JOE CA LTD

01/05/2025

𝐒𝐡𝐨𝐫𝐭 𝐩𝐚𝐢𝐝 𝐲𝐨𝐮𝐫 𝐓𝐚𝐱 ?
What is the latest you could pay any short paid 2024 provisional and/or terminal tax without incurring penalties and how ?
𝐀𝐧𝐬𝐰𝐞𝐫 This could be the 18th June 2025 if you were to purchase some tax credits from a “Tax pooling” IRD approved intermediary.
𝟏. 𝐁𝐮𝐲𝐢𝐧𝐠 𝐓𝐚𝐱 𝐂𝐫𝐞𝐝𝐢𝐭𝐬
Yes tax credits are sold by approved intermediaries who have funds, “Tax Pools”, sitting with the IRD that they can transfer to your income tax account on the date it was due. You pay the Tax Pool Intermediary the tax due plus an interest fee say 1% to 2 % lower than the IRD would charge you and save by not incurring late payment penalties. The IRD’s current interest rate is 10.88% which is dropping to 9.89% on the 8th May 2025.
2. F𝐢𝐧𝐚𝐧𝐜𝐞 𝐎𝐩𝐭𝐢𝐨𝐧
If you are forward looking you could retain your 2026 provisional tax for working capital and enter into a financing agreement to pay the Tax pooling intermediary as late as the 18th June 2027. The finance rate is competitive with rates as low as 5%pa. So rather than paying 2026 Provisional tax on the 28 August 2025, 15 January 2026 and 7th May 2026 you pay the Tax Pooling Intermediary on the 18th June 2027 plus interest.
The Finance option and the Buying Tax credits only applies to Income tax.
𝟑. 𝐈𝐑𝐃 𝐑𝐞𝐯𝐢𝐞𝐰 𝐚𝐧𝐝 𝐑𝐞𝐚𝐬𝐬𝐞𝐬𝐬𝐦𝐞𝐧𝐭
If you are reassessed for any tax type and have a tax bill that is now old and late there is no time bar on how far back you can buy the tax credits to cover the debt. Tax Pool Intermediaries are holding tax credits that go back over 10 years.
𝟒. 𝐃𝐞𝐩𝐨𝐬𝐢𝐭𝐬
For the tax pool to work there needs to be organisations or individuals willing to deposit funds in the Tax Pool. Their return is around what the IRD pays for overpaid taxes currently the rate the IRD pay is 4.3% dropping to 3.27% on the 8th May 2025. If the funds they deposit are utilised by a Buyer or Borrower they earn an extra margin above that.
about me - https://www.linkedin.com/in/josef-langreiter/
unlock tax benefits # TAXtipsNZ - https://joeca.co.nz/TAXtipNZ/

