INSIDE THIS EDITION
Winter blues tips 1
Witnessing history 2
Winding up a company 3
Labour’s housing policy 3
Do you want tax with that? 4
FBT Reminder 4
Winter blues tips
With positive thoughts we experience pleasant and happy feelings. Unfortunately, in the midst of winter, it is easy to lose sight of our positive thoughts where the days are short, the temperature low and grey clouds surround us. However, it is important to make the effort to maintain a positive outlook on work, family and life in general.
Positive thoughts can not only bring us positive feelings, but they also change the way we appear, act and react. Take a moment to look at the people around you right now. Are you able to identify those who are thinking happy, positive thoughts? It’s not just the people who are smiling.
People who have a positive mind set have a certain brightness in their eyes. They often walk tall and have elevated energy levels. For some, their whole being broadcasts happiness, health and success. Is it any wonder that we prefer to be around positive people, and avoid the negative ones?
So what can you do to think more positively? Well, it’s not just about putting your head in the sand and ignoring life's less pleasant situations. Positive thinking is about approaching unpleasant situations with a more positive, productive attitude. It involves focusing on the best outcomes, not the worst.
One reason people struggle to live a positive happy life is due to their minds playing a constant record of negative self-talk. When self-talk, that constant chatter in your mind, is always negative, it can bring down your whole perspective on life and dictates how you relate to yourself and those around you.
A few tips to help elevate your thoughts and reduce negative feelings are to:
Recognise negative self-talk - a good place to start is to keep an eye on the things you tell yourself. If you tend to dwell on the negatives or do not feel good about yourself, this is a good indicator that your thoughts need improving.
Pause for a moment - when you notice yourself having negative self-thoughts, stop for a moment and think about the scenario. By putting it into perspective we can prevent ourselves from thinking negatively. For example, if you trip and fall, before you berate yourself for being such a ‘clumsy idiot’, stop and think, are you really that clumsy? Or was the ground wet or uneven, were you distracted?
Challenge negative thoughts - you can test and challenge your self-talk. Pull yourself up on negative self-talk and ask yourself, "is that really true?". If you missed that business opportunity, are there any lessons for the future you can take from the situation?
Accept yourself - having self-confidence is fundamental to ensuring you are on track to having positive thoughts. The degree to which you value yourself and the belief you have in your skills and abilities impacts the way you think about yourself. Nobody’s perfect, so accept your faults and move on.
Get positive - train your mind to conduct positive self-talk. Make an effort to use positive words in your inner dialogues and when talking with others. To reinforce your positive thinking, write three words on a piece of paper and put this in your pocket: "Approachable, Happy, Smart". Read the note a few times a day and this is what you will project.
No one is immune to negative self-talk, but by making a conscious effort to change the way you think and practice your self-talk, you can work towards removing self-criticism from your life.
One small positive thought in the morning can change your whole day. Good thoughts. Good feelings. Good life.
Over the last few months we have witnessed history, with the majority vote in favour of Britain leaving the European Union (EU). This was a surprise to many, and sent shockwaves around the world. In the days following the vote, the value of the pound declined substantially, and this instability may continue into the future as long as uncertainty is prevalent.
Some of the key drivers behind the vote to exit the EU include a general view held that the EU is holding Britain back. The EU is said to be imposing too many rules on business and charging billions of pounds each year in membership fees for little in return (per the Treasury figures, in 2014/2015 Britain’s net contribution was £8.8 billion). Many people are also concerned with immigration levels and want Britain to take back full control of its borders, reducing the number of people moving there to live and/or work.
Under the current EU framework, it is relatively easy for businesses to move resources such as people and products to and from British and European countries. However, businesses that trade in Europe and Britain are finding it difficult to predict how Britain’s exit from the EU will impact their business going forward. Although it is difficult to predict what will transpire over the next few years, by understanding the process and expected events behind the exit, you can get an idea of the potential outcomes an exit may cause.
