Category Archives: Pro Experts

Hawke’s Bay’s leading professional service advisers & leaders

3 ways business intelligence can accelerate your business

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Business intelligence (BI) and the ability to draw higher-level understandings from your data is fundamental for any organisation striving to be agile, future-proofed and ready for tomorrow.

Business intelligence, or BI, is how organisations collect, organise and contextualise data, often using BI reporting tools to provide data-driven insights at a glance and in easy to understand formats. BI refers to a wide range of data-related activities, including data mining, reporting, and querying. All organisations should seriously consider a Business Intelligence initiative to assist in a better understanding of business performance. Financial analysis and forecasts are still an essential part of business planning, but now only provide part of the picture. As companies expand and evolve, data can become more challenging to manage consistently. As a result, businesses regularly face obstacles that prevent them from performing a comprehensive analysis of their data to drive informed business decisions. Fortunately, there are new and powerful business tools doing away with these issues. There are plenty of business intelligence software and services available to help organisations gather and organise data more effectively, improve information access across their business, and successfully support more accurate, reliable results.

1. Simple and accessible insights

You don’t have to be a software engineer to start using BI for data analysis or understand how it presents information. BI applications make reading and submitting visual reports as straightforward or as detailed as you want it. The tools for building dashboards is usually drag-and-drop, so you can organise data with a few clicks and customise how it is presented. Beginners and experts can use BI tools to quickly explain increases or decreases in data charts by a simple click on an analyse button. The results are displayed in a window with simplified visualisation and an insightful description outlining what factors may have impacted your data. A great example is where data is gathered from machinery operating within a factory. The data can be integrated with a BI tool to identify trends of machinery performance over time.
A human operator can observe this to determine whether the production cycle is slowing; if so, they could work further to identify which machine requires service, dispatching a technician to perform maintenance before the problem results in downtime and a loss of productivity. Some BI tools can identify the underperforming machinery’s specific part, such as by determining that the motor is overheating.

2. Collate data from separate systems into one dashboard

BI tools can be used by anyone in your organisation and can be customised to their role and requirements. The tools can quickly create simplified visualisations of your most business-critical data that anyone can read and understand at a glance.
Why is any of this useful? A unified dashboard can act as a quick reference for any employee needing to access relevant data in a hurry, such as in a meeting. It also makes sharing insights easier if you collaborate remotely.

3. Using BI to identify past results, current performance, and for future predictions

Data modelling has made it possible to forecast trends and predict future outcomes relatively accurately with modern-day software. BI tools can provide great predictive analytics and forecasting features to explore reliable future results for your business. Using the analytics and forecasting tools in BI applications, you can run and compare different ‘What If’ scenarios on your information such as financial forecasts or industry-specific growth markets by adding a forecast to your chart without needing a data analyst’s services. BI Tools use built-in predictive forecasting models to automatically detect seasonality, next reporting period (week, month, year) and provide forecasting results. These models learn from historical data using statistical algorithms (often of the data mining or machine learning kind) to derive probable results and project them in an easy to understand graphical visualisation.

Conclusion:

Business intelligence is becoming an essential part of today’s business. When combined with business analytics, BI offers an ability to differentiate past from present, while predicting the future and responding accordingly. Businesses that implement BI into their operations will likely enhance their competitive edge and bottom line. They can stay across trends and key results optimising their processes based on data-driven insights and making future decisions based on more accurate predictions of what the future might hold.

Are RMA reforms the solution for HB’s housing issues?

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In February, Environment Minister David Parker announced the government’s proposals to repeal and replace the RMA with the following three Acts:

1. Natural and built Environment Act

2. Strategic Planning Act

3. Managed Retreat and Climate Change Act

These actions are in response to a broad consensus that the system introduced by the RMA has not adequately protected the natural environment or enabled development where needed and has under-delivered for urban areas – contributing to rapidly increasing urban land prices to the extent that NZ’s housing is amongst the least affordable in the OECD. While it will be interesting to see if it is the legislation itself or implementation by people, or in fact other non-RMA factors such as engineering approval
or infrastructure delivery processes that is the culprit, which will inevitably be borne out over in time, the option of fundamental change certainly seems to have been favoured over targeted improvements. Let’s hope that day to day resource management is improved as a result and we’re not getting wholesale change for a few issues in a few areas of country. Immediate issues with housing supply cannot be denied however, and with the Randerson review referring to poorly managed urban growth leading to increased homelessness, worsening traffic congestion, increased environmental pollution, lack of transport choice and flattening productivity growth, the reality is its not just enabling development for developers, its actually about enabling development for society.