17/04/2025

# 𝐓𝐀𝐗𝐭𝐢𝐩𝐍𝐙 # 𝟏𝟏 𝐓𝐚𝐱 𝐀𝐫𝐫𝐞𝐚𝐫𝐬, 𝐈𝐑𝐃 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 & 𝐏𝐞𝐧𝐚𝐥𝐭𝐢𝐞𝐬
“𝐈 𝐜𝐚𝐧’𝐭 𝐩𝐚𝐲 𝐦𝐲 𝐭𝐚𝐱𝐞𝐬 𝐰𝐡𝐚𝐭 𝐚𝐫𝐞 𝐦𝐲 𝐨𝐩𝐭𝐢𝐨𝐧𝐬 ?”
“𝐖𝐡𝐚𝐭 𝐰𝐢𝐥𝐥 𝐢𝐭 𝐜𝐨𝐬𝐭 𝐦𝐞 𝐟𝐨𝐫 𝐩𝐚𝐲𝐢𝐧𝐠 𝐦𝐲 𝐭𝐚𝐱 𝐥𝐚𝐭𝐞, 𝐜𝐚𝐧 𝐈 𝐫𝐞𝐝𝐮𝐜𝐞 𝐭𝐡𝐚𝐭 𝐜𝐨𝐬𝐭 𝐚𝐧𝐝 𝐦𝐲 𝐬𝐭𝐫𝐞𝐬𝐬 ?”
Having a grasp of the IRD late payment penalties and interest charges can help you minimise unnecessary costs. The IRD penalties for late payment are 1% on the unpaid amount by being 1 to 6 days late and an additional 4% if it is still not paid after 7 days followed by an additional 1% penalty a month on the unpaid balance unless you have an arrangement in place.
You can significantly reduce these penalties by entering into an instalment arrangement with the IRD 𝐩𝐫𝐢𝐨𝐫 𝐭𝐨 𝐭𝐡𝐞 𝐝𝐮𝐞 𝐝𝐚𝐭𝐞. If you apply before the due date it is only the first 1% penalty that is applied. You could also pay what you can before the due date rather than waiting till you have the full amount.
On overdue payments the IRD also charges interest which is currently 10.88% per annum. The interest paid is a tax deductible expense however the penalties are not.
It is quick and simple to arrange an instalment arrangement. MYIR/I Want to/Payments Refunds and Returns/Request an instalment arrangement. The term via MYIR can be 2 to 3 years and you can repay it earlier if you choose. If you need more time you would need to communicate with the IRD or have your tax agent request this for you.
If you are in a position to pay a lump sum towards tax arrears you could also negotiate with the IRD for the remittance of additional penalties they typically will maintain the initial 1% penalty and the interest. In the case of hardship the IRD can write off all the penalties, interest and all or some of the tax owing depending on your case and financial position.
There are penalties for not filing the various tax returns so even if you can’t pay the tax on time file the return on time so you don’t also incur late filing penalties.
Tax Pooling is also an option to either reduce penalties and interest or finance tax payments and we will cover this Topic in the next TAXtipNZ
𝐚𝐛𝐨𝐮𝐭 𝐦𝐞 - https://www.linkedin.com/in/josef-langreiter/
𝐮𝐧𝐥𝐨𝐜𝐤 𝐭𝐚𝐱 𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬 # 𝐓𝐀𝐗𝐭𝐢𝐩𝐬𝐍𝐙 - https://joeca.co.nz/TAXtipNZ/
𝐍𝐞𝐱𝐭 𝐰𝐞𝐞𝐤 # 𝐓𝐀𝐗𝐭𝐢𝐩𝐍𝐙 # 𝟏𝟐 𝐓𝐚𝐱 𝐏𝐨𝐨𝐥𝐢𝐧𝐠 𝐨𝐩𝐭𝐢𝐨𝐧𝐬.

TAXtip :1 Tax Minimisation is Legal Yes it is legal to minimise your tax but some strategies are obviously not legal and fall into the categories of tax a

09/04/2025

# 𝐓𝐀𝐗𝐭𝐢𝐩𝐍𝐙 # 𝟏𝟎 𝐌𝐨𝐭𝐨𝐫 𝐕𝐞𝐡𝐢𝐜𝐥𝐞𝐬 𝐋𝐞𝐚𝐬𝐢𝐧𝐠 𝐯𝐬 𝐁𝐮𝐲𝐢𝐧𝐠
“𝐈𝐬 𝐢𝐭 𝐛𝐞𝐭𝐭𝐞𝐫 𝐭𝐨 𝐛𝐮𝐲 𝐨𝐫 𝐥𝐞𝐚𝐬𝐞 𝐚 𝐯𝐞𝐡𝐢𝐜𝐥𝐞 ?”
“𝐃𝐨𝐞𝐬 𝐢𝐭 𝐞𝐟𝐟𝐞𝐜𝐭 𝐅𝐫𝐢𝐧𝐠𝐞 𝐁𝐞𝐧𝐞𝐟𝐢𝐭 𝐓𝐚𝐱 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬 ?”
𝐖𝐡𝐞𝐧 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐚𝐦𝐨𝐮𝐧𝐭 𝐨𝐟 𝐆𝐒𝐓 𝐲𝐨𝐮 𝐜𝐚𝐧 𝐜𝐥𝐚𝐢𝐦 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐭𝐚𝐱 𝐝𝐞𝐝𝐮𝐜𝐭𝐢𝐛𝐥𝐞 𝐞𝐱𝐩𝐞𝐧𝐬𝐞𝐬 𝐝𝐢𝐟𝐟𝐞𝐫 𝐝𝐞𝐩𝐞𝐧𝐝𝐢𝐧𝐠 𝐰𝐡𝐞𝐭𝐡𝐞𝐫 𝐲𝐨𝐮 𝐛𝐮𝐲 𝐨𝐫 𝐥𝐞𝐚𝐬𝐞 𝐚 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐯𝐞𝐡𝐢𝐜𝐥𝐞.

𝙶̲𝚂̲𝚃̲ - If you are GST registered and buy a business vehicle, including buying it on hire purchase, you claim the GST of the purchase price. So if it’s a $57,500 incl gst car you can get a GST refund amount of $7,500 on the next GST return. You don’t claim GST on the hire purchase payments as they are just finance payments. If you were to lease that car and not own it there is no upfront claim for GST but each lease payment would include GST so you claim that amount when the payments are made. So you would only get as much GST back as buying the vehicle once you have paid lease payments equal to what the vehicle was worth. Buying on hire purchase has some short term cash flow advantages. If you own the car when you sell it there is GST to declare on the sale price.

