Elevate CA Blog

The IRD have always used industry benchmarking as a tool to identify businesses that may warrant further attention by their investigation team.

But this has previously been a dark art where those outside the IRD have little idea of what the benchmark numbers look like.

But now, the IRD is publishing their benchmarks.  Well, for 16 industries at least.  For those 16 industries, we can see gross profit ratios, stock turnover per annum, payroll costs as a percentage of sales – and a number of other balance sheet ratios.  These are the industries which the IRD has made public so far:

Cafes and restaurants

Pubs, taverns and bars

Takeaway food services

Gardening services  

Nursery production

Landscape construction services

Painting and decorating services

Preschool education

Electrical services

Electrical and electronic goods wholesaling

Electrical, electronic and gas appliance retailing

Hairdressing and beauty services  

Passenger car rental and hiring  

Real estate services

Fruit and vegetable retailing

Supermarket and grocery stores

It is easy to see why this makes interesting reading for the IRD.  We know that if you operate a tavern that turns over $800k or more per year, your business may be of interest to the IRD if payroll costs are more than 34% or sales – or if your stock turns over less than 15 times per year.

Nothing new here, the IRD have always used statistical analysis to help determine where best to focus their audit activity.

But these published benchmark ratios are also of interest to business owners as a way of determining how your performance fits with the rest of the industry.

For example, for the same tavern turning over more than $800k per year, we can now see that the median payroll costs are 28% of sales – and the median stock turnover is 22 times per year.  These are useful numbers to know when managing your own business – and figures like this based on real businesses in your own industry are not always readily available.

So if you’re in one of the 16 industries listed above, I would urge you to check the IRD benchmark figures here >>> to determine how your business fares against the median.  If your business is not performing to the IRD’s benchmarked industry norm, get in touch with us as we can help you to understand the numbers, what may be driving them – and how you might be able to improve your business performance.

The Oxford Dictionary defines “nexus” as “a connection or series of connections linking two or more things.”

This is a rarely used word outside smartphone or tax circles.  But it is an important concept for business owners when determining whether expenses will be tax deductible.  For expenditure to be deductible, it must have a clear nexus with generating taxable income.  For example, it is clear that a business that manufactures say barbeques will be able to claim a deduction for the purchase of the sheet metal they use in the production process.  That expenditure has a nexus with the income generated from the sale of finished barbeques.

One of the interesting areas that have come before the courts recently to test the principle of is around repairs and maintenance of buildings, so we will examine this as a good example.

Consider these two similar scenarios – both of which involve repairs and maintenance on an untenanted property:

Scenario One

Will owns a rental property which has been rented for the past ten years. He hasn’t paid much attention to maintenance and the property has become a little tired over the years. Will’s tenants moved out six weeks ago and he is struggling to  re-let the property due to its tired state. Will decides to spend $10,000 on sprucing the property up in order to attract a quality tenant.

Scenario Two

Kate also owns a residential rental property which has been rented for the past ten years. She hasn’t paid much attention to maintenance either. Her property has also become a little tired over the years – and her tenants also moved out six weeks ago. Kate decides to spend $10,000 on sprucing the property up – and she decides that once the property is back to its original state, she will move in and live there herself.

Will and Kate have both spent $10,000 bringing their properties back to the standard they were when their tenants originally moved in – and both include the $10,000 as a deduction in their tax returns. One, however, will  fall foul of the IRD in the event of an audit.

Will’s maintenance expenditure will probably be tax deductible as it has a nexus to generating rental income. But Kate’s house is no longer being rented, so her maintenance expenditure does not have sufficient nexus to her income.

With one or two exceptions, this principal applies to all expenditure – regardless of whether one is a business owner or a property investor. In order to be tax deductible, expenditure must have a clear nexus to deriving taxable income. As always, real life cases have their own unique set of circumstances so be sure to call us before taking a tax position!

Are you a user of an old version of the Accomplish Cash Manager accounting software?  By old, I mean version CM2009 or earlier.

