Slash Your Taxes – Starting In Business
Starting a business can be a stressful and expensive time so it pays to make sure you take advantage of all possible ways to save Income Tax and GST. One common oversight is not to claim for tools, equipment, furniture, computers, vehicles, reference books and any other assets or items owned personally and then transferred into the business upon commencement.
For many business owners these add up to many thousands, sometimes tens of thousands where vehicles are involved, so it is certainly worthwhile claiming as much as you can.
Where Income Tax is involved, it doesn’t matter what type of business entity you use but for GST, you can only claim where you are using a business entity like a company or a partnership. Watch out though, because there are detailed rules on the GST claimable if you originally bought the assets second-hand, which means you cannot claim any GST. Furthermore, the GST you can claim is limited to 3/23 of the lesser of:
- The purchase price you’re paying
- Their open market value
- The original GST included in the original cost to you
Just two further notes of caution. Remember that your business now owns the assets, not you, so if the business gets into difficulty it may be the last you see of them! Remember also that if you buy the assets back from the business there may be depreciation recovery or a GST liability.
If you need help with your business start-up and saving tax contact Nick on 0800 ASK NICK or get in touch by email. .
The information provided here is of a general nature and only applies in New Zealand. You should not act upon this information without obtaining appropriate professional advice and only after a thorough examination of your particular circumstances by an experienced tax adviser.