News Articles

We are committed to finding innovative ways to improve the way we do business with you.  As part of our ongoing development, CooperAitken is enhancing our systems and procedures.  Going forward, you will notice changes to how our invoices look and in the way we communicate with you about your account with us. Where you prefer to receive an electronic statement, these will now be emailed to you along with the copy of the invoice. We also now offer more options for you to pay your invoices: Internet banking Monthly Instalments – subject to credit criteria Credit Card – we now offer payment by Visa or Mastercard online Other Options – please contact our credit team as below for other payment options: Hazel Miller     hazel@cooperaitken.co.nz     027 262 5962 Ali Little            ali@cooperaitken.co.nz          027 212 2866  To pay online, head over to our payments page or click on the link at the bottom of your invoice. Another change you may notice is during the month when we are completing different pieces of work, we will invoice each piece of work when it’s completed rather than at month end.  Overall, the total fee will be the same and summarised on our statement. If you have any questions around our new systems, please do not hesitate to contact our office. make a payment

INCLUDED THIS MONTH; Read of the month – Could your business survive without you? Certificate of Public Practice – Congrats Chloe, Gerrie & Sharlotte Upcoming Sir John Kirwan Event The end of Banklink NZ Dairy Industry Awards Careers with CooperAitken Proud to Support download here

INCLUDED THIS MONTH; New Trust Disclosure Rules: What you need to know, by Gerrie Jacobs Chartered Accountants ANZ team achievements Team News Quiz & Cocktail Team Night Careers with CooperAitken Proud to Support download here

The 2020/2021 year will always be remembered for the worldwide Covid-19 Pandemic which affected people from all walks of life. Whilst the virus was slowly spreading two significant tax changes happened in New Zealand, specifically: The Government proposed new trust disclosure rules and passed it into law five days later with little to no consultation, almost as if by stealth The Government also passed legislation under urgency to increase the top individual income tax rate from 33% to 39% for personal income in excess of $180,000 Both changes are applicable from 1 April 2021. The Government’s motivation behind the new disclosure rules has a direct correlation to the use of a trust as a tax planning tool. The new rules will enable Inland Revenue to establish to what extent trusts are used to effectively avoid the 39% tax bracket. The new rules will additionally enable the Inland Revenue to share the disclosed information with overseas tax authorities and other New Zealand Government Departments such as the Ministry of Social Development. What do the New Disclosure Rules entail? In short, from the 2021 – 2022 income year  all New Zealand Trusts  have to: Disclose a laundry list of additional information Prepare financial statements File a tax return Complying Trusts that are non-active with interests only income of less than $200 per annum are exempt from the above three requirements. Per Inland Revenue legislation the additional information is provided with the IR6 Trust Tax Return in the form of: IR6S – Relates to Settlor & Settlements (Current Year Settlements) IR6B – Relates to Beneficiaries details IR6P – Relates to the details of any person that has the power to appoint or dismiss a trustee, to add or remove a beneficiary, or to amend the trust deed The additional information required to furnish the above forms include but is not limited to: The amount of settlements made to the trust in the income year which includes cash, financial arrangements, land, buildings, shares/ownership interest and settlements that have been valued at zero. The full name, date of birth, jurisdiction of tax residency and IRD number or Tax Identification Number (if tax resident in another country) of all settlors. The full name, date of birth, jurisdiction of tax residency and IRD number or Tax Identification Number (if tax resident in another country) of all beneficiaries as well as any movements in beneficiary current accounts which include: The Opening balance Distributions (accounting income, trust settlement, capital, use of trust property for less than market value, distribution of trust assets and forgiveness of debt) Amounts withdrawn or enjoyed from the trust The Closing balance of the amount owed to the beneficiary or owed to the trust Over and above the non-active trusts that are exempt of the new rules, the following trusts are also exempt: Estates still under administration Foreign Trusts Charitable Trusts Trusts that are eligible to be Maori Authorities Widely-held superannuation funds Exempt employee share scheme Debt funding special purpose Lines Trusts How does it affect you? Trustees have to spend more time than ever before on the administration of a trusts, it is also likely that there will be a large increase in the compliance cost for trusts because a lot of the information required by the new rules is not always readily available. We are finding that the 2022 year is particularly challenging as all of the required information not only has to be sourced, it also needs to be entered into the prescribed Inland Revenue provided IR6 returns. Income tested benefits you receive may be affected in that Inland Revenue will now have access to not only taxable income distributions but also non-taxable distributions which are both taken into account for testing purposes. An example being working for families. Inland Revenue has the power to request the same information from the trust for the previous eight years should they find anything of concern during their review of the 2022 income tax returns as filed. In summary we believe the impact of the new disclosure rules are significant on trustees and we urge you to contact us if you would like to discuss your trust disclosure obligations. download a copy Gerrie JacobsAssociate, CA P: 07 889 7153E: gerrie@cooperaitken.co.nzM: 021 284 6444