𝙵̲𝙱̲𝚃̲ ̲– The value of the benefit is calculated on the value or cost of the car so whether you lease or buy there should be no difference.

𝙸̲𝚗̲𝚌̲𝚘̲𝚖̲𝚎̲ ̲𝚃̲𝚊̲𝚡̲ – When you lease the payment is tax deductible verses if you own it you claim depreciation. So at the straight line depreciation rate of 21% you would claim the full cost of the car spread over five years. If you buy using finance the interest paid is also tax deductible. When it comes to selling the vehicle see # 𝐓𝐀𝐗𝐭𝐢𝐩𝐍𝐙 # 𝟓 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐀𝐬𝐬𝐞𝐭𝐬 & 𝐓𝐫𝐚𝐝𝐞 𝐢𝐧𝐬.

Tax aside you should do the math when comparing lease vs buy. If you can get a low finance rate and can buy well that may be a better commercial decision. Currently some banks offer interest free loans for EV’s. Do your homework and check the terms of Leases as they may have conditions regarding charges for extra kms.

𝐮𝐧𝐥𝐨𝐜𝐤 𝐭𝐚𝐱 𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬 # 𝐓𝐀𝐗𝐭𝐢𝐩𝐬𝐍𝐙 - https://joeca.co.nz/taxtipnz/
about me - https://www.linkedin.com/in/josef-langreiter/
𝐍𝐞𝐱𝐭 𝐰𝐞𝐞𝐤 # 𝐓𝐀𝐗𝐭𝐢𝐩𝐍𝐙 # 𝟏𝟏 𝐓𝐚𝐱 𝐀𝐫𝐫𝐞𝐚𝐫𝐬 𝐈𝐑𝐃 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 & 𝐏𝐞𝐧𝐚𝐥𝐭𝐢𝐞𝐬

01/04/2025

# 𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭 # 𝟵 𝗠𝗼𝘁𝗼𝗿 𝗩𝗲𝗵𝗶𝗰𝗹𝗲 𝗙𝗿𝗶𝗻𝗴𝗲 𝗕𝗲𝗻𝗲𝗳𝗶𝘁 𝗧𝗮𝘅 (𝗙𝗕𝗧)
𝗖𝗵𝗼𝗼𝘀𝗶𝗻𝗴 𝗹𝗼𝘄𝗲𝗿 𝗰𝗼𝘀𝘁 𝘃𝗲𝗵𝗶𝗰𝗹𝗲𝘀 , 𝗿𝗲𝗱𝘂𝗰𝗶𝗻𝗴 𝗮𝘃𝗮𝗶𝗹𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗳𝗼𝗿 𝗽𝗿𝗶𝘃𝗮𝘁𝗲 𝘂𝘀𝗲 𝗮𝗻𝗱 𝗼𝗯𝘁𝗮𝗶𝗻𝗶𝗻𝗴 𝗮 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻 𝗲𝗾𝘂𝗮𝗹 𝘁𝗼 𝘁𝗵𝗲 𝘃𝗮𝗹𝘂𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗯𝗲𝗻𝗲𝗳𝗶𝘁 𝗰𝗼𝘂𝗹𝗱 𝗺𝗶𝗻𝗶𝗺𝗶𝘀𝗲 𝗙𝗕𝗧 𝘁𝗼 𝗻𝗶𝗹. 𝗜𝗳 𝘁𝗵𝗲 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲 𝗶𝘀 𝗮 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲 𝘁𝗵𝗲 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻 𝗰𝗮𝗻 𝗯𝗲 𝗮 𝘀𝗶𝗺𝗽𝗹𝗲 𝗮𝘂𝘁𝗼𝗺𝗮𝘁𝗲𝗱 𝗯𝗼𝗼𝗸 𝗲𝗻𝘁𝗿𝘆.