If so, you may or may not know that Accomplish’s policy is not to support only the current and three prior versions of Cash Manager.

This means that whilst Accomplish currently supports CM2009(V14), when CM2013 is released shortly, CM2009 will no longer be supported.

If you’re using the Accomplish Cash Manager CM2009(V14) accounting software or earlier, these will soon be unable to be imported into Cash Manager.

If this applies to you, we suggest that you update your software without delay.  Give us a call if you need to discuss your options.

We are growing fast – and are looking for just the right accountant to join our team.

 Who we’re looking for?

We’re looking for a person who is up to speed in the industry right now.  You’ll need to have at least two years recent experience in an NZ Chartered Accounting business.  And equally important is the attitude to thrive in the unique way we operate.

If you can tick those boxes – and if you like what you see on this website, please read on.  This could be a great opportunity for you.

A partial accounting qualification – and knowledge of the Acclipse iFirm software would be a real advantage.  But  we know that we can’t have everything, so if your CV is missing either of those, it won’t necessarily be a deal killer.

Who are we?

We are new (just four years old), we are different and we are growing fast.   We are small enough to be nimble – and we are willing to take a risk to deliver better value and service to our clients.   We are a relaxed team – but highly focussed on providing fantastic value and service to our clients.  And we’re a very long way from the traditional accounting “factory”. 

We embrace innovation and change as a positive rather than avoiding it as a threat to “the way things are done around here”.  We have up-to-the-minute IT, we are marketing focussed, and are always looking for opportunities to connect our business clients with each other.

We are members of the NZ Institute of Chartered Accountants – and if you’re completing PCEI or PCEII, we have a registered mentor on the team.

The position

This is a full time position based in our CBD Whangarei office, with plenty of client contact.  Here’s what you’ll be doing:

1. Preparation of financial statements and tax returns from source documents;

2. Playing a key role in managing our relationship with clients, other professionals and the IRD.

What to do from here

Here’s how to grab hold of this opportunity:

1.  If you have at least two years recent experience as an accountant in an NZ Chartered Accounting business – and you like what you see on this website, proceed straight to step two without delay!

2.  Email your CV to goingUP@elevateCA.co.nz now.  We want to know about your CA experience, where you’re working right now, the kind of work you’re doing – and any questions you may have.  You can count on our complete confidentiality.

3.  We will move quickly.  You’ll hear from us straight away to acknowledge receipt of your CV – and to arrange interviews where applicable.

4.  Start date will be to suit – and you’ll be very busy from day one! 

Thank you for taking an interest in joining the Elevate CA team!

 

We would be honoured if our clients, professional contacts, BOF members and friends would join us at 4:00pm on 5 December for the “Elevate CA Christmas Party – 2012”.

If the idea of an accountant’s party leaves you searching for excuses like a long ago booked hair appointment, never fear – this one won’t fit the mold.

 

For your entertainment, The Nukes >>> will be performing live. 

 

The Nukes are an ukelele trio with a twist: David Parker (Rhythm Cage, The Parker Project), Ben Collier (Goldenhorse, The Magnets) and David Thiele (or Snapper as they call him on stage), pumping out contemporary originals with killer harmonies.  The Nukes have been touring New Zealand and Australia for the past two years – and have recently released their debut album “Each to their Own” – available on itunes.

 

 

  

We will be serving the signature Elevate CA cocktail on the night.  We can reveal it has generous helpings of lime, mint and satsuma in keeping with our colours – and some other rather tasty ingredients to give the event a little added zing.  Of course as responsible hosts, we will also ply you with pizza and non-alcoholic beverages. 

Christmas festivities are from 4:00pm to 6:00pm on Wednesday 5 December – here in the Elevate CA office, level four, 35 Robert Street, Whangarei.

We appreciate the massive support we have enjoyed from our clients and the business community during 2012 – and we would love to round off 2012 in style with you as our guest. 

Just e-mail Fraser (fraser@elevateCA.co.nz) before the end of Monday 3 December to RSVP – and we will look forward to seeing you there!