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McLEAN AND CO.
DIRECTORY Manager Address Office
Telephone Number ( Office
Facsimile Number ( Web
Sites www.taxreturns.co.nz www.taxreturnz.co.nz Email
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McLEAN AND CO MARCH 2008 NEWSLETTER PAGE
2 TAX
RATE CHANGES The
company tax rate (CTR) will reduce from 33 to 30% from the beginning of
the 2008/2009 income year- The
change also applies to some savings industry entities. In
addition, the top rate for portfolio investment entities (PIEs) has been
capped at 30%. Business
Structure Changes
The
CTR change may prompt you to consider changing your business structure.
McLean and Co can assist in company incorporation. When
the new Tax Rate becomes Payable
Use
the new CTR when calculating your company's income tax payable for the
2008-09 income year onward. The first payment to which the new rate
applies is the first provisional tax instalment for 2008-09. TAX RATE CHANGES FOR CHARITABLE GIVING The
changes, effective from the 2008/09 income year, include:
The
changes recognise the significant contribution made by the charitable
and non-profit sectors to the well-being of our communities, and foster
a stronger culture of charitable giving in How
will the changes work?
For
Individuals
For
example: Indira
donates $3,000 to various charities and other non-profit organisations,
including her local church. Her taxable income for the 2009 year ( In
the past Indira could only claim a maximum of $630. With the removal of
the threshold Indira will now receive $1,000, a gain of $370. For
Indira to claim her rebate she will need to complete the Rebate
claim form (IR526). Indira will need to include her receipts
from the approved charitable organisations with her rebate claim form. (Cont. Page 3)
McLEAN
AND CO MARCH 2008 NEWSLETTER
PAGE 3
For
Companies
The
5% limit on deductions that companies can claim for cash donations to
donee organisations will be removed
For
example: Company
Ltd is a publicly-listed company. In the 2009 tax year ( Under
the current law, Company Ltd is entitled to a tax deduction of $10,000. Under
the new rules, the full $20,000 can be deducted. The tax deduction will
be included in the company's income tax return (IR4). Maori
Authorities
The
change will operate in exactly the same way as the change to the company
deduction and the donation deduction will be included in the Maori
authority's income tax return (IR8). NEW WAYS TO GET AN IRD NUMBER From
18 February 2008, people can apply in person for an individual IRD
Number at any Automobile Association (AA) Driver Licencing Agent,
PostShop, or selected New Zealand Post retail outlet. These agencies are
Inland Revenue Appointed Verifiers.
They confirm the originals.
Taxpayers need to bring in one current original document
from Category A below and one current original document from Category B
below, plus photocopies of these documents.
Applications should be processed within 8-10 working days: Category
A
Category
B
McLEAN AND CO MARCH 2008 NEWSLETTER
PAGE 4 The new process does not apply to
IRD umbers for non-individual customers such as companies, trusts and
partnerships, and does not affect people who already have an IRD Number. THE NEW GST AND
PROVISIONAL TAX RETURN From
the start of the 2008/09 tax year, IRD will be sending out the new GST
and Provisional Tax Return (GST 103).
The GST 103 combines payment of GST and Provisional Tax onto one
return. It has been
developed as a result of aligning the GST and Provisional Tax due dates. Key
Features of the GST 103 There
are eight versions of the GST 103, tailored to taxpayer’ individual
circumstances, and only including the fields they need to complete.
The version taxpayers will receive depends on their balance date,
GST filing frequency, if they use the ratio method to calculate their
provisional tax payments and whether they file GST Returns for more than
one location or branch. There
is also a non-tailored GST 103 version which can be downloaded from www.ird.govt.nz. Who
will Receive the GST 103? Taxpayers
will receive the GST 103 when they have a
GST payment due, regardless of whether a provisional tax payment
is due for a particular period or not.
As long as they remain registered for GST and liable for
provisional tax, they’ll continue to receive the GST 103 from IRD.
However, if they’re no longer for provisional tax (as a result
of their residual income tax falling below $2500) IRD will send out the
GST 101. The GST 103
should be received around the same time as the current GST 101, which is
near the end of the taxable period for which the return applies. GST DUE DATES AND
THE NUMBER OF PAYMENTS YOU NEED TO MAKE GST periods haven’t changed at
all- only the due date you need to file and pay your GST has changed.
This means that you’ll still continue to pay your GST the same number
of times each year you have in the past.
If you file your GST Returns every two months, return dates are
as follows:
You should refer to the GST taxable
period and the GST date printed on the GST Return that IRD send to you. GST RETURNS AND LATE
FILING FEES A late filing fee is to be charged on
late filing of GST Returns from So do remember to file your GST Return by
due date, even if it is a Nil Return.
