Taxable income is governed by Income Tax Act 2007 and is administered by Inland Revenue department. For individuals and most businesses the accounting year begins on 1 April and ends the following 31 March. Income tax returns are due on 7 July each year, unless you have a tax agent, in which case you get extension of time. Please check your tax return filing due date here for standard or non-standard balance dates. can choose a different balance date. All income is taxed in New Zealand, like many other countries there is no tax-free threshold. But individuals can get rebates and credits depending upon their personal situation. New Zealand Tax residents are also required to declare their worldwide income.
Many individuals aren't aware that they need to file income tax return and end up receiving penalty letter from IRD. Besides business owners, sole traders, companies, trusts and related organisation, anyone involved in earning income not deducted at source must file income tax return and declare their taxable income. If you are a full-time employee but at the same time you run Airbnb/holiday house, drive uber, own a rental property, are shareholder of a company or receive overseas income you need to file income tax return. In addition to above, Inland Revenue Department may ask you to file income tax return for any reason. New Zealand Tax residents are also required to declare their worldwide income.
We prepare income Tax returns for Individuals, property investors and Businesses (sole Traders, Partnership/LTC, Company etc). We are also specialised in preparing Income Tax return for a group of companies, where complex intercompany transactions are involved and needs sorting.
Along with year-end Income Tax return we provide below services as needed;
- Sale or purchase of New Property or Business.
- Overdue Returns for past years
- Financial Reports when needed
- Sorting out working for Families Tax credit payments
- Prepare reply to IRD queries
- Companies Secretary role (for Company only)
- Dividend Statements (for Company only)
- Maintaining Imputation Credit Account (for Company only) - ICA is not a Ledger Account thus needs to be maintained independent of business transaction account.
The ever changing legislation around the sale, purchase and renting of residential properties, has made residential property investment subject of a technical tax area.
Properties purchased from October 2015 falls under bright line property rules, but since then rules have been revised twice and depending upon when you have purchased and sold your property, a different rule may be applicable in your situation. The rules within each Brightline tests are different.
If you are planning to develop a property you have been living in, then it is very important to keep an accurate record of timeline and documents. The year-end tax return are prepared on the basis of information client's provide, keeping accurate time and documents record helps us maximise expense claims thus lowering Income Tax.
Get timely advise and manage your property affairs efficiently efficiently
If you conduct a business and carry out a taxable activity and your turnover was $60,000 or more in the last 12 months, or you expect it will be $60,000 or more in the next 12 months, then you must register for GST.
The most common GST return frequency is 2 monthly. Once register for GST, you need to charge GST to your clients. GST return must be filed on time. At the end of each GST period, your accountant will prepare GST return and you will be advised if you have a GST to pay or a GST Refund. GST returns and payments should be received by IRD on time in order to avoid any penalties.
Not all goods and services attract GST. The GST on selling overseas or importing goods, bringing personal asset in business or dealing in second hand goods, comes under technical tax area.
Income tax planning is done before the start of a tax year. Each and every individual's circumstances are different and tax planning has to be tailor made. The structure of your business ownership is another factor to consider while planning tax. If a trust is a favourable business ownership structure in one situation, a Company might be more beneficial in a different situation. A professional considers all pros and cons and analyse every situation while doing a Tax planning. Small business dominates most industries as 97% of all firms in New Zealand are family owned businesses. Most businesses owners try to earn from multiple sources, either running more than one business, or owing a business plus doing a job.
We often come across a situation where in a family, a spouse ends up paying tax at top tier income tax rate, while other had no income to declare. Due to the incorrect business structure and no Tax planning not only did they pay higher tax they also couldn't qualify for tax credits (WFFTC or IETC tax credits).
Provisional tax is applicable if your residual income tax is more than $5000 for tax returns filed from 2020 onwards.
Provisional tax helps businesses and self-employed pay income tax in installment during the year rather than a lumpsum.
The most common method of calculating provisional tax is standard option. Under the standard option, provision tax is paid in three installments. The provisional tax due dates for standard and non-standard balance dates can be found under our resources page.
Provisional tax is a mandatory tax payment and if unpaid attracts penalty and interest on any unpaid installment.
IRD categorises the penalties they charge as Late filing penalties, Late tax payment penalties, Shortfall penalties and Criminal penalties.
If you are charged a penalty and not sure why, we can contact IRD to clarify and if possible avoid the penalties.
The amount late filing penalty varies for the each type of tax return and varies from $50 to $250.
Once a return is filed but tax is not paid by the due date, late payment penalty is charged on overdue payments. On the discretion of IRD, taxpayer may be entitled to a 30 days Grace period if they have paid all taxes on time for the last two years. Late payment penalty starts after the tax payment due date, and is charged as a percentage of overdue payment, and in stages as below.
• 1% the day after the due date
• 4% seven days later
• 1% each month when the tax to pay remains overdue (on some taxes).
Late payment penalties can be avoided if you set up an installment arrangement with IRD. You can contact IRD or click here to learn to set up an installment arrangement with IRD
Shortfall penalties are charged on short paid tax and calculated as a percentage (20% to 150% ) of the tax shortfall. If a taxpayer realises that a tax is short paid, a voluntary disclosure before notification of a tax audit or investigation can reduce the penalty by 100%.
Anyone who is convicted of breaking a tax laws, may be charged with criminal penalties. These apply to all taxes. The amount of criminal penalty varies from $300 to $100,000.
Interest is charged (Debit interest) on any unpaid and underpaid tax until the tax is paid in full. If you have an installment arrangement in place to pay -off your overdue tax, UOMI is still charged on the balance unpaid amount.
If tax is over paid, interest (Credit interest) is paid back to the tax payer.
The Debit and Credit UOMI rate is set by the government based on market rate.
The current UOMI rate is 7% for underpaid tax and 0% for overpaid tax for interest calculations from 8 May 2020.
If you often face difficulty with cash flow and struggle to pay income tax and provisional tax on time, tax pooling might be the answer for you. You can defer tax payments by purchasing back dated tax now. Please click below to see the list of IRD approved tax pooling intermediaries. https://www.ird.govt.nz/topics/intermediaries/tax-pooling/tax-pooling-intermediaries