Yahoo Finance Your tax questions answered
Do you have a view on the system of Debit Tax as opposed to the continuation of the current system which is too complex and penal?
Every time I heard that a change will ‘simplify tax’, the result normally lead to the overall tax system becoming more complicated. A Debit (or Withdrawal) Tax sounds simple, but there are bound to be more complications than are first anticipated. As we become more global with the internet, I believe that tax boundaries are going to become more blurred. If the politicians can’t simplify the current local tax system, how will they deal with international tax collection?
We have money to invest and are wondering if it is more beneficial to be in a trust or as a personal investment in regard to minimising the amount of tax paid?
Tax minimisation through restructuring must be incidental (and probably not materially different from any previous structure) to other reasons that a new structure is set up. If this is the only reason, or it becomes a major tax difference, this would most likely be determined as tax avoidance. There is a recent case that has been in the news for the last couple of years called ‘Penny & Hooper’ which highlights the risks of restructuring versus tax benefits.
Why is National Superannuation taxed?
Just like other benefits and ACC payments, New Zealand Superannuation is taxed. This is because it is classified as income by tax law and when you combine all of your taxable income this will determine your true income tax payable. This is another reason why people who receive multiple sources of income need to ensure they are providing the correct tax code(s) to their employer(s) (and in this case WINZ) so they don’t end up with a tax bill at year end.
I have $58.00 to pay to the IRD from last year. I am working in a landscaping company but I do not know how I can pay this tax online and what my account type or code is?
To pay tax online most internet banking sites offer a ‘pay tax’ or ‘pay IRD’ option. By using this option you only need to know the IRD number, period ended, and tax type. These options include a list of tax types to select from.
I am a NZ resident with home and family here. I work a regular rotation in Australia and return to NZ for my breaks (four on, four off). I am taxed at source at the Australian rate, when I file a NZ tax return will I receive a credit for the difference between NZ and Australian rates?
‘Tax residency’ can be different to what most people think of as just ‘residency’. This area can be complex for both immigrants and emigrants and people should get advice before they move or travel. If we assume that you are NZ tax resident then this will mean that you will ultimately be taxed in NZ on your worldwide income. We have a DTA (double tax agreement) with Australia and this should mean that you will get taxed in Australia and then get some credit for that tax paid in NZ. The problem with foreign taxes is the limitation of tax credits for NZ tax residents. It is a win/win situation for the NZ Government. If you are under taxed in the foreign country you will make up the difference by paying further tax here. If you are over taxed by the foreign country you will only get credit for how much tax you should have paid here – no refund!
I came to NZ in 2009 and started working in 2010. Am I entitled to get any tax back?
See above regarding tax residency. It is a complicated area and you should seek professional advice for your individual situation.
We are married and have two incomes coming in. Is it necessary for me to declare both our incomes together or do we put in separate returns?
When it comes to personal income tax returns, they are done separately. You put your own earnings into your own tax return. If you have joint income, such as interest from a joint bank account, this is evenly divided and put into each partner’s tax return.
In the past I have used a tax agent to process my tax refund for me however, in the past two years I have learnt how to do it through the IRD website. Can you advise if I can claim back the filing fee the tax agent charged for the years he did it for me?
It is highly likely that the tax agent already included their fee as a deduction in those year’s returns. Therefore you will have already claimed it back. The only way to be sure would be to ask the tax agent if this was the case.
After five years of working fulltime why don't I have a refund?
First you have to work out if you are due a refund. If the calculation is not a refund, then this either suggests that you have been taxed correctly through the year or that you have tax to pay.
I board with a pensioner and currently get out my board in cash as I don't want her to have to pay tax on it. It is under $200 a week so would it actually affect her tax or pension?
There are special rules for boarders and home-stays. There are maximum numbers of occupants and there are two ways to calculate costs; actual costs method and the standard costs method. The standard cost method is calculated each year and issued by IRD. For example for the 2013 year the standard cost for one to two boarders was $250 each. If your income for each boarder is less than these methods then a tax return does not need to be filed. So in your example, your sole board of less than $200 per week is less than the standard, so this income is not required to be included in a tax return by the pensioner.
