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The Trust tax rate is changing.....
Gina Gambitsis • March 13, 2024
The trust tax rate is changing............
From 1 April 2024 the Trust tax rate is increasing from 33% to 39%. Here’s what you need to know.
What is changing and when will this happen?
The trustee tax in family trusts is increasing from 33% up to 39%. A bill is currently before parliament and the change will take effect from 1 April 2024 (or from the equivalent balance date).
Am I affected?
The 39% tax rate applies to amounts retained as trustee income and not allocated to individual beneficiaries. Where income is allocated to beneficiaries, their individual tax rates apply.
Most trusts have the ability to allocate income to beneficiaries. Where beneficiaries’ individual income exceeds $180,000, income is taxed at 39%. The Bill also applies to estates. However, estates are exempt from the 39% rate for 12 months from the date of death. During the 12-month period, the estate will be taxed at the personal tax rate of the deceased person.
Another special rule in the Bill applies to Trusts settled for the care of a disabled person. These will be taxed at the personal tax rate of the disabled beneficiary.
Is it still a good idea to have a family trust?
There are benefits to having a family trust in terms of asset protection, succession planning and tax benefits.
- Protecting assets – having a trust in most cases limits your personal liability. For example, if you provide a personal guarantee, or if you are convicted of an offence and fined under the Companies Act 1993, the Health and Safety at Work Act 2015 or the Resource Management Act 1991. A trust can also be a useful asset structure if you need more flexibility to deal with your assets upon your death and reduce the chance that a claim will be made against your estate.
- Succession planning – assets can be held in a Trust for various family members for multiple generations. This is especially the case where the asset of the Trust has special family significance (e.g. a waterfront bach) or where there is a family members with a disability that requires assistance from trustees to manage their finances (e.g. a trust that provides for an intellectually disabled child after their parents have both passed away).
- Tax benefits – subject to accounting advice, you can allocate income to various family members. Beneficiaries under 16 can only receive $1,000 but other family members can be allocated income at lower tax rates. Where land and buildings are held by a Trust, it is easier to distribute capital gains than it is in a company situation and those capital gains can be distributed to one or more of the beneficiaries as required.
What does this all mean for you?
It is important that you understand the implications of the Bill for your family trust. We are here to help. Get in touch with the team today.
A little work now will make next year much easier......
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With the recent changes to the traffic light system now in effect, you may be wondering what support is available if you or your team must self-isolate due to COVID-19 and are unable to work from home. The Government has two schemes available to employers, including self-employed people: COVID-19 Leave Support Scheme and the Short-Term Absence Payment. Leave Support Scheme This scheme has been adjusted to a weekly payment to recognise the periods of self-isolation have changed. To qualify, a set of criteria needs to be met. Your team members must have been advised to self-isolate for a period of at least four consecutive days (and are unable to work from home for that period) for any one of the following reasons: * They have COVID-19 * They are a close contact of a person who has COVID-19 * They are the parent or caregiver of a dependant who has been advised to self-isolate * They are in the category of people most at risk of severe illness from COVID-19 * They have household members in the category of people who are most at risk of severe illness from COVID-19 The team members must have been advised to self-isolate by any one of the following: * A medical officer of health or their delegate i.e the MOH or a public health official * A medical practitioner i.e. a GP * The National Investigation and Tracing Centre It’s a good idea to have supporting documents on file that meet the above criteria in case you are asked to provide them. The funding available is as follows and needs to be applied for on a weekly basis: * $600 a week for full-time workers who were working 20 hours or more a week * $359 a week for part-time workers who were working less than 20 hours a week Currently, there is no stand down time for employees — for example: * An employee may have to self-isolate for a week and receive the scheme, but they are eventually cleared to return to work * A few weeks later, they may find themselves in a situation where they have to isolate again — you can still apply for the scheme this time around. To find out more about the Leave Support Scheme, visit the Work and Income website here https://www.workandincome.govt.nz/covid-19/previous-payments/leave-support-scheme.html Short-Term Absence Payment To qualify for this scheme, your team members must be awaiting a COVID-19 test result and are unable to work from home. The funding available is as follows: * $359 for each eligible team member — please note you can only apply once per eligible worker in a 30 day period. To find out more about the Short-Term Absence Payment, visit the Work and Income website here https://www.workandincome.govt.nz/covid-19/previous-payments/short-term-absence-payment.html Important things to note about the two schemes * An employee cannot receive both subsidies at the same time, so you must ensure the test results are back before making any decisions around which subsidy to apply for. * If you do apply, it’s a good idea to have documentation on file to support your claim in case it is ever questioned by MSD. You might need support from HR as it will be personal information you are putting on file rather than financial. Please feel free to circulate this email to anyone who may find it useful and if you are unsure about any of the above schemes, please give us a call or email us on info@gcol.co.nz We are here to support you during this time. Keep safe
The start of a new financial year is an appropriate time to take stock of the position your business is in at present. This month you could ask yourself "How well do I know my business? To start this process, why not ask your employees what business you're in. Then compare their answers to yours. As part of the review of "How well do you know your business?" we have prepared a check list which we are happy to send you. Some of the questions are:
It is almost always best to start by focusing on your employees first. Highly satisfied and engaged employees are essential for achieving high levels of customer satisfaction, retention and long-term loyalty. Start by listening to your employees and taking action based on their ongoing feedback.
Facebook's advertising feature allows you to place small display ads in the right sidebar of the social network's pages and profiles.
The advertising platform works somewhat like Google AdWords. You simply bid for keywords based on Facebook users' profiles and compete to get your ads placed.
You can target your ad using a range of variables, including keywords, location, age, gender, education, relationship status and interests. You can also choose between a cost-per-click (CPC) pricing model, where you pay only for clicks, and a cost-per-thousand (CPM) model, where you pay per 1,000 ad views.
To start a Facebook ad campaign, you simply select the pricing model you prefer and then determine a bid per click and set a daily budget. You can choose whether you want people to be directed to your web page or to a page, aplication, group or event on Facebook.
Facebook puts a "Like" or "RSVP to This Event" button right in the ad so people don't have to visit your page to take action, although you can track them better if they do.
There's not much real estate on a Facebook ad. To be effective, the headline, which can be up to 25 characters, must grab attention immediately, and the body copy, which can be up to 135 characters, should describe and entice in succinct language. Select an image to accompany your ad for maximum impact.
With some 500 million active users, Facebook is a key platform for marketing businesses, brands, services, products and events. Facebook ads offer a great oportunity to attract more visitors to your website and to increase sales, membership, subscriptions and inquiries.
Okay, so you have a business plan - but do you have a life balance plan? After all, making your business a success is a marathon, not a sprint. So it's important to pace yourself by recharging your internal batteries on a regular basis. This can really help your business thrive!
Stay focused
It's easy to lose sight of personal needs when you're caught up in the excitement of building your business. That's why you have to approach your personal life just as you do your business life. Decide what your priorities and values are. After all, spending time with your children or enjoying a vacation aren't just indulgences; they're activities that provide you with a fresh perspective on life.
Be organized
Sometimes it takes real organisation skills to find time for relaxation. So set up a schedule for your personal time if you have to - commit to a set number of personal hours every week, and be strict with yourself. You'll be more likely to stick to the schedule and once you've made personal time part of your weekly routine, you'll find the benefits will help you keep going.
Don't cross the line
If you're a home-based business, try to set a distinct line between work and home time. Leave work at the office, even when the office is only steps away. Commit to having dinner with the family every night, or not working on weekends.