Here in Hawke’s Bay urban growth is underpinned by the Heretaunga Plains Urban Development Strategy. Embedded within the Regional Policy Statement the Strategy requires Councils (or private parties) to complete a complex Plan Change process to re-zone land, including development of Structure Plans to guide future subdivision consent applications and infrastructure development. That process is then followed by a subdivision consent application layer prior to commencement of residential development (building houses).

This process can typically take 3-5 years plus to get to a point where a house is constructed. Given our housing shortfall and the severity of associated social issues, this ‘release’ timeframe is unacceptable. Will the reforms assist us? In time probably yes, but what is the time frame? While an ‘exposure draft’ is said to be released in September this year, media releases refer to this containing only limited details and not details such as consenting processes, designations, proposals of national significance, Environment Court workings or transitional arrangements. While these details will obviously follow in time, initial indications are that the new laws will not be in place for three years or more.

Indeed, Central Government has suggested it will be five years for the reforms to have effect! Can we wait? and if not, why must we remain bound to the current ‘preferred’ but inadequate process? We say, ‘lets not’. Let’s not ‘do nothing’ in the hope of future solutions. Let’s not wait for change that may not even work. Let’s not leave families to raise their children in motels and substandard housing during their formative years – in the hope of a house when they become teenagers, only for their first home to be unaffordable.

Let’s bite the bullet, let’s buck the system, let’s, as a community, try a few  different things and see if there’s a model that enables Councils to design concepts within existing areas that developers or ministry organisations can pick up with greater certainty and get on with building for example. Lets look at those areas already identified in HPUDS, or parts them, and really think about the need for prolonged and expensive Plan Change and Structure Plan processes and consider whether we can jump straight to a subdivision process – potentially saving years of delay. I’m not suggesting we do away with planning tools. Indeed, the Resource Management Act, in its current form, includes tools to help enable this brave approach – we just need buy-in from Councils and the Community to get a little more creative on how to apply those tools and be open to applying different methods to different situations. We can do this – Hawkes Bay is different to Auckland and Tauranga, our new development areas are not actually that big, so let’s just keep things in the box.

Just doing this may well achieve at least some of the outcomes that we as a society desperately need a whole lot earlier than the alternative. Who knows, with a narrower approach seemingly being talked about, it may well be that we lose some of the flexibility that is actually there if we choose to use it. Given what is at stake, shouldn’t we be willing to look at things a little differently and get a little more enthused about trying to make things happen, as there is a real risk that the solutions being talked about are in fact for the next problem, in 10-15 years’ time – not this one.

 

The increasing value of ‘SOMO’

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The post lockdown activity levels and value growth throughout 2020 was a surprise to all, especially as it was contrary to what most experts and economists predicted. The performance of the residential market during the last quarter of 2020 was simply staggering. Hawke’s Bays’ residential housing values grew 19% during 2020. However, it is not just the precipitous increase in values that has our attention, it is the relatively short period of time that this jump has occurred.

The lion’s share of the 19% value growth for 2020 in the region was experienced in the last quarter (October, November, and December) with 50% of Napier’s value growth occurring in this period and 80% of Hastings. The acceleration of growth rates caught many by surprise and left buyers scrambling to adjust their offers upwards with the ‘fear of missing out’ (FOMO) followed by ‘sick of missing out’ (SOMO). Assessing accurate valuation levels using historical sales data was almost impossible as the market was growing at over 3-5% per month.