Employees who have a company car “available” for private use are deemed to be receiving a non cash benefit called a fringe benefit and the value of the benefit is currently 20% of the cost price of the vehicle including gst pa. So if the company buys a car for $30,000 incl gst the taxable benefit would be $6,000. There is an option to calculate the value of the benefit on the diminished book value each year but the percentage multiplier to use is set higher at 36% and you have to stick to the method you start with, you can’t start with cost and flip to book value later.
The general Fringe benefit rate is 49.25% but can be as high as 63.93% if the benefit is provided to high income earners. The business does get to claim the Fringe Benefit Tax paid as a business expense which does reduce the effective fringe benefit tax cost.
Spending less on the company or business vehicle would reduce the value of the benefit and FBT liability. The minimum value amount you can use is $8,333 even if the car cost $5,000.
Availability is another factor so if the car is not available for private use on some days there is no benefit on that day. So for example an Employee A as part of their work needs to take the company work related vehicle home as they need to travel to different sites from home or they may be on call, they are instructed in writing private use is only available in the weekends ( 2 out of 7 days ), the employer monitors the use and the vehicle cost the business $30,000 incl gst. The value of this benefit pa is $30,000 x 20% x 2/7 = $1,714 (down from $6,000).
The value of the benefit is also reduced by any employee contribution in consideration of the private use. So if the employee reimburses the business the $1,714 there is no Fringe Benefit and no Fringe Benefit tax to pay. The business can still claim 100% of the vehicle expenses and depreciation.

The IRD are currently reviewing FBT with a view to simplify the regime. This is out for consultation. It includes a lower valuing percent for EV's and only having three classifications of Vehicles - 100% Benefit for Perk Cars, 0% Benefit for Solely business vehicles, branded & taken home due to multiple workplaces/worksites. Mixed use but predominantly business the benefit is reduced to 35% of the deemed full benefit.

about me - https://www.linkedin.com/in/josef-langreiter/
unlock tax benefits # TAXtipsNZ - https://joeca.co.nz/TAXtipNZ/
𝗡𝗲𝘅𝘁 𝘄𝗲𝗲𝗸 # 𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭 # 𝟭𝟬 𝗠𝗼𝘁𝗼𝗿 𝗩𝗲𝗵𝗶𝗰𝗹𝗲𝘀 𝗟𝗲𝗮𝘀𝗶𝗻𝗴 𝘃𝘀 𝗕𝘂𝘆𝗶𝗻𝗴

25/03/2025

# 𝐓𝐀𝐗𝐭𝐢𝐩𝐍𝐙 # 𝟖 𝐌𝐨𝐭𝐨𝐫 𝐕𝐞𝐡𝐢𝐜𝐥𝐞𝐬 𝐢𝐧 𝐆𝐞𝐧𝐞𝐫𝐚𝐥
𝐌𝐨𝐭𝐨𝐫 𝐕𝐞𝐡𝐢𝐜𝐥𝐞𝐬 𝐪𝐮𝐢𝐭𝐞 𝐨𝐟𝐭𝐞𝐧 𝐚𝐫𝐞 𝐮𝐬𝐞𝐝 𝐟𝐨𝐫 𝐛𝐨𝐭𝐡 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐚𝐧𝐝 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐭𝐫𝐚𝐯𝐞𝐥, 𝐬𝐨 𝐭𝐡𝐞 𝐈𝐑𝐃 𝐡𝐚𝐯𝐞 𝐫𝐮𝐥𝐞𝐬 𝐟𝐨𝐫 𝐬𝐨𝐥𝐞 𝐭𝐫𝐚𝐝𝐞𝐫𝐬, 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐫𝐬 𝐚𝐧𝐝 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐨𝐮𝐭𝐥𝐢𝐧𝐢𝐧𝐠 𝐰𝐡𝐚𝐭 𝐚𝐝𝐣𝐮𝐬𝐭𝐦𝐞𝐧𝐭𝐬 𝐨𝐫 𝐡𝐨𝐰 𝐦𝐮𝐜𝐡 𝐅𝐫𝐢𝐧𝐠𝐞 𝐁𝐞𝐧𝐞𝐟𝐢𝐭 𝐭𝐚𝐱 𝐚𝐩𝐩𝐥𝐢𝐞𝐬 𝐟𝐨𝐫 𝐭𝐡𝐢𝐬 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐮𝐬𝐞.

𝐃𝐫𝐢𝐯𝐢𝐧𝐠 𝐟𝐫𝐨𝐦 𝐡𝐨𝐦𝐞 𝐭𝐨, 𝐚𝐧𝐝 𝐛𝐚𝐜𝐤 𝐟𝐫𝐨𝐦, 𝐰𝐨𝐫𝐤 𝐢𝐬 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫𝐞𝐝 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐮𝐬𝐞 𝐮𝐧𝐥𝐞𝐬𝐬 𝐭𝐚𝐤𝐢𝐧𝐠 𝐚 “𝐰𝐨𝐫𝐤 𝐫𝐞𝐥𝐚𝐭𝐞𝐝 𝐯𝐞𝐡𝐢𝐜𝐥𝐞” 𝐦𝐞𝐞𝐭𝐬 𝐭𝐡𝐞 𝐜𝐨𝐧𝐝𝐢𝐭𝐢𝐨𝐧𝐬 𝐟𝐨𝐫 𝐭𝐡𝐚𝐭 𝐭𝐫𝐚𝐯𝐞𝐥 𝐝𝐞𝐞𝐦𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐚 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭.

