New Health and Safety Reforms - How will this affect you?
Following the Pike River tragedy, major changes are being proposed for workplace health and safety in New Zealand, through a new Bill to be passed before the end of the year.  The resulting Health and Safety at Work Act will be implemented in stages, to take effect in April 2015.

The changes will tighten up Health and Safety practices in the workplace.

Not only will Company Directors and those in governance roles be required to have systems in place, they will be required to be actively undertaking proper Health and Safety management in the day-to-day running of the business and be able to demonstrate this. The regulator and the courts will have a wider range of enforcement tools, including increased penalties for breaches of duties.

Employees are to be regularly involved in Health and Safety management. This will be required to be documented, for example, in records from staff meetings. Protection equipment is likely to be more prescribed so actual types of equipment, for example helmets, headphones or eye protection, will be required to be used.

It’s envisaged there will be an initial round of new regulations covering general risk and workplace management; worker participation, engagement and representation; major hazard facilities; asbestos; and work involving major hazards. More industry-specific regulations are intended to be developed over the following two years.

We'll keep you posted as to what these new measures will mean for your business.


New Rental Yield Indicator
A new rental yield indicator suggests investors may struggle to find suitable properties in some areas.

Interest.co.nz and the Real Estate Institute of NZ have teamed up to produce the Residential Investment Property Yield Indicator, a new tool designed to help residential property investors or those with an interest in the market, to monitor how it is performing.

The indicator, updated quarterly, will track likely gross rental yields in 40 areas around the country where there is a high level of rental activity and is intended to provide a broad overview of trends in the market rather than a detailed analysis.
 
A rental yield is a property's annual rental income expressed as a percentage of its purchase price.  It is often the first number investors look at when considering the purchase of a rental property, because it provides a quick comparison of the theoretical earning potential of different properties.  So it can be the starting point for purchase decisions, before other factors such as the cost of mortgage payments, rates and insurance, likely maintenance requirements and potential vacancy levels are taken into account.

When yields are low, it means that property prices are high compared to the rental income they are generating and when yields are high, the reverse is true.

The Yield Indicator is compiled using rents and selling prices for mostly three bedroom houses in the 40 areas it monitors.  The first edition, covering the first six months of this year, showed significant variations in potential yields between locations.

Residential property investors who bought into the market in the first half of this year were likely to have achieved gross rental yields ranging from 4.2% to 12% depending on the area they purchased in.

In Auckland where property prices are highest, potential yields were mostly under 5.5% and below 5% in some places. The lowest yield in the Indicator was 4.2% in the Orewa/Whangaparaoa district in the north of the region.

The relatively low yields available in Auckland suggest investors that were buying into the market in the first half of the year were prepared to accept low initial returns in the expectation of capital gains in the future from rising property prices and eventually some rental growth.

Of the districts monitored in Wellington, potential yields were just under 6%, and above 6% on the Kapiti Coast.  In the three districts monitored in Christchurch, potential yields ranged from 5.7% in Riccarton to 7.9% in Woolston/Opawa.

The highest yield recorded was 12% at Flaxmere in Hawkes Bay followed by 9.3% in Invercargill Central.
  With Christmas fast approaching many businesses are preparing for the team Christmas function or perhaps gifts for team members. With that come the usual questions about entertainment deductions and tax.

Here’s a guide to get you through the silly season.

Christmas Lunches for Clients
As with all customer entertainment, this is 50% deductible.

Christmas Gifts for Customers
The cost of any gifts to your customers is normally fully deductible. The exception comes in the form of food or beverage where the deduction is usually limited to 50%.

Christmas Parties for your Team
Whether you hold your team party on or off the premises, you’ll only be able to claim 50% of the cost of food and beverage. If you have entertainment in the form of a band or DJ, that will only be 50% deductible as well.

We’ve noticed that some end of year functions are becoming more activity based and less oriented around the dinner table. In some instances, the company will set a maximum contribution and employees also pitch in with remainder of the cost. If this is the case, you would deduct the total contribution from team members before calculating the amount to be claimed as a deduction.

Cash Bonuses
If you give your team members cash bonuses at Christmas, this is considered remuneration and PAYE income tax would apply.

 Food and Wine as Gifts to Team Members
This is a little more complex. Unlike the Christmas Party which falls at a fixed time or may be part of an employee’s work duties, gifts of food and wine can be consumed at any time by the employee and so this constitutes a fringe benefit.

You can claim the full cost of any gifts as long as you pay Fringe Benefit Tax on the value.  However this is providing it’s less than the general employee exemption of $300 per quarter.