The impact of the COVID-19 lockdown on value levels has varied, with lower value level housing growing by even higher percentage levels than the medium to upper level value housing. The 2020 year finished in a sprint towards the pot of gold at the end of the rainbow, only punctuated by the Christmas holiday close down. When our team returned to work in January the market continued where it had left off and the excess demand is still present with values still growing strongly.

How long this will continue is anyone’s guess. The market dynamic, with demand well outstripping supply, and such low interest rates suggest the residential property values will continue to increase.

The rate of growth has been astonishing, and possibly this will only be eased as affordability is not mitigated by low interest rates. This should have the impact of lessening the demand. Although, many buyers are now in the SOMO frame of mind which continues to fuel rising prices. Why is there such strong demand? Basically, it’s a perfect storm. Whilst there is much market uncertainty due to COVID 19 there are certain dynamics which are driving demand for residential property.

At the lower end of the market, we have a very active sector as certain groups compete for housing stock. Kaianga Ora – Homes and Communities has been very active in purchasing residential properties to add to their inventory as well as being active in redeveloping old state housing. First time home buyers have renewed vigour to get their foot on the property ladder, spurred on by the low interest rates. Then, there are those who are now advantageously positioned with good equity and who can take advantage of the low interest rate environment to buy an investment property. This is seen as a less risky way to make a superior return than they can gain through other investments. None of these groups are selling their homes. Through the middle sectors of the market homeowners are using their increased  equity to upgrade to superior property’s locking in mortgages at very low interest rates making the move affordable.

The construction sector is also under pressure with a lack of tradespeople and a lack of vacant residential land for development. The upper end of the residential and lifestyle market is being driven partly by local Hawke’s Bay residents but also a steady stream of people relocating to Hawke’s Bay from our larger city centres as well as those that have decided to return to New Zealand due to COVID-19. The demand for this sector is expected to continue as it is expected more Kiwis will be returning home in the coming years.

One sector that may relieve some pressure is the Retirement Village sector. There are 677 new occupation units under construction in Hawke’s Bay at present. As incoming residents sell their homes prior to entering the village this is likely to provide some much needed residential stock. However, with most residential sectors being squeezed for inventory it is difficult to see how the residential market will slow unless there is a major impact to the market conditions in some way. While we consider it would be healthy for the growth rate to slow down, we do expect the market to continue growing through 2021.

Record making start to 2021 in commercial property activity – Danny Blair – Colliers HB

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Colliers Hawke’s Bay has kicked off 2021 with the largest January and February since inception in 2004.

The economic rebound experienced in the third and fourth quarters of 2020 post the lockdowns led to a rise in a number of local economic indicators, as a broad range of sectors reignited in an attempt to make up for the lost periods of activity. The rebound across many measures has been strong, particularly retail spending, residential and commercial real estate and export conditions.

This has buoyed local conditions, providing cautious confidence in occupier and investor decision-making. There are a number of underlying economic benefits the Hawke’s Bay enjoys including a growing population and employment opportunities which support commercial real estate activity. Investors are conscious that a rebound and resumption in more normal market conditions are eventuating due to the forced short-term nature of market disruption. As a result, investors are turning their focus towards the solid market conditions leading up to COVID-19 and reviewing the fundamentals. Investors are postulating that the current uncertainty created by COVID-19 could be accommodated in many circumstances, especially if incorporating longer-term projections.

Office

Despite caution in the office sector due to the rise in remote working, an active development sector is forecast over the next five years. Supporting some of the optimism is the economic and business performance outlooks. One measure to keep an eye on is the recent changes in the number of filled jobs reported by StatsNZ. It is still early days, and overall growth rates are still below COVID-19 levels, but some trends that show office occupier demand returning are appearing.

Industrial

Strong leasing market fundamentals, which have seen vacancy rates holding at low levels and upward pressure on rentals, have underpinned the positive sentiment towards the industrial sector amongst investors. The results of the latest Colliers investor sentiment survey found that investor confidence across the country was a net positive 45% (optimists minus pessimists).

