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Do it yourself .... (or not?)

Hamish Pryde • July 12, 2014

We are a country of "do-it-yourselfers", which for the most part, is a good thing.

However, there are some things that should be left to the experts.  You wouldn't let your dentist operate on your brain, you would definitely leave that to the brain surgeon!  I probably would not get my optometrist to fix my oven either.

This brings me to some recent events, where people have attempted to understand some finer points of tax legislation. 

The Income Tax Act 2007 and its associated updates, regulations, and surrounding case law, which is interpretations of the Income Tax Act -  if they were printed out and stacked on the floor, I would think that the stack would be nearly as tall as me!

Our tax legislation is complex in a lot of areas.  I was asked recently by a member of the legal fraternity for a second opinion.  Long story short - what had occurred was that a client had rung and spoken to a representative at the Inland Revenue Department concerning "GST on going concerns".  They had also looked at the Inland Revenue Department's website, and did look at a "GST on going concerns" section, but the section they were looking at, and relied upon, bore no relation to their actual circumstances, and in fact, was quite misleading.

Now, the trick is, with any answer research, is to ask the RIGHT questions.  In this instance, the researcher asked the wrong questions, but got the 'right answer' to their questions.  The result of their research, and the action they took resulted in tens of thousands of GST to pay, when in fact, if done correctly, there would have been no liability at all!

Now, to be fair, the Inland Revenue's website contains a lot of useful information, of a general nature.  However it does not contain ALL information, and does not apply to ALL circumstances.

Similarly, if you ring the Inland Revenue Department, the person at the end of the phone that you ask a question of; you must remember that their answer must be tempered for the fact that you do not know their qualifications, how much experience they have had in their job, or what their particular skill set is.

Generally they are very helpful, however, if you want an opinion you can rely on from the Inland Revenue Department, you must apply for a "binding opinion" The binding opinion is provided by an IRD tax professional, similar to a tax professional in public practice; with similar qualifications and experience. This binding opinion is not a free service.  There is no liability on the Inland Revenue Department for "general advice" provided, and no responsibility to "get it right". 

Therefore, if you are wanting to "Google" it or ask for a general opinion, if it is for something that is not overly important or the risk of getting it wrong is not great, then I would agree that that is fine, however if the risk of getting it wrong, by not asking the right questions of the right people, is too great..... then remember that you should always get the brain surgeon to operate on your brain and the optometrist to look at your eyes.

 

Hamish Pryde

11 July 2014

 

By Hamish Pryde September 11, 2024
Paper is everywhere. We spend a lot of time and money moving paperwork around. But with today’s technology it is now possible to get rid of paper entirely. Digital documents are simpler, easier to store and send, more searchable and permanent. How long does it take to post a document to somebody via the ole stamp and envelope method, that is snail mail? It is more efficient and timelier to email the document. How many times do you go to print a document at home and find that your printer has run out of ink? Why do we still hold onto printing paper documents? Sometimes it’s just because that’s what we’ve always done and let’s face it change can be difficult at first. Paper alone is cheap. But when you start paying for printers, toner, servicing and maintenance, paper starts to look more expensive. Let alone the storage cost. Paper tax records for seven years can be quite a few boxes of paper. We have embraced some paperless technology as part of a modern business practice. This includes digital signatures, digital collaboration, paperless minutes of business improvement and coaching meetings, electronic work papers and my new digital notebook which I am enjoying. We send questionnaires via email to you to gather vital information to enable us to prepare your annual financial statements. This is a PDF document. Instead of printing the questionnaires you could save the document down into a folder of your choice then edit the PDF document and return to us. How do you edit a PDF document you ask? Once you have opened the document the Adobe online editor lets you do some things for free. The online editor works in any web browser and lets you add text, sticky notes and highlights. Click on the fill & sign button to the right of the document, then in the top toolbar click Iab text button. You can add text directly on the PDF document. Have a try next time you have a PDF document open. Xero and Farm Focus users can attach invoices directly to the transaction loaded into Xero. Then if you are looking at the rates expense in the profit and loss account or farm working account, you can drill down into the rates code and see the transactions. Then attached to each transaction is the rates invoice if you use this great functionality. All invoices can now be stored in the cloud. So why paperless? Productivity - electronic documents are instantly and simultaneously available to everyone who needs them. Reduce waiting times with less risk of loss or damage. Cost savings - you will save money on printing, postage and associated costs. You could pay less rent because you won’t need all that space for your files. Security - electronic documents are more secure than printed ones. Digital records can be password protected and rendered unreadable through encryption. Printed documents are only as secure as their proximity to a copy machine. Reduced Clutter - paperwork on desks and shelves are not only untidy it’s inefficient too. The organisation of digital files is simpler and your office will look much neater. That will help you clear your mind to focus on your business. Environmentally friendly - less printing means fewer trees cut down for pulp and less energy used to make and transport paper. Disaster recovery - if there is a fire or flood, recovery from the backup is much easier with digital storage them with paper. There are great help articles available in Xero or Farm Focus if you are not attaching invoices to payments already. To find out how click on the links below: If you would like to explore ways you can go paperless we can help.
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