The dismissal of Ian Penny and Gary Hooper’s appeal last week by the Supreme Court has thrown many taxpayers into panic. The pair used company structures and family trusts to lower their salaries and by doing so, avoided paying the top personal income tax rate.

The decision will cause concern for both taxpayers and their advisers as the IRD is reluctant to explain how widely that decision will be applied. Professionals operating businesses through companies and trusts (taxed at 33 per cent) rather than taxed to them personally (at 39 per cent) is common practise and was widely viewed as legitimate tax planning.

An important point to note however is that the Supreme Court did not overturn the taxpayers’ right to trade through a company or trust structure. The court found these structures to be lawful and that “adoption of such a familiar trading structure cannot per se be said to involve tax avoidance”. However, it was the way Penny & Hooper in particular used the structure that constituted tax avoidance.

For other taxpayers who make use of similar structures, the court accepted there are some instances where non-market salaries can be paid by family companies or trusts,

- Where the business is starting up

- Where a market salary cannot be paid due to insufficient profits.

- Where profits were needed for the purchase of capital assets

If one of these circumstances genuinely existed, then the payment of a low salary would not be considered tax avoidance. Because none of these situations applied to Penny & Hooper, the court found it to be the taxpayer’s choice to pay themselves low salaries primarily to dodge paying higher tax.

Peter Dunne, Minister of Revenue, has said that small business owner’s shouldn’t fear a witch-hunt. However business owners will need to consider how they deal with salaries in the future as well as look at how they dealt with salaries in the past.

The IRD has repeatedly refused to indicate what levels of salary are acceptable. This can leave taxpayers employing similar structures uncertain of whether they have crossed the invisible line between legitimate tax planning and tax avoidance.

If you have concerns about the possible implications of this decision on your business, be sure to seek appropriate and professional advice.

What are your views on the matter? Drop us a comment below, we’d love to hear from you.

Firstly, we must make the distinction between leadership and management. Managers are thought to be the organisers, the controllers and the budgeters. Leaders are the big-picture visionaries and the ones who bring a team to achieve goals.

To be fully rounded, it is important to have a bit of both. Being a good manager without leadership skills will make it difficult to motivate the team you are trying to manage. Likewise, demonstrating leadership without good management skills will leave you with an inability to operationalise your goals.

The trick is to blend these two skills together. But for now, lets look at what characteristics make a good leader.

According to the 2011 Great New Zealand Employment Survey, 76% of employers strongly agree that a good leader needs to treat employees consistently and with respect.

The survey, conducted by Clarian Human Resources, also revealed that 70% of employers think that good leaders should,

-         be open and honest

-         support and encourage team members

-         be clear about what is expected of employees

-         communicate organisation strategy and vision.

Between 93% and 95% of employees agreed that honesty and support were important qualities in a leader. However they also think that promoting good work and promptly managing poor performances is crucial.

According to Jeff Simpson, director-psychometrician at Ethos Consulting Group, narcissists are commonly viewed as being good leaders. However a study he conducted of 82 commerce graduates showed narcissists were the lowest-performing group of the study within the first six months of employment.

Those who did well after two to three years had no narcissistic characteristics but were less impressive at interviews. It is important to remember that being a leader, also means being a good team member. Narcissistic qualities such as confidence and outspokenness can be good leadership qualities, but humility and team work must also come into play.

Carey Smith, chief executive of Ray White New Zealand, says good leaders need to value other people’s time as much as their own. When you’re a leader of a business, the smallest things are noticed. Simple things such as always cleaning up after yourself, will encourage your team members to do the same.

What qualities do you think make a good leader? Let us know your thoughts by dropping a comment below or sending an email to deanna.yang@crackerjacks.co.nz

Although there is no definite time period, most experts say that those born between 1981 and 1993 are considered Generation Y. The Baby Boomers generation, from post-world war II, is beginning to retire in large numbers – taking their experience and knowledge with them. Therefore, managing generational differences is becoming increasingly important in order to develop the skills of Generation Y to take the place of Baby Boomers.

According to a 2010 study by Oxygenz, some traits that characterise Generation Y are,

-         Techno-savvy. Grown up surrounded by modern technologies.

-         Agile multi-taskers.

-         They value interaction and opportunities to learn in the workplace.

-         Desire to be emotionally engaged and to be able to socialise with co-workers.

-         56% of Generation Y prefer to work flexibly and choose when to work.

-         They want workplaces that foster a healthy work-life balance.

-         Value corporate culture rather than financial compensation.

