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Trust Changes – updated A much talked about topic for Trusts of late is the trust income tax rate change. From the 2024/2025 income year onwards, the Trust tax rate that applies to trustee income has raised from 33% to 39%. Along with this change there are some specific new rules required to mitigate potential over-taxation: The 33% rate will still apply to trustee income that does not exceed $10,000 after deductible expenses; There are targeted rules for trusts related to deceased estates and those established for disabled individuals, as well as exclusions for energy consumer trusts and legacy superannuation funds. Furthermore, the change also introduces a measure to reinforce the new 39% rate by applying it to beneficiary income derived by certain close companies. This adjustment ensures that income for these companies will also be taxed at the 39% trustee rate, aligning with the updated tax policy. It is worth noting that for Beneficiaries the tax thresholds remain unchanged for income from $78,100 up to $180,000 to be still taxed at the 33% rate. But careful attention is needed regarding the minor beneficiary rule and the $25,000 deemed settlor rules also. For Portfolio Investment Entity (PIE) investments, a 28% tax rate will remain in effect meaning with some tax planning opportunities the impact of the 39% rate could be mitigated to some extent. If you have any questions regarding these changes and rules feel free to get in touch with our team. Written by Megan Potter and Rory Noorland. Megan PotterPartner, LLB  P: 07 889 7153E: meganp@cooperaitken.co.nzM: 027 370 4329 Rory NoorlandPartner, CA P: 07 889 7153E: rory@cooperaitken.co.nzM: 021 721 368 Returns to blogs

More payroll increases coming 1 april 2025. Minimum wage increase The adult minimum wage will rise from $23.15 to $23.50 per hour, and the starting-out and training minimum wage will increase from $18.52 to $18.80 per hour. If an employee is aged 16 or over, the employee must be paid at least the minimum wage. There are 3 types of minimum wage: adult starting-out training An employee’s age and work situation determine their minimum wage. Employees aged 16 and over must be paid at least the adult minimum wage, unless they’re starting out or a trainee. Employees under 20 may be entitled to the starting-out wage, depending on their circumstances. Employees aged 20 or over, completing 60 credits of industry training, must be paid at least the training wage. ACC Earners Levy PAYE calculations also include the ACC Earners’ Levy. The ACC Earners’ Levy will increase from 1.60% to 1.67% as of 1 April 2025. This means all employees will see a small increase in the amount of tax deducted from their pay, and therefore a small decrease in the net amount they receive after tax. For a person earning $1000 per week, the levy will increase from $16 to $16.70. For a person earning $1500 per week, the levy will increase from $24 to $25.05. The ACC Earners’ Levy does not apply to earnings over a threshold, and that threshold is increasing to $152,790. That means the maximum levy someone could pay in the 2025/26 year is $2,551.59. ESCT thresholds ESCT stands for Employer Superannuation Contribution Tax. Typically you’ll see this as the tax that is applied to the employer contribution for KiwiSaver. These thresholds are increasing from 1 April. Nothing you need to do here – this is only really noticeable if you look at how the employer contribution is split between this tax and the net value the employee receives to their KiwiSaver. Tax on extra pays The IRD has specified a new method for calculating the thresholds used to determine the tax rate used for lump sum payments when they relate to the end of employment. These specifications are currently in draft, so we may still see further changes – this can be somewhat confusing and we recommend you reach out to our payroll team for assistance when you have a final pay to calulate. —————— Please contact our payroll team if you need any support or advice. contact our payroll team

Manage your cash this summer Our Kiwi summer will soon be here and with it comes the holiday and festive season. This year has been challenging for business owners and households. It is therefore tempting that the end of year ‘silly’ season can be a time to celebrate, wind down and take the foot off the gas in your business. Before you do, consider your business cashflow and costs over the coming months so you can go through the next few months in good shape. Christmas partiesThe annual Christmas party is a great way to show gratitude to staff and celebrate the efforts from the year. By now party venues are likely to be booked and potentially you have paid a deposit. Plan to pay the restaurant or venue immediately after the event, or within 7 days at the latest. Our local hospitality businesses will certainly appreciate your custom in the lead up to Christmas. The cost of your Christmas party (team activity, food and drink) is 50% deductible for tax purposes. This means also that you can claim 50% of the GST inclusive amount in your GST return. The remaining 50% (GST inclusive) is a non-deductible entertainment expense. Staff and Client GiftsIn New Zealand we have a generous culture of showing appreciation to our team and our clients by giving gifts such as hampers, boxes of beers, hams, merchandise, wine and chocolates. These gifts can amount to quite a bit of additional cost to businesses, especially