Provisonal Tax – A tip from Accountants First Iran Kamal

Is 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 provisional 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)

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Accountants First quote of the day

“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

Imran Kamal, Managing Director Accountants First

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Accountants First Questionnaires

Many clients never tend to complete their Accountants First questionnaire as it takes time to fill the form. What they don’t understand is vital information can be sometimes missed out.

Most common stuff that always get missed out is Home office. So next time please complete your questionnaire, it will only take maximum of 15mins.

This helps us at Accountants First and also yourself  to claim those small expenses that will be a big help to your financials and tax returns.

Imran Kamal, Managing Director Accountants First

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IRD readings

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
  • Kiwisaver
  • Working for Families
  • student loans,
  • PIEs.
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Your Tax Return for 2011 is now due

Tax returns for 31 March 2011 are due to be filed by 2 April 2012.

If you have not done this please call your accountant as soon possible to get this done. Also remember your terminal tax is due on 7th April 2012.

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Our latest Newletter is now online

Our newsletter for the first quarter of 2012 is now out, featuring:

•     The year of the dragon

•     New minimum wage

•     Employer superannuation contribution tax

•     Beware the price shopper

•     Cutting tax liability enterprises

•     ACC levy reductions

Also visit the Accountants First website to read the Wilco Autumn edition tax newsletter.

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Subcontractors (withholding tax)

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)
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Home Office

2012 year is here and you will need to complete your financials and tax returns again.

One of main things clients often forget to claim is the use of a home office.
A home office is residential property which is necessarily used in production of business income.

Example: Mr X has a property 20% of which he uses as an office or workshop. He can claim:

  • Mortgage Interest
  • Rates
  • Utilities
  • Homeowners insurance
  • General repairs
  • Depreciation-office equipment
  • depreciation-home.

So next time you receive a questionnaire from your accountant be sure to complete the Use of home office section and claim your entitled deductions.

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Tax Quote

I’ve always enjoyed this quote and thought I’d share it with you.

Death and taxes may be inevitable, but they shouldn’t be related.  
- J.C. Watts, Jr.

Watts served in the U.S. House of Representatives from 1995 to 2003 as a Republican, representing the 4th congressional district in south-central Oklahoma. After leaving Congress he established a lobbying and consulting firm, served on corporate boards, and worked as a political commentator.

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A great tax myth

Myth:
I don’t make alot of money, so I don’t need to be know about tax planning?

Wrong!

Knowing about tax planning is important,regardless of income level. In fact, some would argue that the tax bite hits hardest on those who are least able to afford it.
(Sibbald,2005)

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