With their tech-savvy culture, new ways of contemplating work and social networks, Generation Y are setting off a new wave of social and business transformation. Because their work expectations are different from past generations, engaging them in the collaborative and rewarding environment they seek can be quite challenging.

Employers must consider the workplace itself as a recruitment factor. For example, flexibility in working hours instead of rigid time schedules can appeal to Generation Y talent when choosing where to work. Also, a work environment that allows for social interaction between colleagues can help retain young workers.

Part of the challenge is in managing attitudes and personalities. Older generations may see new technologies such as blogging and social networking as a distraction from work. However, recognising the value of networked sociability and enabling it through the workplace can allow businesses to tap into the powerhouse of Generation Y energy and innovation. Because the business environment is becoming increasingly diverse and ever-changing, employers need to adapt and change with the times before they get left behind.

With the next generation valuing flexibility and a ‘work hard, play hard’ attitude, contracting may be the way of the future.  Contracting allows you to choose your own pay rate and what hours you work. For Generation Y this can be an enticing alternative to permanent recruitment. But because contractors are generally very experienced and specialised in their field, Generation Y are not prominent in the contracting market as of yet. However, as they gain more experience and skills, it is likely that contracting will become a suitable choice for Generation Y. As the popularity of using online resources to find jobs grows, Crackerjacks will be a useful tool for Generation Y in providing an online platform for contractors and businesses to meet.

Either way, whether it be in contracting or permanent work, it is important for businesses to re-think their working practices and to adapt their corporate environments to attract and keep Generation Y talent. Otherwise, we will be left with a large talent deficit as the Baby Boomers continue to retire from the workforce.

What do you think about Generation Y in the workplace? We’d love to hear your thoughts! Feel free to leave a comment below.

If you would like to know more about Generation Y, you can take a look at the Oxygenz study here.

This may lead to more demand in the IT sector as companies look at updating their systems to ensure data is protected if disaster strikes.  Various Christchurch businesses were unable to access information on computers inside their buildings after the quake hit.

Since then, the benefits of cloud computing have been brought into the spotlight. Cloud computing allows people to store data on servers. To access files, all a company needs is the internet.

Nowadays, we are seeing a convergence of technology. Phones now have cameras, tablets are used as computers and cameras can upload photos straight onto the internet.  Value is now found in the ability to have information transferred and accessed with ease.

Instead of software being downloaded and accessed on one computer, software is becoming a service that can be accessed on a multitude of devices.

This is especially helpful in times of disaster – cloud computing gives the ability to continue working offsite, anywhere and at anytime.

In a world where consumers and businesses are now living and working online, connectivity is crucial.

Though setting up new IT may be expensive, businesses may be more willing to invest in hiring skilled staff to keep connected and have their data stored online.

Frane Karaman, Crackerjacks’ Technical Director, thinks there will be increased demand for a new breed of IT specialists this year.

“Businesses will be moving further from the old fashioned IT departments towards specialised on-demand teams capable of providing end to end business solutions using agile methodologies.”

He believes that increased demand will drive businesses to look at contracting IT specialists to set up systems on time and on budget.

“Contractors will always be a good choice for companies asking for the premium expertise and service especially on a short notice. The permanent staff will stay predominant in junior and more general IT positions.”

Crackerjacks have used an older cloud model, Infrastructure as a Service (IaaS) since our launch. However, we are currently planning to move to a more modern and efficient cloud technology, Platform as a Service (Paas). As the Crackerjacks contractor database continues to grow, this is a pragmatic option for us to take that will improve the efficiency of our software, explains Frane.

Going back 30 years the main recruitment sourcing tool recruiters used were physical job adverts.  Whether they displayed in newspapers or industry magazines – this was the main way the public found out about new job opportunities.

With the introduction of the first job board, Online Career Centre, which was launched in August 1992 by Bill Warren, print job advertising has slowly regressed as the most popular sourcing channel.

The market for job boards has been growing rapidly, as they are recognized as a targeted and cost-effective channel for recruiting candidates. A number of leaders have emerged in this space, such as Monster.com in the UK and Seek.com in Australasia.

Job boards that attract large audiences have been proven to deliver good results for recruiters. But given that these take a ‘reactive’ approach, where the onus is on the candidate to apply, they can fall short when recruiting in a tight labour market or in a profession affected by skills shortages.

This is where recruiters can leverage their candidate database to proactively search for suitable candidates. Given that this can have its limitations, i.e. candidate availability and validity – a number of job boards have seized the opportunity to provide out-sourced CV banks. Which in effect, acts as an outsourced candidate database. For example, Monster.com offers a Power Search service where users can search through their CV bank to find suitable candidates.