A ”work related vehicle” needs to be noticeably and permanently sign written and not designed to carry passengers.(Hence the popularity of UTEs). There must be a business reason for taking the vehicle home such as being on call or that you will drive to various sites directly from home. The employer or company must instruct the employee in writing that the vehicle is not to be driven for private use and then monitor that use. Some private use could be provided in the instruction by restricting the private use allowed to the weekends and therefore reducing the value of the benefit calculated by 5/7ths.

For sole traders the requirement is the most straight forward you claim the business use percentage, by keeping a log book for a 3 month period which will provide the percentage for business use. That is the % you claim of the GST on the purchase price and running costs and eventually the % of GST you declare on the sale of the vehicle. This % also applies to claiming the vehicle running expenses and depreciation to work out your taxable profit. Alternative you could keep a log of business kms travel and claim travel at the public mileage rates.
For a closely held company you now have the option of the method used by sole traders or the fringe benefit adjustment or fringe benefit tax.
Sole Traders who employ people and provide a vehicle to the employee could also be up for Fringe benefit tax.

unlock tax benefits # TAXtipsNZ - https://joeca.co.nz/TAXtipNZ/

Next week # TAXtipNZ # 9 Motor Vehicle Fringe Benefit Tax - what are your options are and which may be the most beneficial.

19/03/2025

# 𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭 # 𝟳 𝗙𝗕𝗧 𝗲𝘅𝗲𝗺𝗽𝘁𝗶𝗼𝗻𝘀 - 𝗘𝗺𝗽𝗹𝗼𝘆𝗲𝗲 𝗚𝗶𝗳𝘁𝘀 & 𝗧𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁.
𝗪𝗮𝘆𝘀 𝘆𝗼𝘂 𝗰𝗮𝗻 𝗿𝗲𝘄𝗮𝗿𝗱 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀 𝗮𝗻𝗱 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗵𝗮𝘃𝗶𝗻𝗴 𝘁𝗼 𝗽𝗮𝘆 𝗙𝗿𝗶𝗻𝗴𝗲 𝗕𝗲𝗻𝗲𝗳𝗶𝘁 𝗧𝗮𝘅.

Fringe Benefit Tax (FBT) came about in 1985 so the Government could tax non cash benefits provided to employees. In fact it is an Income tax based on the assumed value of the benefit and the tax is payable by the employer. Most of us would be familiar with the exposure to FBT when a company car is available to an employee for private use.
However the FBT rules do provide some exemptions where the business can claim the expense and is not liable to pay FBT. These exemption should be considered if you are looking to reward employees.
Gifts, prizes, subsidised or discounted goods to individual employees less than $300 including gst per quarter are exempt as long as the all employees total spend in this quarter plus the three preceding quarters is less than $22,500. So in summary you could gift 18.75 employees up to $1,200 pa. Gift vouchers are good method to simplify the process as long as they are not for food or drinks as they are then only 50% deductible due the Entertainment Tax regime. Entertainment tax can be a topic for another day.
Transport - Normally getting to and from work would be viewed as a private expense not a business expense. However you can pay for and claim as an expense employee public transport (buses, trains , ferries and cable cars) for travel to and from work. But not air flights, taxi’s or shuttles.
Transport - You can provide and claim the cost of low-powered vehicles such as bicycles, electric bikes, scooters or electric scooters. These are exempt from FBT.
Carparking can be provided as long as they are on your premises or you lease a carpark space off site.
Frequent flyer rewards , where employees do a bit of business travel, the employee should join the scheme in their own capacity then they can utilise the rewards without it being seen as a benefit provided by the business.

𝗡𝗲𝘅𝘁 𝘄𝗲𝗲𝗸 # 𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭 # 𝟴 𝗠𝗼𝘁𝗼𝗿 𝗩𝗲𝗵𝗶𝗰𝗹𝗲𝘀 𝗶𝗻 𝗚𝗲𝗻𝗲𝗿𝗮𝗹
𝘂𝗻𝗹𝗼𝗰𝗸 𝘁𝗮𝘅 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀 # 𝗧𝗔𝗫𝘁𝗶𝗽𝘀𝗡𝗭 - 𝗵𝘁𝘁𝗽𝘀://𝗷𝗼𝗲𝗰𝗮.𝗰𝗼.𝗻𝘇/𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭/
𝗮𝗯𝗼𝘂𝘁 𝗺𝗲 - 𝗵𝘁𝘁𝗽𝘀://𝘄𝘄𝘄.𝗹𝗶𝗻𝗸𝗲𝗱𝗶𝗻.𝗰𝗼𝗺/𝗶𝗻/𝗷𝗼𝘀𝗲𝗳-𝗹𝗮𝗻𝗴𝗿𝗲𝗶𝘁𝗲𝗿/

