Taxation Advice and Accounting for Taxation

Here at TaxNZ Consulting we offer a broad range of taxation services which are based on proven knowledge and experience. Taxation can be a major cost to any business. We will work with you to minimise your tax and ensure any tax due is paid on time. We are recognised by the Inland Revenue as Tax Agents so you can trust us with your taxation requirements.

Our aim is to work with you from the start to ensure nothing does go wrong. Our planning advice is complemented by comprehensive support services to help resolve any problems involving your tax obligations. This includes assistance dealing with IRD investigations, audits, dispute resolutions, and the penalties regime.

We have outlined below some of the taxation services we offer. If you find any of this confusing, or simply do not know what you need to know do not hesitate to contact us with an outline of your requirements. Remember we offer a free initial consultation.

• Income Tax advice and returns

• IRD Audits and dealing with the IRD

• GST advice and return completion

• FBT management

• PAYE (Pay As You Earn)

• Rental Properties

• International Tax issues and Tax Residency

• Specialised Tax Advisory Services

Income Tax advice and returns
Income Tax is the main tax in New Zealand and accounts for over 65% of all taxation income that the NZ Government receives. Unless you are employed and have no other income from other sources you will need to complete an income tax return each tax year. The tax year for most businesses is 1 April to 31 March. If you are a New Zealand resident for tax purposes you will be taxed on your worldwide income. Note that New Zealand resident and New Zealand resident for tax purposes are not the same – you could therefore be here on a work permit and still be classed as a New Zealand resident for Tax Purposes. When you complete a tax return, you must include your income from all sources (including that from overseas).

If you are operating your business as a company, partnership or trust, you will need to file a separate tax return for your business.

Income tax is payable on the net profit from your business, which is the income earned less any allowable business expenses.

 Income tax rates can vary from time to time. There are rebates available to sole traders and partners in a partnership that reduce the tax rates if their income is under NZ$38,000.

A business usually needs to pay income tax through the year in three instalments (known as Provisional Tax). When you send in your tax return, you pay or receive the difference between what you have already paid in provisional tax and the actual tax payable for the year.

TaxNZ will advise you on all aspects of Income Tax and ensure that you pay the correct amount. In the case that you have paid too much we can get tax back for you at the end of a particular year.

IRD Audits and dealing with the IRD

If you are in business you should expect to receive an audit by the New Zealand Inland Revenue (IRD) at some point. This can sometimes be a painful and costly experience. We are the experts at dealing with the IRD and will ensure that you are treated fairly. If you are ever contacted by the Inland Revenue we advise that you contact us immediately. Click on our Tax Audits page for further information.

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GST advice and return completion

GST (goods and services tax) is most likely the tax that you will have to deal with on a regular basis. It is also often one of the main areas where problems and disputes arise between the business and the Inland Revenue department.

We offer a full service in this area. We can either offer you one-off advice on GST issues or we can provide the full GST return completion and filing service.

Some areas of GST we deal with daily are.

Registration of GST

We can advise whether you must register for GST or whether you can register voluntarily for GST. You can either complete registration for you or explain the registration process.

Accounting Basis

We also look at the basis for registering for GST as there are 3 different accounting basis – payments basis, invoice basis or hybrid basis. You also choose or must follow a set rule (depending on your circumstances) on how often to file GST returns.

Preparing of GST returns

We can complete your returns for you, or we can offer assistance when required if you wish to complete your returns yourself

Filing and adjustment of GST returns

We can file your returns electronically for you. Any required adjustments can be dealt with by us.

Special events involving GST

For example large asset sales or purchases. These are often transactions that attract attention from the tax authorities. We are happy to assist in this area.

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FBT Management

Fringe Benefit Tax (FBT) is one tax which is often overlooked but is vitally important. It is also a tax that can, with correct planning often be legally avoided. That’s right it is possible through planning to pay no Fringe Benefit Tax. The rules of FBT are complicated and it is therefore easy to make mistakes. These mistakes can be costly in penalties if you are audited by the Inland Revenue department.

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• Hire someone to work as part of your business
• Control the way in which the person works
• Meet other stipulations which make your business an employer as defined by law

Your business will need to register with Inland Revenue as an employer and make pay-as-you-earn (PAYE) and other deductions (such as student loan repayments) from your employee’s wages each pay day.

Each month you must let Inland Revenue know who your employees are, how much they earned and what was deducted from their wages, and pays those deductions to Inland Revenue. Your business will also need to keep wages records, such as a wage book.

We can help in all aspects of this area, from letting you know if your business is classed as an employer to assisting with PAYE returns and payments.

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Rental properties

More and More people own investment properties which they rent out. Others keep boarders in their own home. In most cases expert tax advise is needed and returns need to be filed.

If you have rental properties or boarders and flatmates we can help advise you on:

• What income you must include in your tax return.
• The expenses you can deduct from this income for tax purposes.
• The records you'll need to keep.
• What to do if the property is owned by more than one person.
• What happens if the property is sold.

We are also able to maintain records for you and submit returns when required.

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International Tax issues and Tax residency

New Zealand Tax Residents are liable for income tax on their worldwide income. If you are a New Zealand Tax Resident, you will need to pay income tax on all income you receive from both New Zealand and anywhere overseas. You do not necessarily need to be a New Zealand Resident to be a New Zealand Tax Resident - they are not the same.

Generally you are a New Zealand Resident for tax purposes if:

• You are in New Zealand for more than 183 days in any 12 month period. You are considered to be resident from the day you arrive in New Zealand. The 183 days need not be consecutive.
• You are overseas in the service of the New Zealand Government.
• You have an ‘enduring relationship’ with New Zealand.

To decide whether you have an enduring relationship with New Zealand, Inland Revenue considers things such as:

• Whether you are here for continuous periods from time to time
• Whether you own, lease or have access to property in New Zealand
• Your social ties (where your immediate family lives, if you have children being educated here, if you belong to any New Zealand associations)
• Your economic ties (if you have bank accounts, credit cards, life insurance, investments or superannuation funds here)
• Your employment (if you work here)
• Your personal property (if you own or keep possessions here)
• Whether you intend to live in New Zealand
• Whether you receive welfare benefits, pensions and other payments.

Please note that you can keep similar ties, or even a home, in other countries, but still be a New Zealand resident for tax purposes. If you have an enduring relationship with New Zealand, you will always be a tax resident.

You may be a tax resident in New Zealand and another country. This means you are resident in two countries under the tax laws of each of those countries. If both countries tax their residents on worldwide income, you could be taxed twice on the same income. New Zealand has double tax agreements with many other countries including Japan. These agreements establish which country has the first or sole right to tax certain types of income and therefore stop income being taxed twice. However just because you are paying tax in say Japan does not mean that the income is exempt from tax in New Zealand. New Zealand Inland Revenue and Japanese Tax Authorities can exchange information. If you have an income from Japan and are a New Zealand resident for tax purposes we would advise you to contact us to discuss possible tax minimisation. In the worst case, if you live here and earn money from Japan you must pay tax on this (even if you already pay Japanese Tax). It is therefore important that you seek advice on this if you haven't already done so.

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The specialist tax advisory services provided by TaxNZ include:

• Advanced Tax planning (business and personal)
• Asset protection (including the use of trusts) Tax minimisation (paying as little as you have to within the law) Specialised International tax services (including transfer pricing, inbound and outbound investment, assistance with double tax strategies, and foreign tax management)
• Tax compliance (including tax return preparation, review, and tax payment management)
• Global e-business tax advice and planning
• ‘Reasonable Care’ reviews, from the point of view of an IRD investigator

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(c) 2004, 2005 TaxNZ Consulting