when done at scale. Weigh up whether the value and appreciation received back (including meeting other’s expectations) exceeds the cost to your business. All food and drink related gifts are 50% tax deductible and you can claim 50% of the GST inclusive cost in your GST return. Staff bonus & Gift VouchersAn alternative to a gift is to give staff a Christmas bonus or gift voucher. Your team may really value a gift voucher to help assist with the additional end of year costs rather than a food hamper or similar. Vouchers can be 100% deductible provided you are within the fringe benefit tax (FBT) rules. At a high level, if you provide a voucher under $300 per employee (per quarter of the year) and your annual staff vouchers (and fringe benefits) are under $22,500 then the voucher is 100% tax deductible to your business. FBT can be tricky area so please give us a call to check on your obligations and the FBT rules. Vouchers and gift cards do not contain GST. The GST is triggered at the point of sale where the voucher is redeemed. When entering the purchase in your accounts watch out for GST and ensure the transaction is marked exempt from GST. If you opt to pay your team a bonus this needs to be processed through your payroll system as a one-off pay. The manual calculation for tax deductions is not the same as a regular pay as this income is paid and calculated on top of the annual wage. Please contact our friendly payroll team to calculate the PAYE deductions if you don’t use payroll software or have any questions on paying staff bonuses. Work in progress and debtorsWith the end of year in sight there is a push to complete orders and finish work in progress. This can be a busy period for your team. Be proactive to review your work in progress jobs now and see what work can be invoiced to customers. Aim to get your invoices sent out promptly to ensure your customers load them in for payment before the holiday season. November is the time to get invoices sent to ensure you get paid this year (dependent on your payment terms). November is also the time to look at your accounts receivable ledger to see whether some customers need to be followed up for payment. Set aside time to call overdue customers to get paid now rather than waiting to check your overdue accounts next year. Many businesses need additional cash in the bank to pay for holiday pay and cover costs during the holiday period until the end of January. Be proactive to protect your cashflow rather than being a ‘bank’ for others. Cash Outflows December & JanuaryDecember can be tricky for productivity with many businesses having an annual shutdown starting around Christmas Day to early or mid-January. This means you will pay holiday pay to your team and no or little work can be invoiced to customers during this time. Holiday pay cycles are often calculated at a higher amount than a standard pay. This is because annual leave is calculated at the rate being the higher of the last 52 weeks or last 4 weeks of an employee’s pay. Annual leave calculations are not straight forward, with some large Government departments getting it wrong in recent years. Please contact our payroll team if you have a payroll question or need the annual pay calculations checked. If you pay your employee their annual leave in December for their January leave the PAYE is due for payment to Inland Revenue by the 20th of January. For cashflow reasons it can be preferable to pay employees on your standard pay cycles to help balance when the cash leaves your bank account. It needs to be writing (ideally in an employment contract) should you opt to pay employees their annual leave in their usual pay cycle rather. The default position is to pay employees leave before they go on leave. When an employee’s January annual leave is paid in January the PAYE and deductions are due for payment in February. You can process the payruns and upload your banking payments in advance to be paid in the future. Tax Due in January & FebruaryJanuary and February can be tax payment time for many businesses. Here is a list of some of the key due dates to remember (some won’t apply to you):  15 January 2025 – GST due for period ended

Cashing up an employee’s annual leave Christmas is on its way and with this pending holiday comes the typical myriad of additional pressures. This is the time of year that some employees may be thinking about their leave balances and pondering if they could have some of this balance paid out in cash. If your employee has a sufficient unused Entitled Annual Leave (sometimes called Outstanding), you can consider a request for a cash up of leave. Why would I consider Cashing up my employees Annual Leave? Unused Entitled Annual Leave is a liability to your business. If your employees are not using their Entitled Annual Leave, it increases debt, increases the risk to workplace safety and can indicate that some employees may not be accessing periods of rest as they should. It is recommended that you check your leave balances regularly, so you can make informed decisions regarding these matters. It is important to note – an employer cannot force or pressure an employee to cash up leave. Nor can cash up be a condition of employment. And in a similar vein, the employer is entitled to refuse a request for Annual Leave Cash Up. Declined requests must be addressed in writing, however, an explanation for the decision is not mandatory. How much leave can my employee cash in? One week of Entitled Leave is the