INCLUDED THIS MONTH; Did Dairy Farmers actually make a big profit in 2022? By Coral Phillips 2022 Herd Scheme Values Directors Strategic Retreat Law change for incorporated societies Matamata office Proud to Support download here

As the 2022 financial year comes to a close for Dairy Farmers, the record high milk payout forecast from all dairy companies is a positive to celebrate.  But the question needs to be asked, has the high payout resulted in more cash in the pocket?  Also of concern, what are the tax implications?  Was it in fact a good year for our dairy farmers and what will future cashflows look like for the 2023 year. High demand for our products and good returns overseas along with excellent grass growth in the spring and early good production levels made for much positivity in the sector.  The hype of a high payout for 2022 continued to grow through the season when Fonterra forecast it’s highest ever of $9.60 midpoint per kilogram.  However, many farmers did not get too excited as they had clear memories of the previous high in 2014 of $8.40, which was quickly followed by a drop to $4.40 and subsequently $3.90 the following year. Also, for many farmers, the autumn drought has been the worst they have seen.  Intermittent skiffs of rain gave hope of more to come.  Greater quantities of supplements were fed to push out the drying off date but was mostly all in vain.  The 2022 forecast also took a small downward turn on the back of decreasing world demand for product despite a favourable exchange rate for exporters, currently under $US 0.65. Meanwhile an inflation rate of 6.9% has been announced for the March quarter.  That is bad enough.  However, farm inflation is running much higher and has created a lot of nervousness.  For example, the palm kernel price has increased by up to $200 per tonne.  Fertilizer has increased and fuel prices continue to soar.  The 2022 Federated Farmers and Rabobank remuneration survey shows an increase of approximately 15% in employee’s gross income  since the previous survey two years ago largely due to a shortage in the labour market due to problems with immigration, and as everyone is aware, bank interest rates continue to increase with the Official Cash Rate (OCR) now at 2.00%, the highest since 2016. These increases in expenses all counteract the positive of the increased milk price. Many farmers will feel cash is tight after repaying bulk debt, and potentially having purchased the long awaited new tractor.  Using cash on capital items does not mean less profit, but simply less cash in the pot left to pay the tax bills.  Therefore, it is important to quantify the effect on the bottom line. To analyze the effective payout in the 2022 tax year, we need to consider the 2022 advance rate and the previous year’s deferred rate, using a Fonterra farmer as an example.  In the 2022 tax year the advance rate was $7.70 plus deferred milk from 2021 at $1.49 plus 30c dividend which gives an effective payout of $9.49.  The 2021 final payout was $7.54, but when adjusting for the tax year, an advance rate of $6.05 plus deferred milk from 2020 year at $1.34 plus a 10c dividend, gave an effective payout for tax purposes of $7.49.  This is $2.00 per kilo more for 2022 compared with 2021.  This is effectively extra income of $300,000 for a dairy farmer producing 150,000 kg of milk solids – but how much of this is profit? The majority of dairy farmers have a May balance date, so with their next provisional tax payment due at IRD on 28 June, this is a good time to review the financial year profits.  In addition, as the 2023 budgets are currently being completed, it is important to accurately forecast the tax payments which will be due.  No one likes to think about tax, but it is a cost which we at CooperAitken can help to plan for.  If funds are short, it is not a good idea to simply not pay the tax that IRD are expecting.  Better options include agreeing to an installment arrangement with IRD before the due date.  Alternatively, tax pooling is an excellent mechanism to lock in lower interest rates than what the IRD will charge and is simpler than increasing the bank overdraft limit.  The use of Income equalization can be another option. It’s a great idea to get your accountant to prepare an estimate of the 2022 profit before provisional tax is due on 28 June.  This will help with the 2023 budget, show where the funds are required and give peace of mind.  If any of the specialist rural team at CooperAitken can help, please contact us. download a copy Coral PhillpsDirector, CA P: 07 889 7153E: coral@cooperaitken.co.nzM: 027 285 1106

