Know it all
Frequently Asked Questions
It depends on how the income and losses are earned – if you are a trading business or a contractor and make a taxable loss (this is when your deductible expenses are greater than your revenue) you can bring this forward to the following tax year. This means income earned in the next tax year is offset (partially or in full) by the loss made in previous years.
Additionally, the government implemented the losses carried back scheme. This is currently available to the financial years ending 31st March 2019, 31st March 2020 & 31st March 2021.
Residential rental losses however, there were changes made from the 2020 (1/4/2019) tax year onwards, losses incurred from rental activity are unable to be used to offset other income you’ve earned.
You must register for GST if you carry taxable activity and your turnover was $60 000 or more in the last 12 months or will be in the next 12 months.
If you wish to be GST registered where turnover is less than $60,000, you can become voluntary GST registered.
Not many people are happy to pay provisional tax when it is their first year (of going into provisional tax). Provisional tax however, helps you to manage your income tax in the current financial year.
People often think that provisional tax is paying your tax in advance, however, the more positive outlook, is that you are actually paying your tax closer in line with when you earn it – avoiding a large, potentially unexpected tax bill at the end of the financial year (providing your trading was consistent with the prior year).
You’ll have to pay provisional tax if your income tax liability is/was more than $5,000 at the end of the year and you ‘normally’ pay it in 3 instalments:
- 28th August (5 months after the beginning of the financial year, but still within the financial year),
- 15th January (9 ½ months after the beginning of the financial year, but still within the financial year) & the
- 7th May (just over 13 months after the beginning of the financial year, and only instalment outside of the financial year that it belongs to)
The first time you go into provisional tax, and depending on when in the financial year your accounts get completed & filed to IRD, you may only have 1 or 2 payments. So, if you accounts are completed and filed to IRD:
- prior to 28th August, you will have 3 equal instalments required to be paid to IRD (as stipulated above)
- between 28th August but prior to 15th January, you will have 2 equal instalment to be paid to IRD
- between 15th January and due filing date (7th February or 7th April), you will need to pay all your provisional tax on the 7th
If however, you are 6 monthly registered for GST, you will only have 2 instalments for provisional tax, these being the 28th October & 7th May (same dates as GST due dates)
Still not clear? Please contact me for further details and/or clarification.
This is purely dependant on whether you have an Extension of Time (EOT) to file the tax return/s.
If you have EOT:
- your due date to file your tax return is the 31st March
- a whole year after the end of the financial year (of the accounts I would be completing)
- and your payment date of the ‘terminal tax’ is due 7th April
- 1 year and 7 days after the financial year (of the accounts I would be completing)
If you do not have EOT:
- your due date to file your tax return is the 7th July
- 3 months and 7 days after the end of the financial year (of the accounts I would be completing)
- and your payment date of the ‘terminal tax’ is due by 7th February
- 10 months & 7 days after the financial year (of the accounts I would be completing)
Compliant accounts – 12 months worth (from first return filed + 12 months, however, this may be from an earlier unfiled GST return in the financial year):
- 12 x 1 monthly GST returns or
- 6 x 2 monthly GST returns or
- 2 x 6 monthly GST returns
Non compliant accounts – up to the end of the financial year year, of accounts being completed.
The simplest of plans starts at around $27.50 + GST to around $75 + GST for premium (per month).
These prices vary depending on any add-ons that might be necessary. If you’re struggling to locate the ideal plan, we can go through it with you in the initial consultation.
You can also check out pricing plans on the website (https://www.xero.com/nz/pricing-plans)
Dividends will be charged out at $395 + GST on completion of the dividend being filed – this price includes the paperwork, solvency certificate, company resolution to pass/allow the dividend & filing of dividend to IRD.
Due to the dividend rate being higher than the company tax rate, there will be an additional amount (5%) of tax (DWT – Dividend Withholding Tax) owed to IRD on declaration of the dividend – normally by the 20th of the month following declaration.
You can incorporate a company at the companies office for $143.05 (inclusive of GST – as at March 2021) OR If you would like us to incorporate a company for you, we would be more than happy to do this for you, for $350.00 + GST
Helpful link to the companies office: https://companies-register.companiesoffice.govt.nz/
An annual return is not a tax return or financial statement — it’s a yearly update of publicly available information about your company on the Companies Register.