In order for Britain to formally exit the EU, Article 50 of the Lisbon Treaty must be invoked. As Article 50 is relatively new and has never been invoked before, both the timing around the exit and application of the Article are uncertain. The process of Britain exiting the EU is expected to take some time and until Britain ceases to be a member, the EU laws still stand. From a legal and regulatory standpoint, nothing should change for approximately two years. This window, as prescribed by the article, provides for a renegotiation period allowing for a new legal foundation to be built for Britain’s trade relationship with the EU. During this period a number of other factors could also impact the outcome of the exit where key events will take place, such as the French Presidential election and German Federal election.
The exit implications for businesses will largely depend on the arrangement Britain enters into with the EU following the exit (Britain will likely enter into one single deal with the remaining 27 EU members). Four scenarios could occur in relation to the different degrees of integration that Britain may have with the EU in the future. These scenarios could take different specific forms, but broadly reflect one of the following:
EEA Member - where Britain remains part of the EEA and keeps the four freedoms of labour, capital, goods and services.
Free trade agreement.
Bilateral agreement (Swiss option).
No access agreement, whereby no new trade agreements are established with the EU.
Any businesses trading across the British border will be anxiously waiting to see what happens next. They are likely to be thinking ahead and identifying potential issues and opportunities that may arise following an exit, such as the structure for exporting and importing goods, potential regulation changes, customs procedures and passport controls for business travellers. It could even see NZ businesses being put on a par with UK businesses when trading with counter parties within the EU.
Winding up a company
Recently, there has been an increased level of sophistication on the part of Inland Revenue (IRD) when reviewing company windups. Important points to bear in mind when winding up a company are outlined below.
Before applying to the Companies Office for removal from the companies register, a company should have discharged its liabilities to all creditors and distributed its surplus assets to its shareholders. The distribution of the company’s surplus assets should be recorded by way of the directors’ resolution. The amounts distributed to shareholders on liquidation are taxed depending on the nature of a distribution, as follows:
Available subscribed capital (ASC) - represents a company’s paid up share capital and can be distributed tax free to shareholders on liquidation.
Capital gain amounts - are generally able to be distributed tax-free on liquidation of a company.
Remaining funds - to the extent that the distribution exceeds ASC and capital gain amounts, the balance will comprise a taxable dividend. This is typically a company’s retained earnings.
In order for capital gains to be distributed tax-free, the process to windup the company must have commenced. Ideally, commencement of a liquidation is evidenced by a shareholders’ resolution signalling the intention to commence winding up the company. The IRD accept that in some circumstances, a less formal step may be sufficient to commence the liquidation, provided the step is overt and carried out with the aim of achieving removal from the register.
We have seen an increasing number of cases where IRD has specifically requested documentation to evidence when the liquidation process was commenced. Therefore it is important to ensure the commencement resolution is drafted and dated correctly, or alternatively, a less formal course of action (if applicable) is supplemented by supporting documentation.
The Income Tax Act also prescribes a specific formula that is to be used to calculate the capital gain amount. This will not necessarily equate to the capital gains recorded on the company’s balance sheet. Through its review process IRD are asking for a copy of taxpayers’ capital gain calculations.
During the removal process approval must be obtained from IRD to remove a company from the register. The request to IRD should be made in writing after the liquidation process has commenced and once all tax compliance obligations have been met, e.g. final GST and income tax returns have been filed.
If the final distribution is subject to resident withholding tax, this will also need to be filed and paid before IRD approval is given. The IRD have a list of information that must be provided as part of this request, which is available on their website.
If approval is obtained, IRD will issue a letter stating they have no objections to the company being removed from the register. However, this approval provides no defence if a subsequent review, as described above, identifies mistakes when the various elements of the distribution were calculated.
Care must be taken. If IRD take the view that a capital gain was distributed prior to ‘commencement’, the costs could be significant.