INCLUDED THIS MONTH; The long and overwhelming to-do list of a dairy farmer, by Gavin Haddon. 31 March Balance Date New Financial Year ACC CPX Renewals Using the correct tax code Proud to Support download here

Have you ever been served 100 tennis balls at once and expected to return each one with accuracy? – and when you don’t you are penalised! This is how a client described owning a dairy farm now with the outrageous level of compliance all are expected to achieve. Being totally confused by bombardment of expectation I sat down and started jotting down the on-farm compliance I am expected to conform with on my own farm. The list is still not complete.  I started with my Dairy Company Supply agreement which in itself is quite complicated and should be read.  The next hurdle I thought I should action is ensuring I have copies of my Resource Consents to take Ground Water. I notice they do have an expiry date which is worth noting in your diary. A complicated document on its own.  Being proactive I installed a meter and the readings are regularly sent to WRC. Just as well I do as late one Wednesday afternoon recently, I had a phone call from the Council saying they are conducting a spot audit the next morning. With slightly less sleep than usual the meeting went well, however they had no record of my meter readings. When they did however discover them, I now have an issue of using too much water and have to re-apply – Ouch. Hence a warning letter received shortly after. My Dairy Effluent Storage Calculator is an interesting beast. I have put my faith with the experts on this one along with the Actual Area Dairy Effluent Calculator. Yes, the sprinklers and irrigators are all calibrated and hopefully not spreading too heavily. No, it’s not ending up in the river! Heck, you should see my “Whole Farm Soil Test Fert Map & Plan”. A weighty document I have invested in to ensure no excess Fertiliser usage and my nitrogen application is under 190units/ha. That’s taken some precision calculating so not to be penalised. My Farm report now says my GHG CH4 (methane emissions) is 8495 and my GHG N2O (Nitrous Oxide Emissions) is 2098. Umm, the graph also shows 25KG/Ha/Yr Nitrogen Loss and 27% Nitrogen Conversion Efficient. My farm is in the middle of the graph so I must be ok, who knows. What about my Farm Environmental Plan? That’s on the to-do list. I’ve just found my Sustainable Dairying Water Accord. Again, I’m in the middle of the graph so I must be ok? QCONZ emailed and we booked in for the annual shed inspection. Mostly good but a few small issues that needed addressing. The incorrect soap at the hand basin was an easy fix however on the return visit I did have a little too much “manure” on the yard. It may have been because we have been trying to save water. Anyway, we survived that curve-ball! What’s next, well the milking machine test. Another hold your breath invoice turning up!, but we managed that one as well. All this methane gas has caused global warming and now my milk is too warm. Our farm was outside its “Milk Collection Temperature Specifications”. It sounded like an expensive fix (and it was). Concrete pads, ice banks, wiring, plumbing, the works but hey – I’ve got cold milk now. Another invoice, My Overseer annual subscription expired. I suppose I have to pay it to keep compliant. Thinking I’m on top of it all I received a phone call from the Dairy Company. “Ah Gavin, I’m just informing you that we are changing our tanker configuration and unfortunately you will have to restructure your entranceway so the tanker can pick up your milk”. Well at least I had a year to do it and a few more dollars from the same dairy company to spend on it. That invoice is still coming. A lovely lady rang me recently and said, “Gavin- do you think farming clients are up to speed with ensuring their workers houses are compliant?” I said – “I doubt it” knowing full well most aren’t! She responded – “I think they need help!” Well, you may as well start with my farm houses. Taking the appropriate step, I engaged her and received a very thorough report which suggested why I am legally obliged to get these houses to standard. – I said thank-you but yet more money to allocate. Due to my excellent sharemilker, I do own jackets from our Dairy Company with the words “Grade Free” embroidered. BUT speaking of sharemilkers I’ve just met with mine to discuss animal welfare compliance – That’s another article. We as Accountants are compliance driven. Compliance is our life. The reason I wrote about this is to encourage our clients to talk to their accountants about it, see how we can help with revenue versus capital expenditure, depreciation rates, tax deductions and low interest loans. Furthermore, we want to make you aware of your legal obligations. We are anticipating helping our farmers more and more in this space as time goes on. For the reasons above the Groundswell movement has gathered traction. Farmers are generally compliant but the volumes of policies are excessive and continue to increase and change. I also hope our non-farming readers understand more about what the HOOHAA is all about. download a copy Gavin HaddonDirector, CA P: 07 868 9945E: gavin@cooperaitken.co.nzM: 027 221 0130  