maximum that can be cashed out each year. This can be taken a few days at a time, but the total days cashed up between anniversary to anniversary cannot exceed an ordinary week. How can I check if I can give my employee a cash up? Cash ups come from Entitled Outstanding Leave balances. See below for an example of which components to look at for cash up. (I am not addressing Kiwisaver in this example) Using the example above – let’s explore a request to cash up 1 week of Annual Leave. On 31st July 2024, Bill applies to cash up 1 week of his Annual Leave. Bill’s employer is happy to consider this request, but before they give Bill their response, the following is considered; Has Bill been employed over 12 months? YES, Bill started 1st July 2023. Does Bill have sufficient Entitled Annual Leave? YES. Bill has just passed his first anniversary and has his full entitlement of Annual Leave (4 weeks) What is a week for Bill? 6 Days, as per his roster. How much do I pay? Bill’s Annual Leave rate must be the higher of Ordinary Weekly Earnings (OWE) and Average Weekly Earnings (AWE). In this example, AWE is higher at $1,129 per week, therefore this is the rate to apply. What about the tax? We are going to use Bill’s M tax code for this example. Lump sum (extra pay) is not subject to the changes that took place 31st July 2024. Annual Leave cash up is taxed at Lump Sum tax rates. Selection of the correct rate is based on the annual gross earnings. Calculate the grossed-up annual value of the employee’s income by adding up the previous 4 weeks of income payments. (4 x $1,125.00 = $4,500) Bill get’s paid weekly, so multiply this number by 13 to calculate grossed up income. ($4,500 x 13 = $58,500) Add the lump sum payment amount ($58,500 + $1,129 = $59,629) From the chart below, select the appropriate lump sum tax rate Now Bill’s employer has been able to work out the value of the Annual Leave Cash Up, they can decide if this is feasible for their cashflow at this time. Working from the assumption that the request is approved, Bill receives his cash up in the next pay run. His ordinary earnings (wages) are taxed as per the tax tables, and his lump sum taxed at the appropriate rate. Bill’s employer also recognises that the tax amount is higher than on a usual pay, so takes the time to explain lump sum tax rates to Bill. Why do I need to tax at lump sum rates? Why are the tax tables not used? Because the cash up is an extra pay, it can push the employee’s income into the next tax bracket. Using the tax tables to calculate the PAYE payable on an Annual Leave Cash Up can result in under or over charging PAYE. This could result in a debt for your employee at the IRD and can affect the employment relationship. Our Payroll Division can assist with Annual Leave Cash Up calculations, both in a processing and an advisory capacity. Please reach out, we are always happy to help. Jane Smith, Payroll Divsion Lead Phone: 07 889 7153Email: wages@cooperaitken.co.nz return to all blogs

The 2025 dairy season has set off with a bang! The lift in the farm gate milk price to $9.00 kg/ms, with a range of $8.25-$9.75 kg/ms has brought about some welcome confidence to the industry and our farmers. Alongside this increased payout, many farms started in a positive position for 1 June 2024 with improved cow condition, good pasture covers, and feed on hand.   $7.20 kg/ms is the advance rate that Fonterra farmers are receiving for milk solids supplied in October and paid in November. Compared to last year’s rate of $5.45 kg/ms, the $1.65 per kg/ms increase will provide a meaningful impact to farmers’ cash flow. For the average sized 100,000kg farm that equates to an extra $165,000 cash that will be received on 15 November 2024 when directly compared to the same time last season. Tax on this at the company tax rate of 28% is $46,200 in forecast additional tax. This is before factoring in any interest rate reductions or production increases, meaning taxable profits are forecast to be up significantly which is fantastic news for our farmers. With the increased cash flow, some farmers are considering or have recently repaid a lump sum debt payment to their bank. A lump sum payment may seem like a great idea today, but it is important to consider what does the bank account balance look like heading into winter 2025? Will there be enough cash to pay the additional 28 June 2025 provisional tax? To answer these questions and provide some clarity on cashflow, we recommend a 12-month cash flow forecast.  A forecast cashflow provides an opportunity to; Forecast the closing bank balance on 31 May 2025 Forecast cash movement position and compare to last year Forecast the 28 June 2025 provisional tax payment to account for any extra tax Plan for debt repayment Identify break-even milk price, farm working cost per kg/ms and benchmark against industry averages Another welcome change in the payout is the advance rate which is at $7.60 and not forecast to change until July 2025. What this means is a Farmer will not have any catch-up payments or larger milk cheques running through these months, which is very different to the past seasons and another good reason to complete a cash flow forecast to understand how this impacts your farm and your cash flow. A forecast cashflow is a key decision-making tool and in this season, more important than ever. The forecast seeks to use information we know today to plan.With farming we know it is never going to be exact because of the external influences on the business. However, it is a proactive way to provide some certainty on cashflow and tax position to avoid any end of season surprises!   Amy CoombesPartner P: 07 889 7153E: amyc@cooperaitken.co.nzM: 027 715 2728 return to all blogs