Retail

There have been some clear winners in the retail sector after a challenging 2020. Latest data released by StatsNZ indicated core retail card spending in December 2020 totalled $6.68 billion, an increase of $1.14 billion from the previous month and 4.8% higher than December 2019.Consumable and durables recorded the biggest spending increase as Kiwi’s spent up strongly in liquor, supermarket and grocery stores. A new milestone was also recorded with spending on food and beverage services surpassing the $1 billion mark for the first time on record. The nonfood and beverage large format retail sector have also benefited, with strong spending in the furniture, electrical and hardware category, with spending up 12% compared to December 2019.

Economy is performing better than forecast

Action taken by the government and Reserve bank to insulate, as far as possible, NZ business from the impact of COVID-19 and the relative success the country has had in dealing with the virus has seen the economy outperforming original forecasts. Treasury now expects New Zealand’s GDP to grow by an average rate of 4.2% across 2021 and 2022 outpacing Australia (forecast 3.6%) and the USA (forecast 3.5%). While unemployment rates are expected to increase, they are much lower than original expectations.

The unemployment rate is forecast to peak at 7.8% as opposed to earlier predictions of 9.8%, according to latest Treasury forecasts. Government policies including business tax refunds, small business cashflow loans, wage support and mortgage holidays successfully limited job losses and company failures. The Reserve Banks quantitative easing and reduction and stability in the OCR until March 2021 has improved market liquidity, kept interest rates low and boosted investment confidence.

Should I work in or Workout

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A structured health and fitness routine should be high on the priority list for us all this year.

We are seeing a big uptake of people locally and online making it a priority. This is a positive. However, many of these people are presenting with aches, pains and niggles and having trouble finding balance in their lives. The assumption is that they need to train hard. No pain no gain!

This is NOT normal. With all the uncertainty we experienced last year in addition to today’s fast paced life we are bombarded with stress from the time we wake up to the time we go to bed. Stress comes in many forms – we have nutritional stress, emotional stress, physical stress, electromagnetic stress, and mental stress. Your body does not recognise where the stress is coming from it just responds to it. Adding high intensity exercise to a body and mind that already has a high stress load often results in more niggles, aches and pains.

We are in a position to control and manage all of these things which will help with reducing the stress load, find balance and build a health and fitness routine that gets results.

Many people perceive the symptoms as normal and put them down to their current situation and a busy life.

If you are experiencing any of the following common symptoms it is a sign that your body is not coping with stress.

  • Aches and pains
  • Bloating
  • Fatigue and poor sleep
  • Trouble waking up in the morning
  • Weight gain or loss
  • Mental tiredness
  • Not coping with stress as you used to

To help find balance with your health and fitness routine it’s important that you do the right type of activity for your mind and body.

Before you start your training check in with yourself and rate yourself on a scale of 1-10 against the seven Peak Fitness Pillars of Health and Fitness below.

1 = Feeling poor and off your game 10 = Feeling great and ready to play

If your numbers are on the low side don’t be scared to adapt your session to suit where you are at. Reducing training intensity and volume may be just what your body needs. If your numbers are on the high side get out there and follow your plan (just keep some energy in the tank for tomorrow). Once you have done this you can make a more educated call on working out or working in. In an ideal world your weekly training will include both working in and working out exercises.

Remember that working out costs your body energy. If your check in scores are low use some working in exercises to give your body an energy boost.

Working in exercises could include meditation, yoga or pilates, slow walking or mobilisation exercises.

The key things that qualify an exercise as working in are:

  1. The exercise and movement should be of a low enough intensity that you could perform it straight after a meal on a full
  2. You should be in control of your breath throughout the session without your heart rate or breathing rate
  3. Move in time with your breathing. Let the speed of your breath determine the speed you move.
  4. You should feel relaxed during the movement or
  5. Afterwards you should feel lighter and have an energy

Try 10-20 reps of these working in exercises and see how much better your body feels. We recommend a quiet area in bare feet

https://training.runninghotcoaching.com/videos/working-in- with-jess

If your scores are high then try 2-5 rounds of 10-20 reps (or 30- 60 seconds) of this great working out session. It will be a great addition to training.

https://training.runninghotcoaching.com/videos/working-out- with-jess

Remember the balance between working in and working out each week is the key to great performance and consistent results.

