What to do if you get audited

No business owner looks forward to a letter from the taxman requesting a closer look at the books. If you’ve received an audit letter – an official request by Inland Revenue to review your accounts and confirm your taxes have been paid to date – don’t panic. Prepare. These four steps will help you get through the process with minimal stress and the best possible outcome. Respond promptly If you file…  Read more

AIM: is it hitting the mark for provisional tax?

There has been a lot of talk in the small business marketplace about the new Provisional Tax method called the Accounting Income Method, or AIM. To recap, the AIM method has been heavily promoted by the IRD as a new way of paying provisional tax which removes some of the problems with estimation that exist with the “standard” provisional tax method. Simpler than standard provisional tax? The method was pitched…  Read more

Is it better to buy or lease a company vehicle?

If you need a car to operate your business, you may wonder whether it makes more sense to purchase or lease. On the one hand, if your business owns the car you’ll have a long-term asset and may qualify for more tax deductions. On the other hand, buying a car is a huge expense and monthly lease payments tend to be lower than car loan payments; they will also be…  Read more

Provisional tax improvements

Provisional tax improvements New legislation enacted in February substantially simplifies obligations under the provisional tax regime. Most taxpayers pay their provisional tax at three times through the course of their financial year, being the 28th day of the 5th, 9th and 13th months after their balance date. The ‘standard uplift’ method determines a person’s liability based on a prior year’s tax payable (105% for last year, or 110% for previous).…  Read more

FAQs on company structure and minimising tax

So you’re setting up a new business or thinking about changing the way your existing business is structured… do you go for the added protection that a limited liability company provides, or do you keep things simple and operate as a sole trader or partnership with fewer tax compliance obligations? Tax expert John Shewan, formerly of Price Waterhouse Cooper, gives advice on structuring your business to minimise tax and meet…  Read more

Christmas Parties, Entertainment and Tax

Believe it or not, Christmas is just around the corner already, which will leave many of you thinking about how best to reward staff. It may also have crossed your mind to consider how much of the expenditure that you will make will be tax deductible. Generally, if you provide entertainment for your team, clients or any other business contact, some of your business entertainment expenses are tax deductible. Below…  Read more

Home Office Expenses

A common question that we get asked, is “what portion of my home expenses am I able to claim for tax purposes?” Where a self-employed taxpayer uses his or her home partly in furtherance of the conduct of a business, he or she is entitled to a partial deduction for the outgoings which relate to the use of the home for the work related activities. These include: – Heating –…  Read more

Standard mileage rate increases

The IRD standard mileage rate for motor vehicles is now 77 cents per km. This rate applies to the 2012 income year. The standard mileage rate may not be acceptable where an employee’s business travel exceeds 5,000km. The reimbursement should be based on actual expenditure or a reasonable estimate of the expenditure likely to be incurred by the employee. One way to claim in Xero is to enter the mileage…  Read more

Provisional Tax

Provisional tax is often a source of confusion for new business owners as well as a source for frustration for owners of existing businesses. This article gives a brief overview of some aspects of the system to help which may be of assistance to all business owners. What is provisional tax? The concept of provisional tax is based on payments of tax being made while income is still being derived.…  Read more

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