Current Newsletter: March 2005  (pdf)

Archived Newsletters:
August 2004, March 2003  (pdf)
May 2002, March 2002, December 2001, June 2001
May 2000, February / March 2000 , June 1999, March 1999

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- Tax on Interest
- No More Tax Returns!
- Balance Date Coming Up
- Valuation of Trading Stock
- Five Golden Rules
 

Remember that if you earn more than $38,000, your tax rate is 33%. RWT will only be deducted from your interest at 19.5%. To avoid paying the difference as end of year tax, you can advise your bank to deduct 33% RWT off your interest.

Warning!! From 1 April 2000, if your bank does not have your IRD number, they will deduct RWT from your Interest earned at 45%.

Conclusion

- 1. Check with your bank now that they have your IRD number; and
- 2. Tell them the rate of RWT you want deducted from your Interest earned (either   19.5% or the higher 33% if you earn over $38,000).

!!! TAX REMINDER !!!

Tax and ACC Levies that were previously due on 7 February are now payable 7 April. Your usual reminder will be forwarded to you prior to this date.
 

The current income tax year is the last for which many taxpayers will need to send in a tax return.

This must be a welcome development indeed. But there are some fishhooks!

The exemption generally applies to wage and salary earners who to date have filed IR5 tax returns. The IR5 tax return is being replaced by an "income statement" generated by Inland Revenue from information supplied by employers. A simplified declaration form will replace the IR12s and IR13s, and the non-declaration rate for deducting tax increases from 33% to 45%.

The income statements may not be sent to you or your agent unless you have a student loan, received family assistance, had deductions applied wrongly, or ask. If a statement is not issued automatically this does not necessarily exempt you from taking some action.

Firstly, you are obliged to ask for a statement if you should have received one.

And you are also obliged to furnish a return if you are in any of the following categories:
- absentee;
- provisional taxpayer;
- non-cash basis holder;
- recipient of withholding payments or beneficiary income;
- private domestic worker (IR 56 taxpayers);
- have died during the income year (your representative of course!);
- receive income that is not taxed at source;
- hold a certificate of exemption;
- make a loss; and
- receive a demand from the IRD

Even when a statement is issued you are not exempted from responsibility, but are obliged to check the accuracy of the income contained therein. If the amount of income shown is understated by more than $200 you must provide Inland Revenue with the correct information so that a new income statement can be generated.

Where a refund of $50 or less is shown, this will be automatically refunded. However refunds of more than $50 will not be made unless you contact Inland Revenue and confirm that you have verified your income statement.

Any amounts showing as owing on the statements must be paid by the usual terminal tax dates unless a statement should not have been issued in the first instance and Inland Revenue have been notified of this.

To facilitate the non-filing of tax returns a number of new tax codes have been introduced. These are intended to minimise any end of year wash up by having tax deducted at source at an appropriate rate. Accordingly it is important to advise employers of the correct tax code and that they deduct tax on the basis of this information correctly.

To enable you to continue claiming the donation and housekeeper-childcare rebates a rebate claim form must be completed. Although simple in format you do need to remember to obtain the form and forward it to Inland Revenue. To date claims for these rebates have been included in the IR5 tax return.

There are implications for employers also.

Employers will no longer be required to prepare IR12s, IR13s, the monthly (for large employers twice monthly) PAYE returns, or annual wage reconciliation. (The annual ACC employer premium statement remains.) In place of these a comprehensive monthly schedule is required. Initially this will require some additional paper work. The schedule will include the name and IRD number of each employee, their tax code, gross earnings and details of any deductions made on behalf of Inland Revenue such as PAYE and child support. Further, large employers (those that pay more than $100,000 in PAYE annually) are required to lodge these electronically.Small taxpayers have the option of lodging the schedules manually or electronically.

It is likely that current payroll procedures will need to be amended and software upgraded to incorporate the new requirements. If work is needed in either of these areas early action is recommended as time is running out.

As always, we are here to help where needed.