Employers need to balance growth with volatility from COVID-19

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No doubt we are all spending a lot of time considering what sort of year 2021 will be. New Zealand has been very fortunate compared to the rest of the world, however, there are still plenty of challenges we are facing particularly for those in certain industries such as tourism and events, most recently highlighted by the cancellation of the Art Deco Festival due to the recent change in alert levels.

Confidence in the local economy appears strong although it is hard to predict if this will continue and how any changes will impact the workforce and its well-being. For example, businesses may be wishing to increase their workforce to cope with current workloads while trying to balance this with not being over-committed given the potential changes to alert levels throughout the year and the resulting impact on both the local and national economy.

While we are all navigating this together, we must also be aware and informed of the employment law changes the Government has signalled for the coming 12 months. The Government has made a commitment to focus on our workers and will look to introduce changes to better support them.

These changes include:

  • a confirmed minimum wage increase effective on 1 April 2021 from $18.90 to $20.00 per
  • proposed increase to sick leave entitlements from five to ten days every 12 months which looks likely to apply to both full and part time employees, but will not increase
  • making it easier for women to gain pay
  • plans to strengthen and simplify the Holidays
  • Te Rā o Matariki confirmed as a public holiday from

Employers must be conversant with the changes already confirmed, and those that are planned, and be ready to implement them while also navigating the uncertainty from COVID-19.

  • What is clear is that working arrangements have (and no doubt will continue) to change for some For example, in the professional services sector (such as lawyers and accountants) there is a greater focus on flexible working which includes working a different number of hours, e.g. part-time.
  • working within different time frames, g. starting and finishing early.
  • working
  • job-sharing.
  • purchasing additional annual
  • taking additional unpaid annual

These flexible working arrangements are known to have benefits for employees, such as:

  • the ability to meet family needs and responsibilities.
  • reducing the chance of burnout
  • increased job satisfaction.

Under part 6AA of the Employment Relations Act 2000, all employees have the right to request a variation of their working arrangements at any time. Employers have an obligation to respond to requests as soon as possible and not later than one month after receiving the employee’s request.

There is a limited but broad number of reasons employers can decline a request for a variation to working arrangements, such as an inability to recruit additional staff or to reorganise work.

Employers should consider a number of factors when an employee requests flexible working arrangements and it is important to ensure that transparent processes are put in place for the benefit of both the employer and the employee. Employers must also be aware that no matter when or where an employee works, ensuring their health and safety is a shared responsibility. For example, if an employee will be working remotely, they are responsible for organising a work area that is appropriately set up to ensure that they can work safely, and an employer may request an employee provide photos of their work location. An employer may also request a health and safety assessment of the workstation to ensure that the employer’s health and safety obligations are being met.

Businesses will no doubt continue to adapt to the ever- changing landscape presented by COVID-19 and those that chose to embrace flexible working for their employees may end up with a stronger and more committed workforce. That said, we suspect that there will be many twists and turns to come throughout 2021.

Are you personalising your health and wellness

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Since COVID has hit – ‘workplace health and wellness’ are the new buzz words, There has been a big increase in health and wellness programs both online and in gyms and lots of discussion about stress reduction.

We are all different and our bodies respond differently to stress, diet exercise and our environments. What might work for your best friend may not work for you.  That may be because you both have different body types and need to do things differently from each other.

There are three main body types, Ectomorph, Mesomorph, and Endomorph. While most of us are not 100% a specific body type, we tend to be a combination of two body types. This can be broken down into 3 further groups. Ecto-Meso, Meso-Endo and Endo-Ecto.

Your body shape and bone structure is determined by your genetics and whether during embryological development your body put more energy into developing the layers of the ectoderm, endoderm or mesoderm.

