McLEAN AND CO.
EMAIL NEWSLETTERJUNE 2002
Tax Calender April 2002- March 2003 www.mcleanandco.co.nz/page24.htm
Current Tax Rates www.mcleanandco.co.nz/Page4.htm
Pricing your Product or Service www.mcleanandco.co.nz/Page45.htm
Improving Cashflow www.mcleanandco.co.nz/Page36.htm
Business Plan- Reasons for Preparation www.mcleanandco.co.nz/Page27.htm
Inland Revenue's annual mail out of Personal Tax Summaries is well underway, with 338,972 to be sent out by the end of June.
Personal Tax Summaries are being issued to those taxpayers the department has identified as needing an end of year square up. If taxpayers are expecting to receive a Personal Tax Summary but they have not, there is no need to contact the department at this stage. Inland Revenue is mailing the Personal Tax Summaries out progressively and expect to have this completed by early July.
However, there may be taxpayers who need to contact IRD in July. IRD will advise these taxpayers when and how to contact them closer to the time.
Inland Revenue wants to make sure working families are getting the right amount of Family Assistance.
"We need to know, therefore, if working families who are receiving Family Assistance have had any changes to their circumstances," says Bruce Thompson, General Manager Service Delivery.
"This is important so we can ensure working families are receiving their full entitlement or that they are not receiving more assistance than they are entitled to, which they will then have to pay back at the end of the tax year."
Mr Thompson says the type of changes the department needs to know about includes any changes in a family's circumstances, such as a change in marital status (including de facto relationships). For example if there is a change from being a one-parent family to a two-parent family.
"It is also important if there is a change in the number of children a family claims for. This could include a new child in the family, a child leaving school to start work or a change in a shared custody arrangement.
"We also need to be advised of any changes to a family's income. For example, from 18 March the adult minimum wage is increasing, which could affect a family's entitlement. If a family's income does increase, it is important they let us know."
Customers can let Inland Revenue know of any changes to their circumstances by calling 0800 227 773.
"We're available from 8am to 8pm weekdays and 9am to 1pm on Saturdays. We'll be happy to help," says Mr Thompson.
Tax is tax paid as you go for people in business.
It is not a separate tax. When
you fill in your Income Tax Return to calculate your end-of-year tax bill, you
deduct the provisional tax you have paid during the year, so the end result is
that you will not pay tax twice.
you pay Provisional Tax in a particular year if in the previous income year
your Residual Income Tax (which is the income tax that is calculated that you
have to pay after deducting rebates you can claim and also all tax paid during
that year except for provisional tax) was $2,500 or more.
are, however, liable for Provisional Tax in the first year of business in the
you are an individual and you stop receiving income from employment and
begin to derive gross income from a business, and your residual income tax
for the past four years was less than $2,500 per year, and your residual
income tax for the current year exceeds $30,000.|
are a non-individual (e.g. a company) who commenced business during the
year and have not been deriving business income in the previous four years
and your Residual Income Tax calculated at the end of the year is $2,500
Option- under this option the
Provisional Tax to pay is the previous year Residual Income Tax plus 5%.
If in the Income year you pay the Provisional Tax it is
subsequently found that you have underpaid the Provisional Tax in
comparison to your calculated Residual Income tax liability you are not
charged penalties (unless your residual income tax turns out to be $30,000
or more), and if was too much IRD will not pay you interest for this.|
Option- under this
option you can estimate your Provisional Tax if you believe it will be
different than the previous year Residual Income Tax plus 5%.
If it is subsequently
found that you have underpaid the Provisional Tax in comparison to your
calculated Residual Income Tax liability for the year you will be charged
interest, and if you have you have overpaid IRD will pay you some interest
for doing so.|
you make an estimate, you cannot change to the standard option for that year.
You can re-estimate any number of times up to your third instalment
date, when your last estimate becomes final.
businesses tend to select the Standard Option, unless they believe the
following year profit will be significantly different.
you donít believe your Residual Income Tax in the following year will be
$2,500 or more, even though you paid
Provisional Tax in the current year, you can choose the Estimation Option and
estimate Nil. If this turns out
to be the case you will not be liable for interest, but if you were liable to
pay Provisional Tax you will be charged interest by IRD.
Tax is payable in three instalments, on the 7th day of the 4th,
8th and 12th calender
months after the previous year balance date.
For example if you have a 31 March balance date, Provisional Tax
payments are due on 7 July, 7 November and 7 March.
you are registered with a tax agent and you were not liable to pay Provisional
Tax in the previous income year but are liable in this income year you can
escape paying in the three instalments if your Income Tax Return for the
previous year has not been filed in time for an Instalment, but instead you
must pay the full liable amount but in two instalments (7 November and 7
March) or in one instalment (7 March) after the date the Income Tax Return is
your Provisional Tax instalments are paid late or are short paid, you incur
penalty and interest charges in relation to the late or under payments.
the Provisional Tax paid during an income year is more than the Residual
Income Tax calculation at the end of the income year, you will get an income
tax refund fror the difference. If
it is less, you will have to pay the difference to IRD.
businesses have a free year in the first year from paying income tax (due to
the fact that they donít have to pay income tax until their first year
Income Tax Return is processed) , but then find that they have to pay two lots
of income tax in their second year of business (being the tax calculated for
their first year plus Provisional Tax for the second year).
It is this factor which causes a number of businesses to fail in the
second year due to the fact that the business has not been budgeting and
putting money aside in the first year.
The IRD will accept voluntary payments in the first year even though
they are not technically due then, and this is an option that businesses
should consider if the owners believe that the amount will not be able to be
maintain a separate bank account for trust transactions, including distributions to beneficiaries
hold regular meetings (at least annually)
have a formal meeting agenda
keep formal minutes of meetings and include these together with any resolutions in the trust's minute book
minute investment decisions
make the minute book available to all trustees
ensure formal and timely approval of the trust's annual financial statements.
make formal decisions on the treatment of income
ensure that the power to use majority voting is exercised only after all trustees have been formally consulted on the issue
dynamics of the computer industry mean that each year we seem to be offered
P.C.s that run quite a bit faster and better at a price that is just a bit
There is a law that says whenever you buy a P.C., almost invariably a
couple of months later you will see a competing product advertised that goes
faster than yours for the same price, or performs as well as yours for $300
is no way around this.
Waiting for some new innovation that is now on the horizon to materialise
in a few months simply postpones the problem rather than fixing it.
Seven rules for P.C. buying are:
Pack as much punch into your original purchase as you can. Bundles usually offer value for money. Upgrading later is less efficient.
Be honest with yourself about your requirements, and donít be afraid to communicate them to a supplier.
Check the software supplied, especially operating systems. What versions will be supplied and will you get the manuals?
Discounts- it costs nothing to ask if you are an educational user, or if you are a private user is your employer about to buy P.C.s in bulk?
Think ahead. Are your requirements likely to change during the useful life of the P.C.
A three year return-to-base warranty is the standard in the industry. What is the supplier offering?
Specialist applications are often best served by specialist suppliers, even if the initial outlay may be more than high street prices.
If we can assist further, please email McLean and Co as follows: