Could any of the tips below reduce your tax bill?
Check your customers, suppliers, and fixed assets
If you don’t expect to be paid by specific customers, we can write off the amount they owe you – it’s a tax deduction. You may have paid tax on the sale in previous years, but that’s not fair if you never receive the money!
We need to make sure all of your suppliers are included – expenses not recorded in your accounting system can’t be claimed as tax deductions unless we know about them.
With fixed assets, if assets are no longer in use (such as an iPhone purchased in 2014), we can write off their value – this increases expenses and reduces tax. They may be small items, but they can add up! If you’ve bought an asset but it’s not on the list, we need information so we can add it and claim the depreciation expense.
Collate expenses from your personal property
Business owners may be entitled to a deduction if part of the home is used as an office.
Any tax deduction will be calculated by your Beany accountant, based on your expenses (rates, insurance, internet, mortgage interest or rent), and the percentage of property used for your office at home.
Logbook for motor vehicles
Tax laws around motor vehicle deductions are complicated, and deductibility of expenses can vary from business to business, and from year to year. It’s an area Inland Revenue constantly has on its radar.
If no logbook has been kept, we’re limited to claiming 25% of your vehicle expenses.
Keeping a logbook for 90 days every three years could show that more than 25% is for business purposes.
Overseas income
Your tax return must include your world-wide income, not just the amounts received in New Zealand. Your overseas income could have been taxed already (like RWT or PAYE) before you receive it. While we record the income, we can also claim the tax credit in your New Zealand return.
Inland Revenue has double-tax agreements with many countries to reduce the likelihood of you being taxed twice. Tax offices located around the world often share information, so it’s best to declare the income up front.
Loss of income insurance
You have two options when it comes to claiming expenses for income protection insurance (also called “loss of income insurance”).
- Claim the expense, but any payouts received become taxable income
- Do not claim the expense, and any payouts received are not taxable
Health insurance is not the same as income protection and cannot be claimed for tax purposes.