Trust Changes The law of Trusts has undergone a significant update in the past few years. Firstly, the Trusts Act 2019 came into effect in January 2021. The new Act reformed Trust law and brought it up to date by providing mechanisms to resolve trust disputes, providing Trust administration rules, setting out core trust law principles and aims to make Trust law more accessible and transparent. Key changes included introduction of clearly stated trustee duties, extending the maximum trust duration to 125 years and setting out the presumption of disclosure of Trust information to beneficiaries. Additionally, new Taxation legislation came into effect in December 2020 regarding disclosure requirements for Trusts for tax purposes. Since April 2021 most Trusts are now required to provide Inland Revenue with annual financial reporting. This financial reporting includes a statement of profit and loss, a balance sheet and any other information as specified by Inland Revenue. More recently the trust income tax rate has been raised from 33% to 39% for the 2024–25 income year and beyond. Along with this change there are some specific new rules required to mitigate potential over-taxation. The most beneficial will be that the 33% rate will still apply to trustee income that does not exceed $10,000 after deductible expenses. Additionally, there are targeted rules for trusts related to deceased estates and those established for disabled individuals, as well as exclusions for energy consumer trusts and legacy superannuation funds. Furthermore, the change also introduces a measure to reinforce the new 39% rate by applying it to beneficiary income derived from certain close companies. This adjustment ensures that income from these companies will also be taxed at the 39% trustee rate, aligning with the updated tax policy. It is worth noting that for Beneficiaries the tax thresholds remain unchanged for income from $78,100 up to $180,000 to be still taxed at the 33% rate. But careful attention is needed regarding the minor beneficiary rule and the $25,000 deemed settlor rules also. For Portfolio Investment Entity (PIE) investments, a 28% tax rate will remain in effect meaning with some tax planning opportunities the impact of the 39% rate could be mitigated to some extent. These changes have generally prompted a comprehensive review of Trusts, their administration, financial reporting, purpose and future. If you’d like to discuss your Trust administration and/or financial reporting requirements please get in touch with our dedicated Trust, Governance & Companies team. Written by Megan Potter and Rory Noorland. Megan PotterPartner, LLB  P: 07 889 7153E: meganp@cooperaitken.co.nzM: 027 370 4329 Rory NoorlandPartner, CA P: 07 889 7153E: rory@cooperaitken.co.nzM: 021 721 368 Returns to blogs

Looking Beyond Fines. Unlocking the benefits of Farm Compliance. In today’s evolving agricultural landscape, farm compliance is more than just a regulatory requirement. It’s considered a strategic investment in your business’s long-term success. While non-compliance can lead to significant financial penalties, it’s important to recognise the broader benefits that compliance can offer. By prioritising compliance, there is potential to enhance your farm’s profitability, reputation, and sustainability. Financial Gains Enhanced Access to Financing: Lenders are increasingly recognising the importance of compliance. By demonstrating your commitment to responsible farming practices, there is potential to improve your chances of securing loans at more favourable interest rates. Premium Payments: Some farm assurance programs offer premium payments to farmers who meet their compliance standards, which can provide a boost to your income. Increased Property Value: Farms with strong compliance records can often be valued higher in the market. This is because they demonstrate a commitment to sustainable practices and reduced risk, making them more attractive to potential buyers. Ethical and Sustainable Farming Positive Reputation: Compliance with ethical and sustainable practices contributes to the positive image of our industry and strengthens the ability to negotiate for better markets. Contribution to a Sustainable Future: By adhering to environmental regulations and ethical guidelines, you contribute to a more sustainable and responsible agricultural sector. This can help protect our natural resources and ensure a healthy future for generations to come. Improved Safety and Well-being Safer Work Environment: Compliance with health and safety regulations helps create a safer and healthier work environment for your employees, reducing the risk of accidents, injuries, and associated costs. Employee Satisfaction: A positive and safe work environment can lead to increased employee morale, productivity, and job satisfaction, which can contribute to a more efficient farming operation. Farm compliance is not just about avoiding penalties; it’s about unlocking a range of benefits that can significantly enhance your business’s success. By prioritising compliance, you could improve your farm’s financial performance, enhance New Zealand’s reputation, contribute to a more sustainable future, and create a positive and rewarding work environment.

