7 July Due Date For Income Tax Return Is Fast Approaching!

7 JULY DUE Date for Income Tax Return is Fast Approaching! – Reduce Compliance Cost by Preparing Your Own Taxes During And Post Covid? Don't Know Where to Start?

For contractors/self-employed persons who do not have an extension of time, 7 July 2020 is the due date for the filing of the 2020 income tax return. It’s important to start preparing now to finalise any tax matters and make sure the return is filed on time to eliminate any penalties and use of money interest (UOMI).

During COVID season, many of us explore options to reduce spending. In this article, we share a complimentary webinar along with workpapers to teach you how to prepare an income tax return and to learn about some tax tips and basics of income tax law. We also outline below some common tax matters that may apply to contractors/self-employed persons.

Common tax matters

• Late filing penalty & tax payments – Where the income tax return is filed late, late filing penalty is imposed and graduated according to net income.

Review your annual profit to ensure sufficient provisional tax has been paid. Additional payment can be made at any time to minimise exposure to use of money interest (UOMI) at 7%.

Please note IRD may remit penalties and UOMI for taxpayers who have been severely affected by COVID-19. An application shall be made to request for remission of penalties and/or interest.

• Mixed use assets – Sole traders owning mixed use assets are required to make any GST adjustments required for the mixed use asset in the GST return that aligns with balance date.
• Residential rental property losses - From 2020 income year and onwards, tax losses arising from residential rental properties can no longer be offset against other sources of income. These losses must be carried forward to offset against future residential rental income or taxable income arising from the sale of residential property.
• Fixed Asset review – Apply the correct tax depreciation rates to any new additions in the fixed asset register for the 2020 income year. Tax depreciation rate can be found at https://interact2.ird.govt.nz/forms/depnrates/.

Also, identify any assets that are broken, missing or disposed during the 2020 income year so any depreciation recovery income can be accounted for.

• Bad debts – Bad debts must be written off by 31 March 2020 to be claimed. Clear evidence of approvals and accounting entry are required to be kept on record. A “provision” for bad debt cannot be claimed.

For further assistance or advice with your income tax return, feel free to contact the writer at connie@nztaxprop.co.nz.

Income tax return preparation webinar

You can book the complimentary webinar at https://www.nztaxprop.co.nz/bookings-checkout/contractor-income-tax-return-prep-video and apply the coupon code (i.e. STUFF) at checkout for a 100% discount (normally valued at $75). The webinar is offered complimentary for a limited time, up to 8 July. The webinar comes along with template workpaper and workpaper of a practical example. Any queries will be answered in a facebook forum page and the link will be provided upon booking of the webinar.

The presenter, Connie, of the webinar has been offering tax courses to adults since 2013 year via tax tutoring. She lectured tax in Universities around Auckland, worked for more than 10 years in tax teams of Big-Four, Mid-Tier & boutique Chartered Accountant firms. She also holds a degree in Master of Taxation Studies (Hons), Bachelor of Commerce (major in Accounting & Tax) & Bachelor of Property and is a member of Real Estate Authority.

It is recommended the self-prepared income tax return be reviewed by a Chartered Accountant before it is submitted to the Inland Revenue. To book a review of your self-prepared return, visit https://www.nztaxprop.co.nz/bookings-checkout/review-tax-return-answer-any-queries.

Disclaimer: No liability is assumed by NZ International Tax & Property Advisors Ltd for any losses suffered by any person relying directly or indirectly upon this article. It is recommended that you seek appropriate advice before acting on this information.

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