12/03/2025

# TAXtipNZ # 6 Holiday Pay, Bonuses & Directors Fees
Come the end of the financial year it is worth looking at what Holiday pay has accrued that has not been paid out. The reason to get your head around this is that any of that holiday pay that is paid out within 63 days being 9 weeks of the end of the financial year you can claim in the current year. The logic being this holiday pay liability relates to the current year. For business owners on the payroll you may wish to plan your paid leave payments to be paid between the 1 April and the 3 June.
Let’s say you are on a $120,000 salary and you have accrued 4 weeks leave by the 31 March and you then pay this out in April you could claim the accrued holiday pay of $9,230 in the current year reducing your current tax bill by $2,584.62 (Assumed tax rate of 28%) and the provisional tax for the next year by $2,972.31(Using the IRD standard uplift method to calculate your provisional tax).
The 63 Day rule also applies to Directors fees which is handy to know if you have an exceptionally good year and are looking at a jump in profits and tax. If you declare a Directors fee which you pay via the payroll deducting PAYE or if the Director is not a payroll employee deduct withholding tax typically at 20%. When the directors fee is paid out within 63 days of the end of the financial year the company claims the directors fee as an expense in the current year and the directors fee shows as income for the Director in the following year. Effectively you are moving some of this year’s profits to the next year.
The 63 day rule also applies to bonuses for employees.

Next week see how you could provide tax exempt bonuses to employees.
Next week # TAXtipNZ #7 FBT exemptions - Employee Gifts and transport

about me - https://www.linkedin.com/in/josef-langreiter/
unlock tax benefits # TAXtipsNZ - https://joeca.co.nz/TAXtipNZ

TAXtip :1 Tax Minimisation is Legal Yes it is legal to minimise your tax but some strategies are obviously not legal and fall into the categories of tax a

05/03/2025

# TAXtipNZ # 5 Selling Assets & Trade ins
When a business sells an asset (Fixed Asset) there are a few considerations. If you are GST registered you will have GST to declare on the sale and for Income Tax there is a washup between what you paid for it (Cost), how much you have depreciated it and what you got for it. The cost less the depreciation gives you the book value (BV) and the difference between what you get for it and what the book value is either a loss on disposal which is an additional expense and would reduce your tax bill or a gain on disposal which can be broken into two parts the first being depreciation recovered which doesn’t exceed what depreciation you have claimed in the past and on occasion a capital gain if you get more than what you paid for it, the capital gain would be the amount above what you paid for it. Depreciation recovered increases your profit and tax bill whilst any capital gain is not taxed.
On occasion you may be trading in an existing asset on a new asset which is common with motor vehicles so it is a good idea to have your head around what is the book value of the vehicle I am trading in. You would prefer to get a discount on the New vehicle rather than an overly generous trade in value. eg you are trading in a vehicle that cost you $40,000 and now has a book value of $10,000 anything you get between $10,000 (BV) and the $40,000 (Cost) becomes depreciation recovered and is taxable. The list price on the New vehicle is $50,000 and the dealer offers you $15,000 as a trade in. You would be better off if you negotiated a discount of $5,000 on the new vehicle and accept $10,000 for the trade in, as tax on the $5,000 depreciation that would have been recovered is $1,400 at 28%.

Next week # TAXtipNZ # 6 Holiday Pay, Bonuses & Directors fees

about me - https://www.linkedin.com/in/josef-langreiter/
my web site - https://joeca.co.nz/