To remain ‘active’/carry on business trading, on the register, you must confirm or update particular information when you file your annual return – annually.
There is a charge to keep the company ‘active’. If you complete this yourself, the charge is $45.39 + GST – you will you’re your ‘login’ for the filing of the annual return.
For me to file this for you, I will need an authority form signed (authorising me to act on your company’s behalf) & the small administration fee for this service is $80 + GST.
BECOMING A CLIENT
Our initial consultation is completely free.
The consultation is designed to gather a greater understanding of your trading/business. You can find a time and day to suit you on our booking page or via the link below.
I will be.
Your business means something to me, I limit my number of client numbers to optimise my knowledge of your business.
When the business grows beyond my ideal client number, I will take on a senior accountant as a business partner – someone invested in the business, and someone invested in their clients. When this occurs, all active clients will be advised. Regardless of this, once you are my client, you will remain my client until you decide otherwise.
We start by booking your free consultation online and I will be in touch with you at your preferred time.
I will ask few questions about your business which helps me understanding your business.
After the free consultation, and you decide to come on as a client, you can then go through and book your accounts into our scheduling calendar. At this stage, you will have options of payment (of the service you require), and you will receive the ‘onboarding’ request for information from me.
When we have a signed letter of authority/engagement from you (and any associated entities), we’ll contact your previous accountant with a professional clearance letter.
This asks if there is any reason we should not act on your behalf. They’ll send over all prior year records, workpapers & access to any subscriptions (i.e. Xero – if applicable), and that’s it, new client of Know Accounting Ltd.
There are a number items I require to take you on as a client, this email with the details will be sent out to you, the details include:
- Full legal name/s of all entities (including individuals)
- IRD number/s of all entities (including individuals)
- Contact details (address, phone and email)
- Dates of birth of all individuals
- Signed engagement letter
- Details of previous accountant
- Anti-money laundering (AML) & Identification Verification (IDV) checks
From 1 October 2018, New Zealand launched a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Justification of this law considers New Zealand’s commitment to the international enterprise to counter the impact of criminal activity that has on people and economies internationally.
Previous changes to the Anti-Money Laundering/ Countering Financing of Terrorism Act 2009 mean that from 1 October 2018, all accountants are required to follow with its requirements. This law requires accountants to do several things to help prevent money laundering and terrorist financing.
The law says that accounting firms and other professionals like a lawyer firm; must minimise the risk they may face from the actions of money launderers and people who finance terrorism and to identify potentially suspicious activity.
For the evaluation, accountants must hold and verify information from potential and existing clients of what is called the AML/CFT law which is, “Customer Due Diligence” (‘CDD’).
This (CDD) requires an accounting firm to manage background checks before providing services to their clients. Accountants must make sure the information they receive from the clients are correct, so they need to ask for documents that shows client’s full name, date of birth, and their proof of residential/company address.
It is a legal requirement to ask for information below:
- your full name; and
- your date of birth; and
- your address.
To confirm these details, documents such as your passport, driver’s licence or your birth certificate, and documents that show your address, such as a current bank statement will be required for clients to be sent to the accountant’s office.
For Company or Trust business, information about the Company or Trust including the people associated with it (such as Directors and Shareholders, Trustees and Beneficiaries) are needed. If we are not able to acquire the information from you, it is highly unlikely for the accountant’s firm to process or act for the client.
Residential rental accounts is only an ‘Add On’ service that I can complete. The completion of these accounts is a very competitive market I do not wish to engage in – I’d rather focus on assisting trading businesses.
If however, you cease business trading, and continue to hold rental properties – I will continue to assist you with these for as long as you wish me to.
OTHER INTERESTING QUESTIONS
A Xero platform enables us as accountants to have a greater insight into your business’ data in real-time.
This is incredibly helpful for us to access important information and respond quickly to every need.
Additionally, depending on your subscription, you have access to invoicing, and greater debtor information.
You can contact us any time you like. We will deal with a wide range of questions from your Xero files to accounting problems. We always try to respond within 1 working day in response to your question, even if it may take a bit longer at peak accounting times.
If you require a task out of our scope, such as preparing financial statements (for a specific period of time – different that your financial year), cashflow forecasts, updated provisional tax calculations or working out new tax structure, we will let you any extra costs incurred before we start.
We can also provide training so you can manage some of these tasks yourself.