Passion for supporting Dairy Farming CooperAitken are extremely passionate about our communities and taking pride in getting involved and supporting in any way we can. One of the many ways we are involved in supporting the agricultural industry is through the  Waikato New Zealand Dairy Industry Awards, as a sponsor, as well as many team members having held the role of Treasurer for the Waikato Committee. Having grown up in the Waikato and being immersed in the agricultural industry, I have always been passionate about it. I was thrilled to take on the role of Treasurer for the Waikato region and be part of this incredible program. There is no doubt about the value the dairy industry brings to New Zealand, and to be able to support an awards program where entrants are extraordinary ambassadors, showing their passion for and dedication to the industry, is a great program to be involved in. The New Zealand Dairy Industry Awards have been a benchmark of the industry, celebrating innovation, achievement, and the best of dairying in New Zealand since 1989. Annually the awards have a number of events co-ordinated over 11 different award regions leading into the national awards finals. The events provide the opportunity of collaboration between farmers, industry specialists and key support businesses, providing many learning opportunities, whether you’re involved as an entrant, judge, sponsor, or part of the committee. It is a great way to connect with like-minded people who are passionate and positive about the future of the dairy industry. Not only do the awards offer incredible prizes, many entrants also credit the awards for having a huge impact on their careers, adding value to their CV, building connections, progressing in the industry, and connecting with mentors. Sharefarmers also find significant benefit from learning more about their farming business through the in-depth judging criteria. There are Four Awards Categories: Dairy Trainee of the Year Dairy Manager of the Year Share Farmer of the Year Responsible Dairying Award More information about each category can be found here. The judging process takes place over a number of weeks, tailored specifically for each category. Dairy Trainee entrants are judged at a group a skills day involving hands-on practical skills and general knowledge. Dairy Manager and Share Farmers consist of organised farm visits by the judges to assess a number of areas including, pasture and feed, livestock, farm environmental and sustainability, people and culture. The New Zealand Dairy Industry Awards encourage farm owners and employers to encourage their team to enter. The benefits to yourself and team are endless: Empowers your team, improving confidence in themselves and the industry. Assists in personal development, setting people up for their next step in their career. Giving the next generation drive for the dairy industry, by being surrounded by positive advocates. Networking with like-minded individuals as well as regional and national sponsors Skills and knowledge are developed: the judging criteria covers every aspect of farming, benefitting the entrant to seek the understanding and guidance from the farm owner. Having been involved in the awards program for a number of years, we have witnessed its positive impact on all participants and winners. If it holds some interest, we strongly encourage you to enter. Entries Open: 7 October 2024Entries Close: 8 December 2024 Questions? Touch base with the Waikato Dairy Industry Awards team!Regional Managers Cameron & Nicola van Dorsten – email here. Dairy Industry Awards – Waikato Images left to right: Waikato 2024 Winners, Louise awarding CooperAitken Award, Winner of CooperAitken award & Louise.   Louise Maxwell-Granich, BAM CAClient Manager + Senior Accountant P: 07 888 8002E: louise@cooperaitken.co.nz