Tax Accountant in Auckland
Two main tax accounting issues facing every person or business are the yearly tax returns and the regular GST returns that need to be filed on time. This is our business, we can take all the stress away from you! We are specialised in accounting and tax services in New Zealand, working from Auckland. Below some general information about Income, Income tax and GST.
Business income, what is it.
A business receives business income for the goods and services it sells. Then the business can claim business expenses against its business income to arrive at its net profit (the net profit includes drawings taken from the business). Every year or quarterly, the business the pays income tax to Inland Revenue (IRD) on it’s net profit. It looks like a simple rules, but there can be a lot to it. Your savvy tax accountant Auckland can help you where needed.
Tax payable on income
The rate of income tax that a business has to use to calculate the tax it needs to pay to Inland Revenue depends on the type of entity you operate as (partnership, company, sole trader, trust, etc.), and the particular income year. Off course the rates can change, depending on government decisions. If you are a shareholder of a company, you may also receive tax credits, such as imputation credits attached to dividend income. You can claim these to offset the amount of tax you are liable to pay on that income. This is easily forgotten! It is often a good idea to consult a tax specialist regarding this.
Income tax during your first year in business
• Your first year in business is not tax-free. If, at the end of your first year in business, you have made a profit, you may have to pay income tax on this.
• You may choose to make voluntary tax payments during your first year of business, which helps to spread the cost. Then you are not facing a large bill at the end.
• If you have not been making tax payments during your first year in business, the tax will need to be paid by 7 February in the following year if you have a 31 March balance date (or, if you have an Accountant and Tax Agent, by 7 April).
• If you want a balance date other than 31 March, you must apply in writing to the IRD stating the reasons why and they will advise you of your new payment dates.
• After your first year in business you may be required to pay income tax in three instalments during the year. This is called provisional tax. For more information, contact your tax accountant Auckland!
• If you are a sole trader and have a student loan, you may also have student loan repayments to make. After your first year you may have to pay interim payments. For more information contact your tax agent, or visit the student loans web page of the IRD itself.
Claiming business expenses
• Most businesses incur expenses when generating income and most of these can be deducted from its income to arrive at its net profit or taxable income.
• It is on this profit that you pay income tax. Certain business expenses that are paid for out of business income cannot be claimed as allowable business expenses.
Here are a few claimable expenses sometimes ignored. Your tax accountant will keep track of this for you:
Using rental software packages in your business
If you are using rental software packages in your business, these payments are a deductible expense. Also, for example, Xero fees are deductible.
If you’re an employer you can calculate an employee’s reimbursement when they use their private vehicle for work purposes. If you’re self-employed you can use the IRD mileage rate to calculate the cost of using your motor vehicle for business purposes.
Employers may also use rates published by a reputable independent New Zealand source to reimburse their staff.
Using your own vehicle in the business
If you are a sole trader or in a partnership and you use your own vehicle in the business, you can claim the running costs for income tax. Discuss with us the types of situations where vehicle expenses may be claimed as an expense.
If you spend time travelling as part of your business you can claim business travel as an expense. Learn the travel costs which you can claim as business expenses.
Please contact your savvy tax accountant Auckland for an appointment on 09 266 8379
Using your home for the business
Discuss with your tax accountant in Auckland the costs you can claim when using part of your home for business use and how it can help you.
Holiday homes – mixed-use assets
Your holiday home may be covered by the mixed-use assets rules that determine what income and expenditure is returned. – Discuss with us.
If you provide entertainment for staff or clients, some of these business entertainment expenses are tax deductible. Discuss with us the expense business entertainment expenses which can be claimed back and how it applies to you.
Capital (consumer) contributions
A capital contribution is a payment to a person that compensates them for certain capital expenditure. If you receive a capital contribution, discuss with us how to treat the receipt for income tax purposes.
Changes have been made by the IRD to ensure that all business operating costs, including those for dealing with environmental issues, are taken into consideration in calculating taxable income, and that the timing of such deductions is appropriate.
Ask us, at Citywide Accountants Auckland, for the list of the main business expenses that may be claimed against income tax, provided sufficient records are kept during the tax year.
Please fill out this form if you need us to start with your 2019 financial accounts: CW Questionnare 31 March 2019