I run a small business and bookwork bamboozles me. I am putting 20% away of every sale but never seem to be getting anywhere. Do I need to put aside 20% of the total sale price for an item I sell or 20% of the sale price AFTER i have deducted cost. For example, if I buy a dishwasher for $100, spend $200 on parts and TradeMe fees then sell it for $500 do I put away 20% of $500($100) or do I put away 20% of the $200 profit?
It is the profit that you get taxed on, not the turnover. Having said that, depending on what you sell, how much you sell, your overheads, GST registration, your own tax rate etc, will all play a part in trying to work out the actual profit which is probably not easy on each sale. Any business that wants to have a ‘rough tax estimate’ will probably need to use some average numbers and assumptions to get a realistic number and revise this when trading changes. In the above simplified example, if we assume GST exclusive numbers, that these are the only types of sales made, and that the amount of sales and any overheads has the trader paying about 20% income tax, then 20% of the profit of $200 will be the tax to save of $40.
Now that buildings are depreciated at 0%, what are project costs of doing the build (e.g. consents, professional fees) depreciated at? Can they be expensed?
More than likely these will be capital costs in conjunction with constructing the buildings. Hence they will be added to the overall cost of the building structure and depreciated at 0%.
I am doing IR3 for my son. What information do I need to send to IRD? Do I need to send copies of bank statements & two-monthly GST workings? I do the accounts manually.
The NZ income system is regarded as a ‘self assessed’ system. This means you do all of the workings and let IRD know the results. You must retain the records (in most cases up to seven years). The IRD then has an opportunity to audit these records if they want to check on anything. You must send the tax return and appropriate schedules (such as an IR10 if in business) to the IRD. If you have a set of financial statements you can send these in lieu of the IR10.
Can a business owner do their own tax and GST without paying any accountant? If yes how and where do you get the information from?
Any business owner can do their own accounting. You can use the IRD to obtain all of the forms you need. However the reason why there are accountants is because of their skills and knowledge in helping people run successful businesses and help them comply with relevant laws. My analogy of a mechanic works like this: Many people can check their oil and water on a regular basis without needing a mechanic. Not everybody can fix their car when it breaks down. And even if you can fix your own car, how long does it take and cost you versus using a mechanic? If you enjoy doing your work and can spend more time doing it to pay someone else to fix your car, wouldn’t you rather do that?
I work a full time job and pay secondary tax. My annual income from my full time job is $46,000.00 per year and the secondary is approximately $4,000.00 and I am paying 1/3 of my income on the second job in PAYE. Being that I started the second job at the beginning of March this year do I get any of the secondary PAYE back?
Once again, use the quick IRD calculators to see if a tax refund is due and if so order a personal tax summary (PTS). Only income over $70,000 pa is taxed at 33%, and income over $48,000 is taxed at 30%. Just remember that PAYE also includes some ACC Levies.
Do you not get a refund now for paying secondary tax on another job?
See above.
I have two children from a previous marriage. I pay an agreed amount each week but do not have my children stay with me more than one night a week. Do I still class my children as my dependants?
I’m not totally sure of this answer, but in general terms this may be classed as joint custody. The proportion will be only 1/7 for you and 6/7 for your partner. We see this a lot for people with WfFTC and child support.
Bee Keeping. Can I claim expenses against income? Can I capitalise my hives manufacture?
The answer to the above relies on the answer as to whether the activity is a business or a hobby. Basically a hobby will not make money, whereas a business has a probability of making profit. If you are expecting to make a living from it then it will probably be a business and you will claim expenses and file a tax return. If it is just something you do small scale in your spare time and you probably spend as much on the activity as you get from any sales then it is probably a hobby and no record keeping is required. If you are unsure you should get professional advice to check on other aspects such as GST.
I am told there is a $500 tax credit if you pay a certain amount into your Kiwisaver account each year. How do you apply for this?
You are probably referring to the $521.43 Member Tax Credit for eligible contributors over 18 years of age. This gets paid to your Kiwisaver Scheme around July/August each year as long as you have contributed $1042.86 by the 30th June. These are the maximum amounts as the government contributes 50c for each $1 of your contributions up to the maximum. If you have not made enough contributions throughout the year to reach the maximum you can make voluntary contributions before the end of the June.
Disclaimer:
Any views the writer has expressed are his own and not necessarily those of Accountants On Elliott LP. The information supplied has been written in general terms only. This information should not be relied upon specifically without also obtaining appropriate professional advice after detailed examination of your particular situation.
