Tag Archives: Pay Less Tax

Yes Please I Want To Pay More to the IRD

Posted on June 18, 2013 | Leave a comment

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It’s quite amazing to me that so many business owners voluntary pay extra to the IRD. They moan about their Income Tax and hate paying their GST, yet then choose to pay more they then they need. How weird is that?

What I’m talking about is penalties for late payment. If you pay tax late, as sure as night follows day, you’ll incur late payment penalties. If you’re a day late, you pay a 1% penalty. 7 days late, a 4% penalty, and then a further monthly penalty of 1% if the tax remains outstanding. Use of money interest (UOMI) will also apply to amounts over $100. UOMI is currently calculated daily at 8.40%.

Here are a couple of actual examples of how the penalties and interest ratchet up so rapidly:

GST for period 31 July 2010

GST originally due $3,500.70

Amount now due with penalties and interest $5,555.

 PAYE for period 30 November 2010

PAYE originally due $4,239.83

Amount now due with penalties and interest $5,722.

 GST for period 28 Feb 2011

GST originally due $1,068.72

Amount now due with penalties and interest $1,988.

 See what I mean? Truly an exorbitant, gouging overall finance rate, the sort of rate charged by dodgy loan sharks! And often, it’s not that taxpayers lack the money, it’s just lack of organisation and lack of planning in advance. What a waste of money!

 

If you need help to sort your finances out, contact Nick on 0800 ASK NICK or nick@abac.co.nz.

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Posted in Accounting, Business, Finance, GST, Tax

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Maximising your Tax Deductions

Posted on December 18, 2012 | Leave a comment

Like it or not, income tax is high in New Zealand. As those of us in business know, it can be a struggle to pay in lump sums especially when the prices of what we buy keep going up, and our customers and clients lack the cash to pay for our goods and services. Therefore, it is very important to make sure that we’ve done all that we can to maximise our tax deductions.

Here are some practical things you can do to place yourself in the best possible position to maximise your tax deductions:
(See full article)

 

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Posted in Accounting, Business, Tax

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Slashing Your Taxes

Posted on July 12, 2012 | Leave a comment

There is no magic single answer to reducing your taxes, life is not that simple, but there are a number of things you should be doing to ensure you’re not paying someone else’s as well as your own!

Plan well in advance. Think through the best structure which suits you and know well in advance what the consequences are, tax wise, of your business or investments. Know your Provisional Tax and ACC liabilities well in advance.

Don’t pay your taxes late. Yes, there are no credit checks and it’s easy to get but it’s a very expensive way to get finance, very expensive indeed!

Don’t just think Income Tax. Tax comes in many varieties including ACC, FBT, RWT, GST, PAYE, ESCT, Withholding Tax, and Schedular Tax. All deserve attention if you want to mininise your overall tax bill.

Seek professional help. Tax is extremely complicated and even professional tax accountants struggle to keep up with the law and regulations which are constantly changing. A good accountant will save you much more than they will cost you in fees.

Don’t listen to “G & T” (gin and tonic) advice. There’s always someone claiming to pay no tax whatsoever or that he gets regular GST or tax refunds. Their circumstances will be different to yours, they may have a bad accountant (and I mean bad, not good!) or they may just be hopeless optimists prepared to take huge risks.

Steer clear of tax evasion and sleep better at night. The tax system works by severely punishing those who are caught and making an example of them and being caught is most unpleasant.

Start your own business. There’s no better way to get flexibility into your affairs and claim deductions that an employed taxpayer can only dream about!

Paying tax is, like it or not, part of modern life and the pool of taxpayers is dwindling, seemingly replaced by an endless queue of those who think they deserve to be supported by taxpayers, so do all you can to pay less tax and save for your retirement – you’ll need to the way its going!

If you need help to seriously slash your taxes contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

Why not join the A+BAC community on Facebook? This is the place where business owners share their expertise and get real-time, real-life answers to their questions.

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Posted in Business, Tax

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The 10 Most Commonly Overlooked tax Deductions

Posted on July 29, 2010 | Leave a comment

Paying tax may be a necessary evil but why pay more than necessary?

  1. Use of home as Office. Whether you have business premises or not, you can still claim for some of your home expenses if you do some work at home and let’s face it, what business owners don’t these days? In addition, most claims for use of home are too timid e.g. not claiming for gardening expenses – it is a huge grey area!
  2. Home Telephone. If you make or take business calls at home, you can claim 50% of the line rental even if the business calls are way less.
  3. Interest Costs. Many business owners have home mortgages, loans or hire purchase debts yet no business borrowings, thereby voluntary giving up thousands and thousands in tax relief.
  4. Motoring Costs. FBT is nasty and can be considerable. Always consider the alternatives (such as mileage allowances) or if FBT is unavoidable, get an older car just for business purposes where the tax saved on the running expenses will greatly exceed the FBT on 20% of the cost. If you’re self-employed or in a partnership compare the tax deductibility of the mileage allowance against the total of depreciation and running costs – often, the mileage allowance is higher!
  5. Travel Costs. If the primary purpose of your trip is for business, and any holiday aspect incidental, then you would be able to claim 100% of the cost of the trip (providing you paid for the accommodation, food and any activity costs yourself on the non-business days).
  6. Donations. I still meet people who have not claimed rebates for school fee donations or child care. If you have not claimed in previous years you have four years to claim.
  7. Paying Family Members. If your kids or spouse work in your business make sure you are paying them for the work they carry out (a sole trader is a nuisance here as pre-approval from the IRD is required for wages to your spouse). If your spouse is a director but doesn’t do enough work in your business to justify a salary pay them a director’s fee for the risk involved in being a director.
  8. Incidentals such as newspapers, computers at home, subscriptions, magazines, club memberships can all add up.
  9. Guarantee Fees. If your spouse doesn’t work in the business and is not a director but nevertheless is guaranteeing borrowings or lines of credit, pay them a guarantee fee.
  10. Assets owned before going into business can be claimed on commencement of business and often give rise to large tax rebates. If you have a company you claim GST as well if they were not bought second-hand (there are some detailed rules here so ask first!).

As usual, seek advice on your specific circumstances to avoid disappointment!

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Posted in Accounting, Tax

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