Due to a recent sharp rise in the number of complaints received by MBIE relating to the dairy sector, the Labour Inspectorate, along with the Tenancy Compliance Investigations Team, will start visiting dairy farms from late February to assess their compliance with minimum standards of employment and tenancy. This is now a focus area for the Inspectorate, and follows similar exercises first undertaken in 2013. According to Labour Inspectorate Regional Manager Callum McMillan, “The key objective of the visits is to ensure better compliance in the dairy industry across minimum employment and accommodation standards. This will include looking at employment agreements, record keeping and ensuring payments of at least the minimum wage. Of key importance will be the ability to produce records to show compliance in this area, this includes time and attendance records – i.e. timesheets & leave taken records. “We have had success working in close partnership with the dairy industry, to ensure this important part of New Zealand’s economy is meeting their obligations under labour and tenancy laws. “As part of this industry-wide exercise, labour inspectors will talk with employers and employees, review records and we will also be accompanied by officers from MBIE’s Tenancy Compliance and Investigations Team to assess standards of onsite accommodation for farm workers. “More broadly, these visits will check that if a dairy sector employer is providing housing to their employees, that its compliant with the Residential Tenancies Act 1986 and that it meets the minimum standards aimed at ensuring the homes are warm, dry and safe.” Warranted Labour Inspectors plan to visit farms in both the North and South Islands. “The industry has taken some steps over the last few years by setting expectations and establishing assurance systems and has support readily available for dairy farmers on matters of employment. “These visits are an opportunity for employers to demonstrate compliance, but if noncompliance is found, the Labour Inspectorate and TCIT will consider the appropriate response which may include the issuance of infringement notices.” Here at Cooper Aitken we have the knowledge, expertise, and industry experience to help you negotiate any of the issues raised in the above article. If you need help and/or support, please contact us on 0800 866 191 or email mail@cooperaitken.co.nz.