TAXtip :1 Tax Minimisation is Legal

25/02/2025

# TAXtipNZ # 4 Buying Assets
Some tax tips live on beyond their use by date. When you buy a fixed asset like plant and equipment or a vehicle worth more than $1,000 that has a useful life of more than 1 year it is not an expense it is an asset. However over the period of time the business owns the fixed asset you get to claim the assumed loss in value as an expense in the way of depreciation. eg the IRD straight line (SL) depreciation rate for a car is 21% pa or 30% pa diminishing value(DV). Straight line depreciation you write the car off over 5 years with 21% of the cost price being depreciation claimed each year. Diminishing value you claim more up front and less and less each year because it is 30% on the book value each year not the cost price. Before 2006 if you owned a fixed asset for 1 day of the financial year you could claim 6 months depreciation and if you owned it for 6 months and 1 day you could claim 12 months depreciation. This did encourage some business owners to buy fixed assets around the end of a financial year, we still see some marketing campaigns using this as a way to promote some urgency in buying their products. However since 2006 the depreciation is calculated on a monthly basis so if you own an asset for 1 day of the financial year you only get to claim 1 months depreciation. If you are certain you need to acquire or upgrade a fixed asset that will make you more money buy it when you need it, don’t let tax savings drive that decision as the immediate tax savings may be minimal. Fixed assets that cost less than $1,000 can be expended straight away so any required fixed assets in that category purchased before the year end will reduce your tax bill more significantly. Fixed assets also have different depreciation rates so some will provide more immediate tax deductions eg Computer Equipment is 50% (DV), Furniture is only 10% (DV) and Land is 0%.
You can check out the different depreciation rates on the IRD website.
Often with vehicles a business is trading in an existing vehicle for a new vehicle so there are some things to be aware of when you are negotiating the deal. Next weeks # TAXtip # 5 Selling Assets & Trade ins will go over the implications of trade in values, depreciation recovered or loss on disposal and how this will effect your tax bill.
about me - https://www.linkedin.com/in/josef-langreiter/
my web site - https://joeca.co.nz/

Business advisor & accountant

18/02/2025

# TAXtipNZ # 3 Prepayments
To reduce your taxable profit in the current financial year you could prepay some upcoming expenses for next year before or on the last day of this financial year. Choosing expenses you will be paying in the coming months such as rent, consumable aids, insurance, maintenance contracts, rates, subscriptions, stationary , travel & accommodation, advertising , road user charges ………. .
Some of these expenses have a limit on the amount and/or the period prepaid. Whilst others are unlimited like rates that has no limit on the prepaid amount and period prepaid.
The expenses with set limits still are quite generous for a small or medium size business. For example you could prepay your rent up to the lessor $26,000 or 6 months in advance, your insurance up to the lessor of $12,000 or the next 12 months premium and advertising the lessor of $14,000 or the amount due for the next 6 months. If you were to take full advantage of the 3 prepaid expenses just outlined you would reduce the years tax bill by $14,560 and the following years provisional tax bill by $15,288 (assuming a tax rate of 28% and using the IRD standard method for calculating provisional tax). This strategy is deferring tax till future years.
Another suggestion would be to try and line up periodicals which you pay annually in advance so they are payable in the last month of your financial year.

For the IRD determination on prepayments and more specific details you can visit the link below or google IRD determination E12.
www.taxpolicy.ird.govt.nz - DET E12

about me - https://www.linkedin.com/in/josef-langreiter/
my web site - https://joeca.co.nz/

Business advisor & accountant

13/02/2025

# TAXtipNZ # 2 Inventory
If your business carries inventory the value of this at the end of the year will have an impact on how much tax you will pay.
In general inventory is an asset until it is sold and an expense when it is sold. So if you buy $50,000 of inventory on the last day of the financial year and it is not sold on that day that purchase would not reduce your taxable profit or your tax bill and you will have $50,000 wrapped in product and coming out of the bank. Sales forecasts & Inventory control should drive the timing of inventory purchases. The Just in time method of ordering helps cash flow and reduces costs of storage and obsolescence.
If you are looking to reduce your taxable profit by paying for items prior to the end of the financial year # 3 Prepayments next week will identify what items you could consider and up to what amount is allowable as a deduction in the current tax year.
With Inventory the year end adjustment is based on the value of the inventory you have and this value is the “lower” of what you paid for it or its market value. It is important to get the value right because if you are “over valuing” the inventory it will increase your taxable profit and your tax bill and if you are under valuing inventory you could be short paying your tax liability which carries the risk of IRD penalties. Working out what the inventory cost you there are a few different methods eg Weighted average cost (WAC) of the units on hand or the first in first out principle (FIFO). If you are manufacturing items you will have raw materials , Work in progress (WIP) and finished goods. The work in progress and the finished goods value will include the raw material costs and the manufacturing costs apportioned to them.
Review the inventory you have on hand prior to the end of the financial year and rid yourself of any obsolete inventory, promote and move surplus slow moving inventory and at the end of the financial year complete a detailed stock take identifying items worth less than what you paid for them so their value can be written down reducing the taxable profit and your tax bill.