Our ectomorphs will have the following characteristics:

  • More active brain and nervous system and be more sensitive in your skin
  • Naturally be a leaner/thinner physique and often no matter what you eat you won’t put on much weight
  • Putting on muscle mass can be really hard.
  • Great at analysing, planning and using your most powerful asset – your brain! (in fact, you may feel you “over-think” everything!).
  • Find it hard to relax your brain and learning strategies to help yourself get enough mental rest and down-time (especially in the evenings), will help you to be at your best health-wise and also help you with sleeping better.
  • Naturally have a shorter digestive tract – do better with warm, slow-cooked, “pre-digested” foods.
  • Feel the cold more than others and keeping warm is important for your health.
  • Prone to tension and stiffness through the back and neck, so it will be extra important for you to do some regular mobility and strength work to protect these areas.

Our mesomorphs will have the following characteristics:

  • Shorter, have more defined muscle and a naturally athletic build
  • Suit high intensity exercise for short periods of time (cross-fit, HITT training and most sports that are very anaerobic in nature, are all great for them).
  • Physiology is geared towards movement…movement is key! (think of those kids who can’t still and need to be moving or fiddling to learn).
  • Need a bit more protein than others (and do better with animal proteins), are naturally more of an early bird, and because of their dominant hormones and neurotransmitters they thrive on change, variety, challenge, competition, adventure and excitement (they even enjoy an element of risk).
  • Have a more fiery temperament, they have a need to express their thoughts and to feel heard and they tend to speak their mind, so don’t get on the wrong side of them!
  • Natural innovators, think laterally and outside of the box and they’re great at getting stuck in and achieving and getting stuff done.

Our endomorphs will have the following characteristics:

  • Bigger bone structure, the potential to be stronger and more easily put on mass (muscle and fat tissue)
  • May have more of a struggle to “lose weight”
  • Will  be the most resilient to stress
  • Have a longer digestive tract and will be more suited to fasting and vegetarian foods
  • More of a night owl and need a slower start to your morning and have dominant hormones and neurotransmitters that make them more nurturing, caring and family-oriented.

The fitness and health industry is saturated with information.  Wading through this is often overwhelming and confusing.  Sometimes we lean towards interventions (paleo eating or high protein diets, HITT training, early morning bootcamps, etc) that really don’t suit all types of people – in fact, these things will stress some bodies and make these people struggle more with weight-issues, lethargy and health.

One size doesn’t fit all.  Learning what’s right for you and your genetics is key to cutting away the confusion out there and finding out the key things you can do to improve your health!

We personalise our savings and investment plans – now it’s  time to do the same with our health and fitness plans.  We need to work with our genes to reduce stress and maximise our health and productivity.

www.peakfitnessandhealth.co.nz

Valuing up

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The last time I wrote an article for The Profit was about a month after we had got back into the office after ‘Alert Level 3’.   As I wrote at the time  “So ….. where to from here?  If I had a dollar for each time I was asked what affect this will have on future property values I could probably retire.  Possibly, the more important question should be: What is the impact going to be on volume?  Answering this question will probably give a more informed prognosis because in time it will have a more material impact on property values. Certainly, residential sales have defied predictions and  both values and volume have increased.

Bindi Norwell, CEO of the Real Estate Institute of New Zealand (REINZ) reported that  the number of residential properties sold in September across New Zealand increased by 37.1% from the same time last year (from 6,112 to 8,377). This is the highest number of properties sold in a month in New Zealand for 42 months (March 2017) and the highest number of properties sold in a September month for 14 years.

At the risk of boring you I have rounded up some statistics of the property market since we came out of lockdown when no one was quite sure how the residential property market would respond. The stats quoted are up to September 2020 as there is approximately a month’s lag with receiving data.

September 2020 saw a record national Median Sale Price (MSP) achieved at $885,000 with nine out of the 16 regions also posting record MSP’s.  Not only that, the volume of sales was also the highest it’s been in New Zealand since March 2017.  Regionally, Hawke’s Bay also recorded a 3.1% increase in volume over last month and 21.2% increase over September 2019 with 263 properties sold – the highest number of properties sold in a September month since 2006.

