TOTALACCOUNTING Chartered Accountants

Accounting                               Taxation                                   Business Advice and Development Assistance                                        

 P.O. Box 10 , Clive         133 Main Rd, Clive           Tel. (06) 8700952          Fax. (06) 8700955 

Email murray@totalaccounting.co.nz                                  Website www.totalaccounting.co.nz

 
EMAIL NEWSLETTER JUNE 2015
 

Welcome again to the TotalAccounting Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  

 

NEW CLIENTS

We are happy to accept new clients.  We would be happy to assist colleagues and acquaintances as new clients.

 

INDEX

  1. Cash Jobs

  2. Student Loan Annual Rates for 2015- 2016 

  3. IRD Audits

  4. Residential Rental Property Income and Expenses (Non Property Traders)

 

CASH JOBS

As copied from the IRD website

It's never too late to do the right thing

It's okay to do jobs for cash or for your mates as long as you record them and declare the income when you're filing your annual tax return. Make sure that:

  • you record every job, no matter how big or small
    Find out more about keeping good business records
  • if you're registered for GST you charge it. You must be registered for GST when your annual turnover exceeds $60,000
  • you declare all your income when you file your tax return.

If you're already paying tax on all your income, there's nothing more you need to do.

 

Know someone who's not playing fair?

You have an important role in keeping your industry fair for all.

If you know someone who is doing undeclared cash jobs you can let us know confidentially.

Putting your past tax returns right

If you've left some income off your tax return it's best to let us know now, rather than wait for us to find out some other way. By making a full voluntary disclosure you may benefit by:

  • Not being prosecuted in court.

  • Having your shortfall penalty reduced by up to 100%.

Choosing not to tell us may lead to:

  • late payment penalties

  • shortfall penalties, and

  • prosecution.

Find out more about putting your tax returns right

If you need help with correcting your tax returns, please contact your tax agent. 

If you'd prefer to talk it through with us, you can make an appointment with one of our Community Compliance Officers - we'll even come to you if you prefer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STUDENT LOAN ANNUAL RATES FOR 2015-2016

The annual review of student loan interest, repayment threshold and significant over-deduction rates has been completed. All rate changes take effect on 1 April 2015.

Interest

The interest rate applied to all student loans has decreased from 5.5% to 5.3%. Interest is applied to all student loans. If you're a New Zealand-based borrower, this is automatically written off.

Significant over-deduction

The threshold for significant over-deduction has increased to $60 per pay period. A significant over-deduction can occur when the student loan deductions from your salary or wages in New Zealand are more than needed to meet your pay period repayment obligation.

Repayment thresholds

The annual repayment threshold remains at $19,084 for income other than salary or wages. The pay period repayment threshold for salary or wages is $367 per week.

Repayment thresholds determine when you need to start repaying your student loan.

 

IRD AUDITS

IRD have the statutory right to audit businesses to check if people are paying the correct amount of tax. The audit can cover income tax, GST and employer returns. After an audit you may be entitled to a refund or have tax to pay.

About audits

The different types of audits IRD do, how IRD select you for an audit and what it will involve.

How IRD will work with you

Your rights (what you can expect from IRD) and what IRD require from you during an audit.

After an Audit

After the audit IRD will  send you notices of Assessment and Statements showing if there is a refund or if there is tax to pay, and when it is due. The assessment will be issued after an agreed adjustment or notice of proposed adjustment (NOPA) has been worked out.

 

RESIDENTIAL RENTAL PROPERTY INCOME AND EXPENSES (NON PROPERTY TRADERS)

Income 

Generally, any income you receive from letting out property will be liable for income tax and must be included on an IR3 Income Tax Return.   This income could be from letting out land  or buildings, and in some circumstances, having flatmates or private boarders living with you, or caring for other peopleís children in your home.

Expenses that can be deducted from Rental Income

When you earn income from a rental property, there are often a number of expenses you incur.  The following examples are examples you may be able to deduct from your rental income for tax purposes:

  • Interest- you can only claim interest on the mortgage taken out for the purchase of the rental property

  • Borrowing costs- associated legal fees as below , mortgage broker charges, finance institution bank charges to obtain the finance

  • Legal fees- you can claim legal fees incurred in arranging a mortgage to finance the rental property, arranging a tenancy agreement, collecting bad debts

  • Rates

  • Insurance- on property, furniture and effects, mortgage repayment

  • Motor vehicle and other travel

  •  Letting agentís fees and commissions

  • Depreciation

  • Repairs and maintenance

  • Accounting fees

  • Bank charges on rental bank account

  • Postage

  • Printing & Stationery

  •  Landlord Association, Property Investors, related magazine subscriptions

  • Gardening, lawnmowing

  • Tenancy, Tribunal Court costs associated with tenancy dispute

  • Cleaning

  • Advertising for tenants

  • Telephone costs

  • Heating and Cooling

  • Mower Fuel

  • Use of Home if you have a specific area associated with the rental business

  • Power costs

  • any other relevant costs

What Expenses can't be deducted 

Some expenses cannot be claimed for tax purposes.   For example, you cannot deduct capital or private expenses from your rental income. 

Capital expenses are costs you incur to buy or increase the value of a capital asset. 

Private expenses are incurred for your own benefit, and are not connected with producing taxable income. 

Examples of non deductible expenses are:

  • The purchase price of the rental property
  • The capital part of any mortgage repayments
  • Interest on money you borrow for a purpose other than financing the rental property, even if you use the rental property to secure the loan
  • The cost of repairing or replacing any damaged part of the property, if the repairs or replacement make improvements to the property and increase its value.
  • Real estate agentsí fees and legal fees incurred as part of buying or selling the property
  • The cost of making and additions or improvements to the property.

Selling the Property or Going to Live in it Yourself 

When you sell the property, or cease it as a rental and go to live in it yourself, there are depreciation recovery implications.   That is, you may have to declare back as income all depreciation previously claimed as an expense.  

If you claimed depreciation on buildings (in recent years this has not been allowable) and if you sell the property at a greater price than you paid for it, the depreciation recovery will likely be the full amount of depreciation previously claimed in respect. 

If it is for a lesser amount, you should obtain a valuation of the depreciable assets on which you have previously claimed depreciation, and compare this with the initial cost of these depreciable assets to establish the depreciation recovery.  

 

TOTALACCOUNTING KNOWLEDGE CENTRE AND ARTICLES ABOUT TAXATION AND BUSINESS IN GENERAL PRESS HERE FOR BUSINESS STARTUP KNOWLEDGE CENTRE PRESS HERE
FOR INFORMATION ABOUT COMPANY INCORPORATION PRESS HERE FOR PREVIOUS MONTH EMAIL NEWSLETTERS PRESS HERE

FOR PROPERTY INVESTMENT AND TAX INFORMATION PRESS HERE

FOR FRANCHISE INVESTMENT AND TAX INFORMATION PRESS HERE


The information provided in this email newsletter is for informational purposes only.   TotalAccounting accepts no responsibility for the opinions and information expressed in the information provided and it is provided "as is" without warranty of any kind.    The user assumes the entire risk as to the accuracy and use of this document.   Readers are asked to seek professional advice pertaining to their own circumstances.    The TotalAccounting email newsletter may be copied and distributed subject to the following conditions:
  • All text must be copied without modification and all pages must be included.
  • This document must not be distributed for profit.    

 

If we can assist further, please email TotalAccounting as follows:

 CONTACT TOTALACCOUNTING BY EMAIL BY CLICKING ON THIS LINK

BACK TO HOME PAGE