of old if you’re serious about getting your online words read.  Here are some of his key points for bloggers and on-line writers:

 

Use the skills learned from Twitter to keep things concise.  Twitter requires that you communicate an idea in 140 characters, so transfer this discipline to your general on-line writing;

Unless you are writing for a specialised audience, keep your language and grammar simple;

Stick to easy, simple Anglo Saxon words.  Why use the word “procure” when you could say “get”?

If a sentence is more than 21 words, it’s too long;

Construct your story so a reader “gets it” from the headline and opening paragraph and the detail unfolds as they read on;

If you’re writing on-line, avoid the “long drop”, that is where the big point isn’t made until the very end;

Don’t use passive language – and try to avoid verbs in headlines.  These things just make for crushingly dull reading;

Stick to one idea per piece.  If you can’t say it in 500 words, split it in two or more separate articles.

 

As someone who does an amount of on-line writing, this is interesting stuff for me.  I’m sure if anyone put my blogs, articles or copy to the test they’d find many breaches of Bill’s advice.  But it seems good advice.  So this post contains one idea, it weighs in at 466 words – and this is its longest sentence with 21 words.

 

The 2010 budget signalled an overhaul of the QC regime – and although these changes have not yet been confirmed, they will likely take effect from 1 April 2011. While we have yet to see the proposed legislation, there have been clear signals of what we can expect to see.

By way of background, the QC (Qualifying Company) regime includes the popular LAQC (Loss Attributing Qualifying Company) form of company which allows any losses the company makes to be passed through to the shareholders in proportion to their shareholding. For example, if you hold 40% of the shares in an LAQC which makes a loss of $10,000, you are able to include a loss of $4,000 in your personal tax return thus reducing your own taxable income – and your own tax bill.

This form of structuring has become well known and a popular way of holding loss making business activities such as highly geared property investments or high risk entrepreneurial ventures.  This popularity brought LAQCs to the attention of the Tax Working Group who recommended change in their December 2009 report – largely because they found that during the last housing boom, the number of active LAQCs doubled and the average tax loss claimed by investors increased by almost 50 per cent.

The term LAQC will be dropped, and both QCs and LAQCs will be known simply as QCs.  More significantly than a mere change of terminology, we the following changes are likely to be included in the upcoming legislation – which treasury expects will generate additional revenue of $70 million in the 2012 year:

 

Losses will be limited to the amount that the shareholder has at risk in the LAQC / QC, which would impact on LAQC /QCs which are 100% geared. For example if a shareholder personally contributed say $5,000 to the QC with a much larger amount being borrowed from the bank, then on the face of it that shareholder’s losses will be limited to $5,000 rather than the much larger amount that may have previously been available. However it seems likely that personal guarantees for bank debt may satisfy the “at risk” requirement for claiming losses.  Given that banks lending to QCs almost universally require personal guarantees from shareholders, this proviso would mean no practical impact for most people currently operating LAQC /QCs – unless they genuinely have no money at risk.

Where an LAQC /QC returns a profit, this will be passed through to the shareholders and taxed at their marginal tax rate which is likely to be 33% rather than the company tax rate of 28%. However this will not have an impact on the majority of LAQC /QCs which operate at a loss. There is already a significant incentive to drop out of the QC regime as soon as the venture begins to return a profit as one of the conditions of being in the QC regime is that the shareholders personally guarantee the LAQC /QCs income tax obligations – a requirement that does not apply to companies that are not in the QC regime.

Transferring LAQC /QC shares to existing or new shareholders will potentially trigger depreciation recovery income – as will dropping out of the QC regime.  This depreciation recovery will be the same as if the LAQC /QC had physically sold the depreciated property to a third party – and I suspect this is where treasury expects to derive most of its $70 million additional revenue from these changes.  This will require some careful management – but as the majority of depreciation recovery issues are with buildings, and as buildings can no longer be depreciated after 1 April 2011, this issue will become less pertinent as time goes on.  

 

So in a nutshell, LAQC /QCs will certainly require more careful management – and probably more careful consideration up front as to whether they are indeed the most appropriate vehicle to conduct your business. However there is probably nothing too scary in the wind for most LAQC /QCs.

We will be reviewing all our LAQC /QC clients once we have seen the proposed legislation, but if you have any concerns call us any time.

Only a few days until WordCamp New Zealand on the 7th and 8th of August.  WordCamp is two day conference focusing on anything and everything on and around the WordPress platform.

This is a global event that has been held 66 times since the beginning of 2009 everywhere from California to Istanbul, Lima – and another 63 far-away places as well.

WordPress is a free to download >>> open source Content Management System, often used as a blog publishing application – and as a platform for more static websites.  It is developed by its community, including a group of volunteers who test each release.  WordPress also powers some of New Zealand’s best websites including the Stuff blog >>> and of course our very own Elevate CA blog >>>.

So what?

And why would anyone want to spend a weekend rubbing shoulders with a bunch of folk with nothing else in common than the platform they happen to use for their website?

Well it may be that I’m a bit unusual, but here’s why I’m looking forward to this event:

As well as getting upskilled on WordPress, WordCamps are all about getting to meet other WordPress users.  And the WordPress community is an interesting one ranging from tech-focussed geeks through to entrepreneurs with fantastic projects who are capable of making real change in their particular niche.

Entrepreneurship fascinates me – along with the process of bringing great ideas to fruition.  So if I can lock myself away at WordCamp New Zealand for a day or so and mix with a bunch of people who are making exciting things happen, then that works for me.  Here >>> are some of the speakers scheduled for this event – and the list of attendees will be just as interesting.

If you’d like to follow the event remotely on twitter the hashtag for this event is #wordcampnz.  I’ll keep you posted on my personal highlights after the event right here.