Values do not seem to be hindered by this increase in sales volume.  In Hastings City, the suburbs of Camberley, Mahora/Tomoana, St Leonards and Hastings Central all recorded their highest MSP’s since records began. Mahora/Tomoana recorded an MSP of $749,250 off 12 sales with the suburb’s first million-dollar sale also recorded. Furthermore, Frimley and Clive recorded their second highest MSP and Mayfair recorded the suburb’s highest volume of sales since May 2016.  In Napier City the suburbs of Pirimai, Westshore, Taradale and Napier South also all recorded their highest MSPs since records began. Also, of note is that the median days to sell a property regionally is now 29 days, which is down from 32 days at the same time last year.

However, inventory is down by 17% from September last year. In Hawke’s Bay listings decreased -8.0%, bringing the region to the lowest level of inventory that it has seen since July 2019.

We have seen first time buyers become more active in the market probably due to the low interest rates and lack of ‘loan to value ratios (LVRs). Investors are also taking advantage of low interest rates and have been showing interest at all levels across the market. The increasing levels of demand has created tough competition, resulting in multi-offers on many properties. Furthermore, the Reserve Bank has relaxed the market for property investors since Covid. By scrapping LVR restrictions, the Central Bank has given the green light for banks to lend more money to landlords, further fanning the flames of the market. Investors borrowed $1.45 billion in August, the highest figure since May 2018.

Journalist Daniel Dunkley describes the market as ‘tearaway’ and it’s hard to see this fervour being maintained. Opinion also appears divided as to whether this is a negative or positive aspect to our economic recovery. The housing market has defied expectations post Covid lockdown with values and volumes increasing nationwide. Yet there are fears New Zealand’s housing-led economy is highly vulnerable to a correction.

Are you paying the right amount of tax?

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As we start to get a better understanding of the new ‘Business as usual’ operating landscape and the initial urgency around business disruption dissipates, at BDO our focus has now shifted to ensure local business have the ongoing support and strategies in place for the medium to long term time periods.  By building resilience and taking full advantage of the options available to them, businesses now have the opportunity to finesse, pivot and diversify to best position themselves for the future.

One of the strategies we are encouraging businesses to adopt is to ensure that they are across the tax changes implemented during the initial Covid-19 lockdown.  These changes can affect how much provisional tax you should pay, as well as how different costs might be treated in your reporting to the IRD.

Paying provisional tax based on standard uplift may not be the most cost effective option for you moving forward.  Below I will look to provide an overview of the key tax changes that all SME owners need to ensure that they are across so that they are prepared for any future opportunities.

Claiming depreciation on buildings

One tax support measure following covid, is the reintroduction of tax depreciation on (non-residential) commercial and industrial buildings and the allowance for tax depreciation on newly acquired buildings and capital improvements made to existing buildings from the 2020/21 tax year. The tax depreciation rate will be 1.5% straight line or 2% diminishing value.

For entities that had previously been claiming depreciation on their non-residential buildings, this change will see reduced taxable income levels following from recommencing a claim for depreciation from the beginning of the 2021 tax year.  You may want to consider the impact of this claim when you are considering the amounts you need to pay for provisional tax.

For entities accounting for deferred tax, this reintroduction of a claim for depreciation will also result in a significant change to the deferred tax balances in the 2020 year results.

Increased minor asset write-off thresholds

In March, the government also lifted the threshold for writing off the purchase cost of minor assets. Previously set at $500, SMEs can now claim in full at the time of purchase for assets with a cost of up to $5,000 in the year they were purchased. This threshold increase is only temporary, and expires on 17 March 2021. However, the threshold will only drop to $1,000, remaining double what it had been in 2019.

Loss carry back provisions

The Government’s new “carry back” rule has been implemented to help SMEs recover some past tax losses and put that recovered cash flow toward future recovery efforts. This rule is more complicated than the previous two, and you should consult with your tax accountant to help calculate how this change may be applied in your business.

Tax losses in 2020 and 2021 can be offset against profits earned the previous year (2020 and 2019, respectively). These losses can be based upon a filed tax return or by provisional tax estimates. Estimates need to be based upon extensive analysis and reasonable forecasts and SME’s may be charged interest if payments are underestimated.

