The intent of the provisional tax system is to gain tax payments whilst income is being earned. These are effectively payments on account during the current tax year which are subject to a wash-up calculation (resulting in refund or further terminal tax liability) once the final income tax return is compiled and filed. Provisional tax payments are made in instalments, the number and frequency of which will depend on… Read more
It is quite understandable that tax affairs have taken a backseat at the moment and some taxpayers have struggled and failed to file their 2019 income tax returns on time. Given the other stresses on our lives, such as childcare, we too have found it difficult to prioritise some work. The end result is that some tax returns will be filed late. We have anticipated this and have requested a… Read more
The NZ Government has acted swiftly to support businesses with some measures and tax changes aimed at helping business hold onto some tax money to meet ongoing business expenses and also encourage further spending to keep the economy moving. They have done so by:- Remission of interest Allowing Inland Revenue to remit use-of-money interest (UOMI) for customers significantly affected by Covid 19. This will primarily assist taxpayers with payments due… Read more
Employers and the self-employed appear to be getting to grips with the eligibility criteria to be met and how to go about claiming. If you need a reminder then visit the Work and Income website and review the details and definitions there. We are receiving more and more questions about whether these amounts are taxable and how should they be accounted for in Xero? It is important to note that… Read more
Let’s face it, payroll is a specialist area of business which needs support, time and effort to be done right. Small business owners routinely have little of all of those. So why not remove the issues altogether and outsource your payroll? We are an advocate for outsourcing payroll and below we shall look at some alternatives to doing this yourself in Xero. Let’s start with Xero. Payroll is an add-on… Read more
We often see instances of business owners purchasing food and drink and wishing to claim a deduction through the business. Whilst the general permission will give some guidance there is a further regime that can apply to limit the claim you make – the entertainment regime. The following question and answer from CCH illustrates the rules in terms of coffee being purchased for staff. Question A company is considering three options for… Read more
IRD are promoting AIM (Accounting Income Method) pretty hard as they envisage great benefits in adopting this method of paying provisional tax. We agree mostly and see some significant advantages, including:- · Promoting best practice by ensuring regular reporting and assessment · Increasing contact with key advisors (in this case us) · Promoting financial awareness by introducing accounting adjustments and ensuring you understand and acknowledge these · Better aligning… Read more
Provisional tax is effectively a progress payment to ensure that tax is being paid by most taxpayers as they earn their income throughout the year. It is paid in instalments, the number of which can depend on your GST filing cycle. You become a provisional taxpayer when your Residual Income Tax (RIT = end-of-year income tax less any tax paid at source) is greater than $2,500. There are 4… Read more
Clients often ask what they can and cannot claim in relation to food, drink and other entertainment expenses and this area often tends to be confusing. Due to this we see clients either claiming everything or nothing. Claiming everything can leave you exposed to investigation with interest and penalties being imposed on overclaimed tax. This concern often leads other clients to claim nothing thereby missing out on a genuine tax… Read more
There is a Member Tax Credit (MTC) that the government grants to anyone contributing the minimum $1042.86 to their KiwiSaver account each year. This MTC is added to your account based on the annual contributions to 30 June. The maximum MTC awarded is $521.43 – matching 50 cents to every dollar invested to a maximum MTC of $521.43. For many taxpayers who receive their income through PAYE deducted salary and… Read more
This time of year is often tough for businesses, with terminal tax having just been paid and the final installment for provisional tax due 7 May. You may not be aware but there are now options to ease the pressure, or to make your tax obligations fit in with your cashflow. By using a tax intermediary, you can arrange to pay your provisional and terminal tax in installments, or even… Read more
As you’re probably aware, it’s a legal requirement to keep your business records for at least 7 years. For many, the threat that IRD may want to conduct a routine audit is a key motivator for keeping good records. But there are other advantages too including making things easier to find for insurance claims, explaining variances from your budgets, or answering questions and requests when your accountant compiles the year-end accounts.… Read more
Claiming vehicle expenses in companies is increasingly becoming an area of interest for Inland Revenue and businesses are often exposing themselves inadvertently to investigation and penalties through simply not being aware of the issues. So, below is some basic explanation and help. Currently companies can claim expenses in two ways depending on the ownership of the vehicle. • Privately owned vehicle – mileage rate, currently the Inland Revenue rate of 72… Read more
If you are self-employed or in a partnership and you use your own vehicle privately as well as in your business, your work related vehicle expenses are claimable. These include petrol, diesel, registration, WOF, repairs, tyres, road user charges etc. So how do you work out what portion of your expenses are work related, and therefore deductible? You can choose one of the 4 following methods to calculate what amount… Read more
As IRD can now accept electronic signatures, we will be sending your returns via a Xero portal for you to view, then electronically sign and return to us for filing. This saves you having to print, sign, scan/post/hand deliver your returns! Your signed return stays available online so you can view and print whenever you like. See how it works here: https://youtube.com/watch?v=eqwV06EE36Y Read more
It’s normally in the run up to Christmas that we begin to consider gifts or a party to reward our employees for their services over the last year. Done right, the goodwill generated can be significant with staff feeling valued and part of something great. Which all leads to a better business with hard working and loyal staff. But, before we settle on how to reward our people let’s consider… Read more
For a long time many have considered that gifts of food and drink given to clients, say at Christmas, have been fully deductible for tax. Certainly, for a good while Inland Revenue thought so too. However, Inland Revenue has recently changed their minds and have affirmed the fact that they see these food and drink gifts being subject to the entertainment rules. These rules operate to allow only 50% of… Read more
Interview with Craig from The Project Guys – Listen here to find out what questions you should be asking your accountant In this episode, Craig speaks with Andrew More, Owner and Managing Director of More CA, a chartered accountancy firm. Andrew has set out to add value to his services by not just helping his clients with compliance but also offering them real world advice, assistance, and guidance. When asked about the… Read more
Probably the most frequently asked question by those starting in business and those already trading is “what can I claim as business expenses?” Simply put Inland Revenue offer a simplistic overview of what can be claimed as expenses in this video but, in my opinion, this doesn’t quite go far enough. In response to simplistic advice we often hear people saying things like:- • Bob puts through his wife’s petrol… Read more