Life in general moves so fast nowadays and often we don’t put time aside for things that matter, as we navigate the hustle and bustle of everyday life. Sometimes these things include time to pursue a hobby, our health and well-being, and sometimes it is the big questions like – what happens when I’m not here anymore. As professionals, unfortunately it is a common reality for us to witness the fallout of under preparedness in terms of business and succession planning. Small businesses in New Zealand make up approximately 97% of all New Zealand businesses.[1] Just 30% of family businesses succeed into a 2nd[2] 75% of private family businesses are still owned by the business founder[3] and only approximately 15% of baby boomer business owners have completed a succession plan – despite the fact they are now aged between 58-76 years old.[4] The result of a failure to plan for succession can have adverse effects on business owners and their families, inevitably risking the opportunity to reap the rewards of years of hard work.[5] There is a great risk to New Zealand’s business success and structure as we know it, including land holdings, generational continuance, supply chains and employment, if this important matter isn’t considered by business owners sooner rather than later. When considering this process you should realise its dual purpose; firstly for the business to successfully carry on once you essentially ‘pass the baton’, but secondly for the circumstance where you are no longer around or able to work as you currently do in the business. There are two key aspects, which we believe are crucial in achieving a solid foundation in planning for the future – establishing and maintaining an adaptable succession plan and implementing an effective business plan, often going hand in hand. We encourage everyone in business to put their mind to these concepts, earlier rather than later – on a blue sky day. All businesses should have a succession plan in place, or at least be taking steps to think about this concept, and we encourage you to involve your professional advisors. Depending on your business and your age and stage of life will determine what is more imminently necessary – a business plan or the succession plan, often being intertwined in their establishment.  Your lawyer, accountant and any other key advisors to your business, i.e. investment advisor/farm advisor. It is important to have the support and guidance of a team who understand your business, your values and goals. The aim is to clarify what you want for the future and define the steps required to turn that vision into a reality. All while taking into consideration business, personal and family expectations. Managing family expectations is not always a straightforward process and navigating this can be eased with the help of your advisors. We encourage as a first step – an initial planning session, to determine your goals, objectives and what you want to achieve from the process. A succession planning professional will guide your planning process and act as a sounding board while giving appropriate direction.  Establishing a realistic timeline for each step of the process is also an important part of initial discussions and the overall success of achieving a final plan. Organisational structure of the business is crucial. Clearly defining roles and responsibilities will not only assist with planning for the future but also in ensuring efficiencies in day-to-day operations. Considering a number of ‘what if’ scenarios is important and ‘real’ conversations should be had to identify and raise any potential issues, which may arise now, or in future, and threaten the success of a plan. A hard conversation now could avoid many conversations in future. Defining your goals, both personal and in business, is crucial in determining the most appropriate succession options. Time should be given to evaluating your team and highlighting potential successors within the business. The outcome of this process is not just about you – it impacts your employees, your customers and often your industry and community. How can you minimise possible impacts and ensure that what you are planning now will allow your business to succeed in the future? It is important to think about your own position and what life will look like for you in future. Consider how you will live, e.g. your capital requirements to maintain your lifestyle once you exit or become less involved in the day-to-day business. No one size fits all. The considerations and questions to be answered during this journey are very personal to you. Your personal and business goals may change over time and it’s important to remember succession planning is a journey. Outside influences or significant events can impact and change your plans so adaptability and depth within a plan is important.  Achieving a plan, documenting it and implementing it is the end goal. Moving forward it is important to be mindful of appropriate timeframes to review your plan and update it as necessary. It appears a ‘big task’, this often being the reason it is left too late, or not considered at all, but with the right guidance and tools achieving successful succession is possible. CooperAitken pride ourselves in offering our clients a progressive approach in all aspects of their business and in life. Talk to us about helping you plan for the future. [1] “Small and Medium Businesses in New Zealand: Report of the Small Business Development Group” 2016 – Ministry of Business, Innovation & Employment [2] Harvard Business Review, April 2015 [3] PWC, Next Generation Survey of Family Business Leaders, April 2016 [4] Succession Reset, Pitcher Partners, 2014 [5] “Government Response to SBDG Report” – Ministry of Business, Innovation & Employment download a copy Megan Potter Associate and In-House Lawyer P: 07 889 7153 E: meganp@cooperaitken.co.nz