Research & development claims & refunds

R&D is often among the first functions to be discontinued or scaled back when cash flow is limited. To keep the New Zealand economy at the forefront of global innovation, the Government has brought forward the refund date for the R&D tax credit by one year. Businesses with research and development departments can claim up to 15% of their eligible annual R&D spend, up to $120 million.

The R&D tax incentive was passed last year but some of the broader refundability rules weren’t set to go into effect until the 2020-21 income year. These are the rules the government has moved forward. If your SME has R&D costs speak to your business advisor about whether your projects meet the eligibility criteria for a refund.

Recovery is about seizing opportunities

Businesses can’t leave money on the table when funds are tight. Thanks to these changes, there is now a range of tax benefits available to help small to medium-sized businesses move into the 2021 year as positively as possible.  Given that payment dates for tax are often staggered throughout the year, it is important that you take stock of the changes that were implemented and consider how these may influence your tax responsibilities.   

IT Security – Threat Management

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The problem we are all facing

Security has become a more in-depth executive discussion because of the many ways through which businesses can and are being attacked. Mobility, BYOD (bring your own device), virtualisation, the cloud, and social media have all opened new doors and security loopholes into all our businesses. At the same time, all organisations need IT Security protection to allow their business to function, grow and flourish. And of course, the regulatory environment calls for an increasing number of types and levels of proven compliance, with regular and timely updates and maintenance. Sound Hard? Complicated? You are correct – it is.

Adding pressure to organisations is the fact that technologies, business models, regulatory environments, and the threat landscape are continuously evolving. So, security has become a broad IT discipline that affects the entire organisation and calls for a range of highly specialised and dynamic skills and technologies that most businesses don’t currently have. The boardroom question is: how cost-effectively can these be acquired and implemented?

What is the solution to this serious business issue?

With a specifically structured suite of Managed IT Security products, your IT partner can protect your business from the increasing security breach landscape. Some organisations have firewalls, antivirus, and network intrusion prevention systems in place. However, research shows that they are often not fit for purpose in today’s IT environment, are out of date, and businesses don’t always have the workforce capacity or technology to maintain them efficiently. In particular, systems are often not patched regularly. Consequently, organisations don’t always know whether or not they’ve been attacked and aren’t taking proactive steps. Much more importantly, these very limited systems cannot predict attacks.

A Managed IT Security Solution together with reputable IT tools can and does. Recent highly publicised security breaches at many Australasian businesses have proved just how disastrous security breaches and reputational damage can be. However, achieving this necessitates a fundamental change in security focus as well as significant investment. You need industrial-strength levels of documentation, processes, and procedures. Ideally you need qualified engineers and security specialists to continuously monitor your security systems, analyse the alerts and be able to respond immediately. You need to continuously update your technology with the cumulative experience, insight, and knowledge of many independent security experts working towards the same goal of pre-empting attacks. The best way to achieve this successfully and affordably is through an IT Managed Security Service.

Layered Security Options

Below are some security options that need to be considered by businesses: –

Managed Firewall: protects your key information assets across networks, hosts, applications, and databases.

Managed Advanced Intrusion Prevention: can provide a fully managed, 24/7 service that uses network-based intrusion detection and prevention systems to protect networks from attack.

Managed Email Filtering Services ensures that emails are monitored and managed effectively to provide continued protection from information leakage and from viruses, trojans, spyware, and malicious code distributed via email.

Web Managed DNS: provides secure DNS management (filters the internet address book for bad addresses) to remove the threat of any related security threats, with the added functionality of web filtering by location and/or employee.

Managed Password and Account Access Policies: Changing passwords at least every 90 days and/or implementing multi-factor authentication ensures that imposters cannot log into your account from elsewhere, even if they steal your username and password.

If some or all of these descriptions and/or technology terms are not familiar to you, and you are worried about how secure your IT environment is, you need to talk to your IT provider as soon as you can, and before it’s too late.

It is important to note that recent changes to the New Zealand Privacy Act means businesses will be required to notify the Privacy Commissioner and affected individuals after suffering a privacy breach where personal and business information is criminally accessed, and where serious harm is likely. The new Act takes effect on 1st December 2020.

Can your business afford the reputational damage?