Balanced Accountancy Services Ltd

Happy 20th birthday to us. Stoked to tick over 20 years on our business journey. Thanks to my staff current and past and to all our incredible clients. Thanks for celebrating with us 🎈🎈🎈

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Balanced Accountancy Services Ltd Local accounting services

Happy international woman’s day from these two good bi***es 🐾🐾. Keep surrounding yourself with the amazing women/good bi***es in your life 😍

To our valued clients, thank you for being part of this year's journey :-) Your support means so much to us.

This time of the year is often filled with joy and celebration, but we also recognise it can be a challenging time for those who have lost someone dear. We hope you find comfort and peace in the cherished memories of your loved ones.

We've now closed the books on another year. The office will be open again on 13th January and Julie will be floating around to assist you if needed.

Be happy and be safe. Love Julie, Jane and Katie xx

Check out our September Newsletter... https://mailchi.mp/1c5ce5aa7574/september-newsletter

More Cash in Your Pocket
In just over a week the new marginal tax rates for individuals become ‘effective’. For actually calculating your year end tax obligations this date becomes somewhat academic as it is simply used to calculate the weighted average composite rate used for the 2025 income year before the new rates apply in full from 1 April 2025.
Where it will be important is for employers who deduct PAYE. New PAYE tables will be effective from 1 August and so the amount of PAYE you deduct will change. For employers using software to calculate payments this should hopefully be updated for you, but you may need to check. You may also need to update any automatic payments to reflect these new rates.
For those who manually calculate PAYE the IRD website is advertising that the new tables will be available online from 22 July with the calculators updated from 25 July.
For any employees using a secondary tax code, 31 July is also the date where you may need to change this code if you now fall into a lower threshold.
As always, if you need any assistance with these changes let one of our helpful team know.

Question of the Week
Application date for the new 2-year bright-line test

Question
Tony entered into a sale and purchase agreement for a residential property on 15 November 2021. He became the registered owner of the property on 15 December 2021. The residential property is not new build land.
Tony purchased this property for long-term investment purposes and rented the property out since settlement date.
In May 2024, Tony decided to sell the property due to the rising interest rates over the years. On 15 June 2024, Tony entered into an unconditional sale and purchase agreement with a purchaser, with the settlement date set as 15 July 2024.
Will the sale of the residential property be subject to the 10-year bright-line test or the new 2-year bright-line test?

Answer
The 10-year bright-line test applies to residential land acquired on or after 27 March 2021 and disposed of within 10 years of the bright-line acquisition date (former s CB 6A(1)).
The new 2-year bright-line test applies for disposals of land where the bright-line end date is on or after 1 July 2024. A tax liability will arise under the 2-year bright-line test where the person’s bright-line end date is within 2 years of their bright-line start date (s CB 6A(1)). Exceptions such as the main home exclusion may apply.
For the purposes of the 2-year bright-line test, the bright-line start date for a standard purchase of land is the date that the title to the land is registered for the purchaser of the property. The bright-line end date for a standard land transaction is generally the date that a person enters into an agreement for the sale of the property.
For Tony, the bright-line start date is 15 December 2021 which is the date the land transfer was registered with Land Information New Zealand. Tony’s bright-line end date is 15 June 2024, being the date that he entered into an agreement to dispose of the property.
In this case, despite the settlement date of 15 July 2024, the 10-year bright-line test applies to Tony’s disposal as the bright-line end date of 15 June 2024 is before 1 July 2024. The disposal of the land will be subject to tax under the 10-year bright-line test as Tony has disposed of the land within 10 years of the bright-line acquisition date, being 15 December 2021.
For completeness, Tony hasn’t used this property as his main home and therefore the main home exclusion doesn’t apply.

References
Income Tax Act 2007, s CB 6A.