You may have heard or read about the well publicised tax case of two Christchurch surgeons Penny & Hooper who used company structures and family trusts to artificially lower their salaries to avoid a higher personal income tax rate
The Supreme Court sided with the Inland Revenue when it ruled that “income derived from personal exertion should belong in its appropriate taxation band and should not be inappropriately diverted away”.
Inland Revenue concession to make a voluntary disclosure granted after the outcome of theÂ Penny and Hooper caseÂ runs out at the end of this month.
Those who make a voluntary disclosure before 31 March 2013 would be required to make adjustments for only the last two income years.
Those who did not come forward might incur not only penalties, but Inland Revenue might also reassess their tax position over four years.
We have developed our Shareholder Remuneration Kit for our clients, and aÂ procedure to help you by assessing the risk that the Inland Revenue will disagree with the tax positions taken.
Please urgently arrange a meeting with me so that we could assess the risk and advise whether we need to do a voluntary disclosure to Inland Revenue.
Should you require any further information, please let me know.
Did you know you are probably paying more tax than you are legally required to?
Changing circumstances in your business and in New Zealand tax laws mean that you may not be legitimately claiming everything you are entitled to.
As a valued Accountants First client I would like to explore with you all options specific to your business that have a bearing on how much tax you are paying.
Overpaying tax doesn’t make sense
I have prepared a special program to this end and would like to go over it with you to explain the various legal tax opportunities available.
Call me to arrange a meeting at a convenient time to check that you are currently claiming all the expenses you are entitled to.
Many clients think that provisional tax is a separate tax, it is not.
But it is a way of paying income tax as income is recieved during the year.
The criteria for paying provisional tax is if your income tax to pay for the year is over $2,500 then you will have to pay provisonal tax for the following year.
You can make installments with your GST returns if you are registered.
The amount of prov…isonal tax to pay is determined based on your expected profit or your GST taxable supplies and also depends how you choose to work your installments out.
At the end of the year when final profit is calculated either you pay or a refund will be issued back to you.
Calculation is done in three ways : Standard, Estimation & Ratio Option.
Standard due dates are 28 August 12 , 15 Janauary 12 & 7 May 13. (based on 2013 year)
“As a citizen, you have an obligation to the country’s tax system, but you also have an obligation to yourself to know your right’s under the law and possible tax deductions. And to claim every one of them.”
- Donald Alexander, former commisioner of the US Internal revenue service
Many clients never tend to complete their questionaire since itÂ take time to fill the form. What they don’t understand is vital information canÂ beÂ sometimes missed out.
Most common stuff that always get missed out is Home office. So next time please complete your questionaire, it will only take maximum of 15mins.
This helps your Accountant and also yourselfÂ and to alsoÂ claim those small expenses that will be a big help to your financials and tax returns.
Further to my last post:
Also read about the tax changes for 2012 at Tax changes – Budget 2011 on the IRD website:
- 2011 Budget changes
- Working for Families
- student loans,
Posted in Tax
Tagged ird, tax, tax changes
Tax on schedular payments
Schedular payments (aka Withholding tax deduction) are made to contractors who perform activities outlined in Schedule 4 of the Income Tax Act 2007.
You’ll find more information on the IRD website, under headings such as:
- Taxing activities called schedular payments (formerly withholding payments)
- Certificates of exemption from withholding tax (IR331)
- Tax on schedular payments (formerly withholding payments)