Six Ways to Stay On Top Of Tax This Year End
Posted on 10 Mar 2022
Between Covid restrictions, a downturn in income, government payouts, and tax breaks, we understand if your head is spinning as the financial year wraps up. That��s why we��ve done a?round-up of relevant tax information?you may have missed, so you can ensure everything is in order and there are no unwanted surprises come 31 March 2022.
- First, let��s talk Covid
The two most important things to remember are:
- a) Retain any documentation you have surrounding payments and subsidies you��ve received from Inland Revenue or MSD.
- b) Got employees working from home? The 2021 COVID-19 Protection Framework means a new approach to covering their costs. Remember, if an employer pays for an employee��s expenditure or loss when they fork out for extra power, phone charges, printer ink, home office supplies or equipment, then the payment is tax-free, not subject to PAYE, and deductible for the employer. If you estimate the payment, you need to keep track of (and evidence of) how you calculated it.
- Earning more than $180K?
- As of 1 April 2021, a new top tax rate of 39% applies. If you earn more than $180k any interest you earn from New Zealand bank accounts and investments will need to have the?39% resident withholding tax (RWT) rate Update your records by selecting the 39% rate through your online banking portal or contact your bank or investment provider directly.
- As interest payers didn��t need to make this rate available until 1 October 2021, RWT will have been under-deducted from 1 April 2021 up until the date it was updated. Due to that under-deduction, you may have an end-of-year tax liability for the 2021-2022 year.
- Under-deductions of RWT may also affect provisional tax customers, including people who are already provisional taxpayers using the estimation method, or where the under-deduction will result in their residual income tax (RIT) exceeding $60,000 for people on the standard method.
- It��s a matter of Trust
From the 2021-22 income year there are new disclosure rules for domestic trusts. Trustees will need to prepare financial statements and provide extra information with their income tax returns.
- Residential property investment?
Now that interest on mortgages taken out for residential property acquired after 27 March 2021 is non-deductible, if you have a property with existing mortgage interest that fits the frame for the interest phase-out applying from 1 October, we can calculate the interest phase-out for this year for you. And let us know if you bought or sold residential investment property during the year so we can give you an accurate picture of your tax exposure now and going forward. The brightline test for property sales on or after 27 March 2021 is now 10 years (up from 5 years for properties acquired between 29 March 2018 and 27 March 2021).
- Got a Small Business Cashflow loan, or considering one?
We absolutely understand the financial pressure you��ve been under, and while repayments are not compulsory in the first 24-months, our tip for saving money long-term is to pay off the loan before interest starts being charged. If you��re struggling, and your business has experienced a 30% decline in actual or predicted revenue over the period of a month (compared with the same month last year due to Covid) you may still be considering a loan. Applications are open until 31 December 2023 through the?Inland Revenue website.
- Wage Subsidy Scheme reporting
Inland Revenue is reviewing?WSS payments?that weren��t reported in the ��Government Subsidies�� field of the 2021 IR3/IR3NR income tax returns, so if this was you, talk to us. Please keep any receipts or documents so when we make the amendment, we can provide supporting information to Inland Revenue. And keep all relevant information together for accurate reporting for the 2022 year.