joeca.co.nz/

Business advisor & accountant

06/02/2025

# 𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭 # 𝟭 𝗧𝗮𝘅 𝗠𝗶𝗻𝗶𝗺𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗶𝘀 𝗟𝗲𝗴𝗮𝗹
𝗬𝗲𝘀 𝗶𝘁 𝗶𝘀 𝗹𝗲𝗴𝗮𝗹 𝘁𝗼 𝗺𝗶𝗻𝗶𝗺𝗶𝘀𝗲 𝘆𝗼𝘂𝗿 𝘁𝗮𝘅 𝗯𝘂𝘁 𝘀𝗼𝗺𝗲 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗲𝘀 𝗮𝗿𝗲 𝗼𝗯𝘃𝗶𝗼𝘂𝘀𝗹𝘆 𝗻𝗼𝘁 𝗹𝗲𝗴𝗮𝗹 𝗮𝗻𝗱 𝗳𝗮𝗹𝗹 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝗰𝗮𝘁𝗲𝗴𝗼𝗿𝗶𝗲𝘀 𝗼𝗳 𝘁𝗮𝘅 𝗮𝘃𝗼𝗶𝗱𝗮𝗻𝗰𝗲 𝗼𝗿 𝘁𝗮𝘅 𝗲𝘃𝗮𝘀𝗶𝗼𝗻. 𝗧𝗵𝗲 𝗗𝘂𝗸𝗲 𝗼𝗳 𝗪𝗲𝘀𝘁𝗺𝗶𝗻𝘀𝘁𝗲𝗿 𝗽𝗿𝗶𝗻𝗰𝗶𝗽𝗹𝗲, 𝘄𝗵𝗶𝗰𝗵 𝗶𝘀 𝗼𝗳𝘁𝗲𝗻 𝗰𝗶𝘁𝗲𝗱 𝗶𝗻 𝗱𝗶𝘀𝗰𝘂𝘀𝘀𝗶𝗼𝗻𝘀 𝗼𝗳 𝘁𝗮𝘅 𝗺𝗶𝗻𝗶𝗺𝗶𝘀𝗮𝘁𝗶𝗼𝗻, 𝘀𝘁𝗮𝘁𝗲𝘀 𝘁𝗵𝗮𝘁 𝘁𝗮𝘅𝗽𝗮𝘆𝗲𝗿𝘀 𝗮𝗿𝗲 𝗲𝗻𝘁𝗶𝘁𝗹𝗲𝗱 𝘁𝗼 𝗮𝗿𝗿𝗮𝗻𝗴𝗲 𝘁𝗵𝗲𝗶𝗿 𝗮𝗳𝗳𝗮𝗶𝗿𝘀 𝘁𝗼 𝗺𝗶𝗻𝗶𝗺𝗶𝘀𝗲 𝘁𝗮𝘅 𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆, 𝗽𝗿𝗼𝘃𝗶𝗱𝗲𝗱 𝘁𝗵𝗲𝘆 𝗱𝗼 𝘀𝗼 𝘄𝗶𝘁𝗵𝗶𝗻 𝘁𝗵𝗲 𝗹𝗮𝘄.

# 𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭 will provide tax minimisation tips based on current NZ Tax law. These will be general in nature and you should seek out professional advice for your own particular situation.
To kick things off it is very useful to categorise Tax savings as either Permanent tax savings or Deferred tax. A permanent tax savings means claiming a type of expense now and reducing the immediate tax bill will have no effect on future tax bills eg a claim for Home Office and storage. Deferred tax means we are claiming a type of expense now rather than in a future tax period so we are saving tax now but at some time in the future the tax will become payable. Deferred tax strategies help provide working capital and a dollar saved now is worth more than a dollar 2,3 or 5 years later. Some deferrals may last as long as you are continuing to trade.
A good example of deferred tax savings is claiming in the current year any Holiday pay paid out in the first 60 days after the year end.
You don’t want to miss out on Permanent tax savings and deferred tax assists cashflow.
With the end of the financial year for most of us only 2 months away we can take on board some tax planning initiatives. The next # TAXtips with provide some tips and possibly dispel some myths that may no longer hold true about what to do at year end.
𝘂𝗻𝗹𝗼𝗰𝗸 𝘁𝗮𝘅 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀 # 𝗧𝗔𝗫𝘁𝗶𝗽𝘀𝗡𝗭 - 𝗵𝘁𝘁𝗽𝘀://𝗷𝗼𝗲𝗰𝗮.𝗰𝗼.𝗻𝘇/𝗧𝗔𝗫𝘁𝗶𝗽𝗡𝗭/

You don’t want to miss out on Permanent tax savings and deferred tax assists cash flow.

With the end of the financial year for most of us only 2 months away we can take on board some tax planning initiatives. The next # TAXtips with provide some tips and possibly dispel some myths that may no longer hold true about what to do at year end.