McLEAN
AND CO MARCH 2008 NEWSLETTER
PAGE 5 CHANGE OF DUE DATES FOR PROVISIONAL TAX
INSTALMENTS The
dates for your provisional tax instalments are changing from the
beginning of the 2008-2009 and are based on your income tax balance
date. They will be the same
as to due dates for GST so that businesses only need to file one return
and make one payment for
both taxes Whether
you’re registered for GST or not, you’ll benefit from the changes as
you’ll have more time to pay your provisional tax instalments The
number of provisional tax instalments will depend on the option you use
to calculate your provisional tax payments and your GST filing
frequency, (if you have one) ·
If
you pay GST six monthly you’ll need to make two provisional tax
instalments ·
If
you use the ratio option, you’ll make six provisional instalments ·
Everyone
else will make three provisional tax instalments The
new provisional tax due dates will be:
There
is no change to end of year due dates. RATIO METHOD OF GST To
use the GST ratio method, you will need to make an election to IRD
before the beginning of the year. For
example, an election must be made before (cont. Page 6)
McLEAN
AND CO MARCH 2008 NEWSLETTER
PAGE 6 The
ratio method applies to taxpayers who: ·
have
operated a business and have been GST registered for two full tax years ·
the
RIT is more than $2,500 but less than $150,000 ·
file
their GST Returns monthly or two monthly ·
have
made an election (in writing or by telephone call) by the first day of
the income year ( A
taxpayer may fall out of the ratio method if: ·
GST
registration ceases ·
a
GST Return is overdue by 60 days ·
the
taxpayer ceases to be a provisional taxpayer (e.g. makes a loss) and RIT
is less than $2500 ·
the
taxpayer changes to six monthly filing. Advantages
of the ratio method include: ·
provisional
tax is paid in line with ·
the
dreaded use of money will not apply to taxpayers who qualify for the
method Disadvantages
of the ratio method include: ·
missed
ratio changes could invoke penalties ·
falling
out could expose the taxpayer to use of money interest ·
does
not apply to shareholder employees ·
does
not apply to partners in a partnership ·
asset
·
Six
payments of provisional tax are payable during the year instead of the
previous three. KIWISAVER FROM From
To
help offset this contribution. Employers can claim an employer tax
credit through the PAYE system of up to $20 per week per employee.
The employer tax credit can be claimed for both compulsory and
voluntary contributions to KiwiSaver and complying funds. To
find out more about the compulsory employer contributions and employer
tax credits , go to www.ird.govt.nz/kiwisaver
and look
at ”Employer Guide” You claim the employer tax credit
when you file your PAYE returns using a new version of the IR345 PAYE
Employer Deductions Form. You offset the tax credit against the payment
due and pay the net amount to Inland Revenue. Alternatively
you can claim a full tax deductible expense
(
relating to the employer
contribution) of 4% of gross wages and (Cont
Page 7) McLEAN AND CO MARCH 2008 NEWSLETTER
PAGE 7 Employer
contributions to KiwiSaver schemes and complying funds are exempt from
specified superannuation contribution with-holding tax
(SSCWT) subject to certain limits.
This applies to both compulsory and voluntary employer
contributions. The exemption
applies to the lesser of : ·
an
amount equal to the employer contribution, or ·
4%
of the employee’s gross It
is important that you keep copies of all PAYE Returns (including the
Employer Monthly Schedule) for production to the Accountant at the end
of the year, so that any tax deductions that may be claimable for
employer contributions to KiwiSaver schemes and complying funds may be
calculated. VOLUNTARY DISCLOSURE PENALTY REDUCTIONS If
someone has a tax shortfall due to “not taking reasonable care”,
“making an unacceptable interpretation”, or “taking an
unacceptable tax position” and
they make a voluntary disclosure before IRD advise them of a pending tax
audit or investigation, any shortfall penalty can be reduced by 100%.
Previously the maximum reduction in penalties was 75%. Voluntary
disclosures made on or after Penalty
reductions are regarded as a good incentive for taxpayers to come
forward and put their tax returns in order. 9 DIGIT IR NUMBERS Between
April and May this year the 8 digit range will run out and IRD will
begin issuing 9 digit numbers to all new taxpayers. Some
points to note are: ·
all
current 8 digit IR/GST numbers remain unchanged (12-346-678) ·
once
the 8 digit range runs out, new taxpayers will be issued with nine digit
numbers (123-456-789) ·
when
you complete forms with 9 boxes and you have an 8 digit number, leave
the first box blank ·
if
you have an 8 digit GST number you will only have to display the current
GST number. If you set
up a new company or subsidiary and get a 9 digit number, you will have
to display this.
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