Tax Archives - Page 2 of 2 - BDS Chartered Accountants

Week 1: First things first

Talk to your accountant or bookkeeper. They’ll tell you what you need to do before 31 March including what you can claim for and what you can’t. Remember, tax time is busy for them too, so the more prepared you are, the smoother the process, and the better the result.

File your return on time. Don’t waste your hard-earned cash on unnecessary interest and penalties. Get your accounts up to date, tidy up loose ends and file on time.

Week 2: Your assets and stock

Review your inventory. The value of your stock affects your business’s taxable profit. Do a meticulous stocktake before year-end. Get rid of any out-of-date or damaged items and write them off.

Extra assets on board? Year-end is the time to ditch surplus assets. If you can sell them, great, otherwise write them off.

Week 3: Your spending

Sooner rather than later. If you’re planning to buy any new equipment or assets, do it on or before 31 March (rather than 1 April) to reduce your taxable income and gain a full month’s depreciation.

Got invoices and receipts for your expenses? It can be tricky to keep track of everything so if you’re not already, go digital. Scanning receipts and saving electronic invoices in the cloud saves time and space.

Week 4: Your staff

Payroll up to date? Now’s the time to check your payroll system only includes current staff and that all their details are correct. Ensure former staff don’t have access to company systems.

Remember tax on bonuses: Special bonuses this time of year can be a great way to reward and motivate staff, just remember to get the tax right on any lump sums made. Also keep in mind any bonuses for the current year, and holiday pay or long service leave paid out within 63 days after 31 March can be deducted against your current year income.

The new law on ring-fencing rental losses is now in force, which means:

In most cases ring-fenced deductions will be carried forward and can only be used against residential rental or sale of property income in future years.
Property investors will, in most cases, no longer be able to reduce their tax liability by offsetting residential rental property deductions against their other income, such as salary or wages, or business income.

The new rules apply from the start of the 2019-2020 income year and apply to:

Mainly rental properties but can also include other residential land.
Individuals, partnerships, trusts, look-through companies and close companies.

Own a rental property? We’re happy to talk you through your tax implications so you don’t get caught out.

Five new ways to do it.

If you normally write a cheque to pay for your taxes, it’s time to decide how you will pay in the future. As of 1 March 2020, Inland Revenue will no longer be accepting cheques. By the end of the last financial year (June 2019), only around 5% of payments received by Inland Revenue were by cheque, so they made the call to phase them out.

Here are five faster, cheaper and safer ways to pay your taxes:

Pay securely by direct debit using a debit card or credit card through myIR. Login and register at www.ird.govt.nz
Make payments using online banking – contact your bank to find out how
Use credit or debit cards to make online payments at ird.govt.nz/pay
Visit Westpac and pay your taxes in person by EFTPOS or cash
If you’re overseas, pay using a money transfer service. Search “make a payment” at ird.govt.nz

Overseas businesses selling goods valued at $1,000 or less online to New Zealanders are now required to register for, collect …

Buying or selling a home? You’ll now need to provide your IRD number as part of the transaction process. The change will allow IRD to know who’s flipping owner-occupier homes on a regular basis, and better enforce the existing law that ensures people pay tax on the profit. The move won’t impact the rules around who’s required to pay tax on investment property though.

In an effort to level the playing field between property investors and home buyers, a new law ring-fencing rental losses looks set to come into effect on 1 April 2019.

It means you’ll no longer be able to offset tax losses from your residential properties against other income (e.g. salary or wages, or business income).

However, the losses will be able to be used in the future when the properties are making profits, or if you are taxed on the sale of land.

Need more information? Give us a call.

ACC and Student Loan rate changes from 1 April:

The Student Loan Scheme annual repayment threshold increases …

While sorting your end of year tax paperwork sounds about as fun as spilling coffee on your keyboard, once it is done, it’s done – and now’s the time.

With not long until year end, we encourage you to spend a few minutes this week reading our top tax tips plus the latest changes you need to be aware of in 2019.

Fill your drawers: Can you stock up on stationery, postage and courier bags before 31 March? Claim now and save.
Staff expenses: If you owe employees holiday pay, bonuses, long service leave or redundancy payments, you can claim for these now – as long as they are paid within 63 days of the balance date
Can you fix it? If you’ve got any significant maintenance or repairs on the cards, do it before year end and save on tax.
Turn fun into savings: Do you know which entertainment expenses you can claim 100% of? It’s worth finding out – ask us if you need clarification.
Look at your fixed assets: Do you have any you’re no longer using or don’t plan to use in the future? If so, you may be able to write off the book value.
While you’re at it, check your stock: Look at your stock as well, especially obsolete stock. There may be an opportunity to write some of this off as well – check with us on what could be done in this area.
Income boost: Earnt a lot more this year? Consider making a voluntary provisional tax payment.
Logging car use? Remember to jot down your odometer reading at year end and if you’ve kept a logbook of business and personal use, mileage and costs, good work!
Home office: It’s also a good time to review what home office expenses may be available for deduction, especially your home office. We can help with calculating this.
Saving time saves money! Accountants are required to ask for information to comply with AML – DIA obligations plus the IRD may ask you, via your accountant, for extra information in relation to your EOY tax. Having your identification and tax documents collated and correct saves your accountant time, which saves you money, so get started this week.

Payday filing

We have mentioned this in the past, but don’t forget payday filing for employers is compulsory from 1 April 2019. Please contact us if you need any help with complying with the new process and rules.

No more cheques for IRD

Do you send post-dated cheques for tax payments? It’s time to go digital!

From now on you’ll need to use online banking to make future-dated payments as the IRD no longer accepts post-dated cheques. Plus, if you’re one to put your tax payments in the Inland Revenue’s dropboxes, you’ll now have to head to an IRD office reception area during office hours to do so.

Writing off bad debt? Get your ducks in a row

If you’re expecting a tax break from writing off bad debt, you may also expect to hear from the IRD asking you to prove the debt is, in fact, bad. A new ruling means the IRD could request evidence of any steps you took to recover the debt (before writing it off) and proof there is no reasonable likelihood the debt will be paid. So, get your paperwork in order!