These CV banks house one-dimensional information about candidates; they profile the candidate’s location, key skills and profession etc. If a user chooses to view the full CV after reading the candidate overview, this is where a fee usually applies.

While this takes a relatively proactive approach to sourcing candidates, there are constraints. Job boards can struggle to encourage candidates to list their CV’s – especially when they can browse jobs and pick which ones to apply for then and there. And given the generic nature of job boards, it can be a struggle to attract certain skill-sets.

Another new phenomenon in digital recruitment has been the arrival of social media. Most recruiters will now have a presence across various social media channels, such as Twitter, Facebook, YouTube and LinkedIn. Utilizing these social networks opens up endless opportunities when proactively searching for candidates.

The use of social media is critical to combating skills shortages. Social networks surpass geographical barriers and offer recruiters more options when recruiting off-shore.

In line with this, recruitment today is steadily heading down the Web 2.0 track.  Tapping into online databases of candidates and leveraging your various social networks is essential.

Recruiters need to think beyond the sourcing stage and understand how they can streamline the full recruitment process to get an edge on their competition. There are already a number of online talent management and recruitment frameworks available in the market that offers this type of solution.

Online platforms that deliver an end-to-end recruitment solution, encompassing candidate searching, shortlisting, talent pooling, job management and providing visibility on candidates’ performance, will be the next fad in recruitment.

When the market adapts to this type of solution – we will really see Web 2.0 recruitment fly.

The mixture of workers that make up contract talent (temps, independent contractors, interim execs, freelancers, RPO/BPO/WPO) are a topic of frequent conversation here at the Human Capital Institute because strategic talent management for this population is so critical.  Why?  Exhibit A: it’s growing and growing and will only continue to do so.  Exhibit B: performance, and thereby ROI, improves using human capital management techniques.  So why are so many human resource professionals still working in the dark?

The first theory is that the contingent workforce is still, in large part, managed outside of human resources, by procurement.  There are multiple arguments for why this isn’t a best practice, but the most basic is that they are workers, not supplies or contracts.  And procurement is great at managing those things, but aren’t the experts in managing people.  The second theory is that HR doesn’t know, or care, about this section of their workforce.  What a mistake that would be given the sheer numbers associated here, let alone the risk and opportunity missed.

Most organizations don’t have an enterprise-level view into how many contractors are working on their site or with their customers.  In fact, a recent study from HCI revealed that less than 35% of survey respondents use an enterprise technology or system to manage this section of their worker population.  Bryan Pena, Vice President of Contingent Workforce Strategies and Research from the Staffing Industry Analysts, examines who’s doing the work.

Need a primer on Contract Talent? Who are they, how should they be managed and what questions to address enterprise-wide are important issues.  Tim Giehll, CEO of Bond Talent, advises there’s no time like the present to deal with this.

HR & Communications Advisor, Crackerjacks

Is there really a silver bullet to securing a job interview? Well unfortunately there isn’t a one-stop solution, but there are a number of things you can do that will significantly enhance your changes.

Being in the recruitment game – I come across a number of people asking how to be successful in their job hunts.  Competition for sought-after jobs is still fierce and with an unrelenting unemployment rate stabilising at 6.5% in January 11 (NZ), people are seeking more innovative ways to stand out from the crowd. Even today, it’s not uncommon to receive over 50 applications from one job posting.

While certain industries have more jobs available due to skills-shortages, this is largely irrelevant to the average professional. According to the Department of Immigration, NZ has Long Term Skills Shortages in high level technical roles across a number of industries such as Engineering, Health, ICT and the Scientific industry. I’m not sure about you, but I certainly don’t fit into those categories.

So what can we do to stand out?

1.    Position your skills effectively

It’s important to get the foundations right; you need to understand where your strengths are in terms of your skills, experience and qualifications/training. If you need a hand with this – ask a previous manager’s opinion, they may be able to tell you. When you have a clear direction in mind and know the types of jobs you want to target, you can craft a Curriculum Vitae that articulates all the ‘good stuff’ you have to offer in this area.

2.    Tips for CV writing

It can be quite baffling to know where to begin on this, especially if you haven’t updated your Curriculum Vitae for a while! And with so many resources available providing advice on CV writing, it can be a nightmare to begin.

Just keep it simple – that is always a good start. From a recruiter or employer’s perspective, when they open your CV they want to understand the experience you’ve had, the skills you’ve picked up along the way and an insight to your personal style/career goals.

