Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


The Tax Man Loves Farmers

The Tax Man Loves Farmers
24 June 2014


Dairy farmers need to take action now to avoid high Inland Revenue Department interest being charged on tax owed for the season, says Justin Geddes, Agribusiness Principal at Crowe Horwath’s Dunedin office.

“With the dairy pay out high and stock prices better than last year, there is a good chance farmers will owe tax this season,” said Mr Geddes.

Use of money interest is charged at 8.4 per cent from the first provisional tax date until the time the year-end tax is paid, meaning that even though the due date for final payment of the tax will be April next year, IRD will be charging interest on the amount owed in the meantime. Use of money interest is like an overdraft interest rate, which the IRD applies where the year-end tax is higher than the provisional tax that has been paid.

That means dairy farmers with a May end of year could be charged interest for more than 17 months from 28 October 2013 until 7 April 2015, and sheep/beef farmers, which usually have a June end of year, interest for 16 months.

To minimise interest payments to the IRD, says Mr Geddes, farmers need to keep a good track of how they are performing. If in June or July it looks like the profit will be up on last year, he recommends that farmers get their accountant or agribusiness advisor to do a quick estimate of tax.

“If you’ve got cash in the bank earning about 3 per cent in interest, it makes far more sense to pay your tax early to save yourself being charged 8.4 per cent by the IRD,” he said.

“And even if your cash is a bit tight, talk to your agribusiness advisor, because there are companies you can use to finance your tax using an approved tax pooling scheme. Their interest rates are about 6.3 per cent, but still better than the IRD.”

The key message, said Mr Geddes, was that just because the tax was not due immediately, interest was probably still accruing on it at 8.40 per cent.

“Talk to your advisor, and if you’ve got the cash, make an early payment of your tax and save yourself some money,” he said.


ENDS


Disclaimer
This press release provides general information only, current at the time of dissemination. Any advice in it has been prepared without taking into account your personal circumstances. You should seek professional advice before acting on any material.
Crowe Horwath (NZ) Limited is a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity. Crowe Horwath (NZ) Limited and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Statistics: Net Annual Migration Passes 71,000

A record 71,300 more migrants arrived in New Zealand than left in the January 2017 year, Statistics New Zealand said today. This surpassed the previous annual record set in December 2016. More>>

ALSO:

Fossils: Ancient Penguins Lived Alongside Dinosaurs?

Penguins are much older than previously thought and their evolution probably dates back to the days of the dinosaurs, according to research on the fossilised leg bone and toes of a giant ancient penguin found in rocks near Waipara, North Canterbury. More>>

No Voda/Sky: Commission Declines Clearance For Merger

The Commerce Commission has declined to grant clearance for the proposed merger of Sky Network Television and Vodafone New Zealand. More>>

ALSO:

EARLIER:

Power: IEA Report On New Zealand's Energy System

Outside of its largely low-carbon power sector, managing the economy’s energy intensity and greenhouse gas emissions while still remaining competitive and growing remains a challenge. More>>

ALSO:

NASA: Seven Earth-Size Planets Around A Single Star

NASA's Spitzer Space Telescope has revealed the first known system of seven Earth-size planets around a single star. Three of these planets are firmly located in the habitable zone, the area around the parent star where a rocky planet is most likely to have liquid water. More>>

ALSO:

Auckland Transport Case: Men Guilty Of Corruption And Bribery Will Spend Time In Jail

Two men who were found guilty of corruption and bribery in a Serious Fraud Office (SFO) trial have been sentenced in the Auckland High Court today... The pair are guilty of corruption and bribery offences relating to more than $1 million of bribes which took place between 2005 and 2013 at Rodney District Council and Auckland Transport. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news