I would encourage the following structure for a CV (from the top down);

• Titled with Curriculum Vitae and your full name and contact details.
• Include a Personal Profile that outlines your industry and professional experience, a snip-it on your personality and the type of role you’re targeting.
• List your Career History experience (including employment dates, name of employer and role title) in chronological order.
• Key business and technical skills can then be listed and Professional Associations and education/training details come next.
• If you would like to include a snip-it on your lifestyle out of work – feel free to include this, as some employers like to get a gauge on your ‘culture’ fit before progressing to interview stage.
• Then if you have already asked your referees whether they are happy to be contacted, their details should be listed last. Please note that this is my personal opinion, and a different style may be needed for different types of jobs.
• Stylistic wise – keep it professional, in black in white, a sensible font such as Arial or Verdana (or similar) and appropriate spacing between different sections.

Another question that gets raised regularly is whether to include a photo or not. My preference is not to, however if this is something you prefer, make sure that it’s a professional colour head shot and place it on the front page of your CV.

3.    Be proactive – Network

Yes – I know that the word ‘networking’ sends some people running in the opposite direction, but this is a key element to coming across job opportunities.

Linked In

• With the arrival of social media, people are networking more and more online. Having a Linked In profile is essential in the professional world; making sure it is kept up to date is equally important. One of the nifty things you can do with Linked In is updating your status – and if you have a decent network size – this is a useful way of letting your colleagues know that you’re seeking a new position. For obvious reasons this may not be applicable to you if you’re currently in work, but is great if it’s not a ‘hidden fact’.

• Another great tool with Linked In is the Group function – you can search for relevant groups in your industry and join them. This opens you up to new contacts in your industry and gives you access to the comments and news stories people post (in the interest of the group). Posting relevant information and blogs in these groups is a way of establishing yourself as a thought leader in your industry – which is a valuable position to have. Keep in mind that this doesn’t happen over night, so get going now! On another note, Recruiters will often post jobs in certain group forums too, enabling you to access more jobs.

Attending industry meetings and visiting training seminars run by the Chamber of Commerce, EMA and other professional institutes are useful for making new business contacts that could open doors for you.

4.    Use a creative combination of channels to get your name out there

It is a good idea to set up job alerts on major job boards Seek and Trade Me while approaching a couple of recruitment agencies that specialise in your industry.  Be specific and research what job portals are available in your profession/industry. For example, if you are interested in professional contracting Crackerjacks.co.nz provides a hub for contractors and businesses to engage, or if you specialise in Creative Design/Event Management The Big Idea hub may be useful.

5.    Follow up

After you have put an application forward – schedule a follow-up in your calendar to find out where things are up to. Probably 7 days from sending your application off is an appropriate time frame. Most recruiters and employers will get back to you, but it pays to be proactive and contact them first to make sure your application is reviewed.

Hopefully these tips will get you that all important interview….which brings us to a whole new ball-game.  My next blog will provide a few interviewing tips!

Crackerjacks and CXC work together to bring you more choices in how you structure yourself as a contractor.

Some of the great things about contracting are the ability to offset business expenses against your tax rate and the freedom to choose where and when you work. But with that comes the administration burden and associated risks that are synonymous with running your own structure.

CXC’s core service is to provide Contractor Management services, meaning they act as your Ltd Company for the duration of the contract, taking care of all the administration for you.  All you have to do is submit your timesheets and expenses via the MyCXC online portal and CXC does the rest.

Once CXC receive your timesheet, they manage your billing to agencies or end client, collection of funds, calculate PAYE tax, ACC payments, take care of GST and make any other necessary deductions such as student loans or Kiwisaver. Individuals are then paid as a PAYE contractor meaning no additional paperwork, unexpected tax bills or additional accountancy fees.

The end result is the ability to go contracting without the need to set up or run your own structure – whilst retaining more of your income. Clearly a ‘win/win’.

This is not a new concept; in fact it has been around of well over 15 years and is one of the most popular ways to go contracting in Australia and the UK and has quickly caught on in Ireland and USA.  CXC itself has 28 offices in 19 countries and is the largest global provider in the industry.

So if you are new to contracting, a non resident who is unfamiliar with New Zealand tax laws, or simply tired of the handling everything yourself, contact CXC to obtain a quote and find out if this is the right solution for you.

For more information please visit www.cxcglobal.co.nz, email info.nz@cxcglobal.com or phone 09 358 4133.

1.      Mobile Commerce to Take Off

It is still in it’s relative infancy, but with mobile devices imminently offering the internet in your pocket/purse en masse, it is inevitable that it will take off very soon. Large retailers and companies will invest in making mobile commerce easier, and secure, and this in turn will mount pressure on SMBs to develop capability for mobile transactions. SMBs will be planning mobile specific web-sites, payments, products and service tracking, document sharing and sales/support/service in 2011. However, type of industry, phase of business and other factors will mean that key drivers for adopting mobile commerce will vary. Forward-thinking SMBs will also look to integrate mobile commerce with ERP accounting and CRM systems to save time and increase efficiency.

2.      App Stores/’Markets’ To Become a Key Information Source and Channel for SMBs

Figuring out just what differing solutions can help businesses is a major technology challenge for SMBs. SMB App ‘stores’ (also known as ‘marketplaces’) have the advantage of providing user-created ratings and guidance which really assists SMBS to decide the best-fit solutions available. Examples are Google Apps marketplace, and GetApp.com which have launched recently. They will become increasingly important into 2011 for SMBs. Vendors will compete to provide the best selection of applications and best information, guidance, integration and ecommerce.

3.      The Shift to Cloud Computing and Software-as-a-Service (SaaS) Becomes Unstoppable

The recession achieved what marketing as far back as the late 90s couldn’t:- a spike in the interest levels of SMBs on adoption of SaaS and cloud solutions for business. Much of this demand is driven by economic necessity – once driven into the cloud, SMBs are seeing the largely positive results i.e. cost savings, increased time-to-solution, as well as re-engaging I.T. resources to more strategic activities rather than rudimentary application support and management.

4.      Metamorphis to the ‘Insight Economy’ Becomes Easier

We all know that exponentially more and more digital information is being created and stored. But just how much? In 2010, try 1.2 zettabytes – 1,000,000,000,000,000,000,000 bytes…This is made up of data-hungry online video, social networking, digital photos and cell phone data. This all presents a challenge to SMBs to get better business insights and analysis from all this data. Vendors are developing solutions to take care of specific tasks like performance management spend analysis or pipeline management.

5.      Tablets Stoke the Mobile Apps Explosion

Already globally, smartphone apps have caused radical change to the IT industry. SMBs are profoundly affected, in that mobile workforces now have access to apps which can enable increased productivity–enabling tools and access to real-time information. The iPad’s year and niche-defining ascension has caused a raft of copy-cat devices from rival Vendors, and SMBs are finding them incredibly useful for keeping busy on the fly. Where growth will occur is in mobile business solutions complemented by SMBs investing in mobile marketing and advertising, customer service management and social media solutions.

6.      Better and Faster Integration Will Be a Key Business Solution Differentiator

It should not cost more to integrate business solutions with each other than the actual solutions themselves. SMBs more than Enterprise business require this even more – they simply do not have the money or time to for complicated, lengthy integrations. Simple integration saves time and money and will be increasingly vital for SMBs.

7.      Hybrid Computing Requirements Accelerate Virtualisation Adoption

SMBs will continue to run a hybrid combination of packaged applications while at the same time still delving into cloud computing solutions.  Packaged applications will still meet needs due to privacy or security issues, but as options for virtual server desktop and storage options increase, SMBs will be able to afford these previously desirable cloud-created high availability and disaster recovery solutions. They will also look to MSPs (such as Origin IT) to remotely manage their on-site IT infrastructure as well as helping to implement and manage virtualisation and cloud continuity/disaster recovery solutions.  VMWare seems to be very strongly positioned and Microsoft and Citrix also market players. The expanding mobile workforce will also be a catalyst for growth in the ‘virtual desktop’ area. Vendors will however by necessity need to invest in educating SMBs about the benefits of cost savings, management and provisioning benefits.

8.      Convergence and Collaboration

2010 was the year that the collaboration war accelerated into action with integrated platforms introduced by many vendors, pulling together suites that made it easier to find and share information, improved shared knowledge and increase connections with people in a way which improves on traditional email. This is important for SMBS because collaborating is something employees do every day. An example has been Google who with Google Voice have added VoIP capability to it’s offerings. Social networking of course will also increasingly play a part in this area for all Vendors.

David Burns is Marketing and Communications Manager for Origin IT | davidb@originit.co.nz | www.originit.co.nz

We’re now planning to provide tailored workshops for employers who work with contractors in 2011. The floor is open for suggestions on topics, but we’ve had a few ideas…let us know what you think.

• Contractor workforce planning – industry networking sessions to discuss projects in the pipeline & the required skills for these.
• Advice on managing contractors – maximise productivity & avoid miss-communications.
• The future of contingent workforces in New Zealand – how to get prepared.

Please share your thoughts; what would be useful?