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TAX •  27 JANUARY 2022 • 14 MIN READ

Help us reduce your tax bill!

Help us reduce your tax bill!

A 3-in-one blog! We’re covering the Beany questionnaire, some tax tips, and a brief look at changes in 2022 laws which could impact your tax bill.

Submitting your Beany questionnaire

Take your time when providing your responses throughout the  Beany questionnaire – detailed explanations and attachments will probably reduce the number of our follow-up questions! Once you’ve answered all of the questions, you need to submit the information to Beany. Click on the button on the top right of your screen.

All questions for all organisations need to be completed before submitting – we cannot start working on your financial statements unless all organisations are completed and you click on “Send to accountant”

We need all organisations submitted before we start – this ensures changes in one organisation can immediately be recorded or updated in the other. For example – changes to profit would require changes in the individual tax return; an interest adjustment in one company may need to be adjusted in the other; and so on.

Submitting the information triggers activity on our side, and we can start preparing your financial statements.

Year-end tips to reduce tax

Could any of the tips below reduce your tax bill?

Check your customers, suppliers, and fixed assets

If you don’t expect to be paid by specific customers, we can write off the amount they owe you – it’s a tax deduction. You may have paid tax on the sale in previous years, but that’s not fair if you never receive the money!

We need to make sure all of your suppliers are included – expenses not recorded in your accounting system can’t be claimed as tax deductions unless we know about them.

With fixed assets, if assets are no longer in use (such as an iPhone purchased in 2014), we can write off their value – this increases expenses and reduces tax. They may be small items, but they can add up! If you’ve bought an asset but it’s not on the list, we need information so we can add it and claim the depreciation expense.

Collate expenses from your personal property

Business owners may be entitled to a deduction if part of the home is used as an office. Any tax deduction will be calculated by your Beany accountant, based on your expenses (rates, insurance, internet, mortgage interest or rent), and the percentage of property used for your office at home. Read more on How to correctly claim your home office expenses.

Logbook for business vehicles

Tax laws around motor vehicle deductions are complicated, and deductibility of expenses can vary from business to business, and from year to year. It’s an area Inland Revenue constantly has on its radar.

If no logbook has been kept, we’re limited to claiming 25% of your vehicle expenses. You need to keep a logbook for 90 days every three years could show that more than 25% is for business purposes. Read more on What motor vehicle expenses can I claim?

Overseas income

Your tax return must include your world-wide income, not just the amounts received in New Zealand. Your overseas income could have been taxed already (like RWT or PAYE) before you receive it. While we record the income, we can also claim the tax credit in your New Zealand return.

Inland Revenue has double-tax agreements with many countries to reduce the likelihood of you being taxed twice. Tax offices located around the world often share information, so it’s best to declare the income upfront.

Loss of income insurance

You have two options when it comes to claiming expenses for income protection insurance (also called “loss of income insurance”).

  • Claim the expense, but any payouts received become taxable income
  • Do not claim the expense, and any payouts received are not taxable
    Health insurance is not the same as income protection and cannot be claimed for tax purposes

I gave you this information last year, why do you need it again?

Simply put – things change. You may have traded in a vehicle for a new one. The areas used as your home office may change if you’ve moved, decide to use a storage service, or if you now use part of your garage to keep business assets.

Tax records need to be retained for at least seven years, so we want a good history of what we’ve claimed for you, and why.

Rental properties

In March 2021, the government announced significant (and unexpected) changes for the deductibility of interest on rental property loans.

What we need

  • The loan summary from the bank – this will show the principal and interest paid during the year ended 31 March 2022
  • If you purchased a rental property and/or ‘converted’ your family home to a rental property, on or after 27 March 2021:
    Signed sale and purchase agreement
    Settlement statement from the solicitor
    A copy of the property’s code of compliance certificate if it was issued on or after 27 March 2020 – even if you are the second or subsequent property owner (your solicitor should have this)

Why we need it

The tax treatment of interest paid on the property loan now depends on the date the property was purchased, and whether it was a new build or not. The information you provide will make sure that the maximum permitted interest is claimed.

Airbnb

If you receive any income from short term rental (the most common being Airbnb), you need to pay tax on this income. Expenses can be deducted from the income, but there are some pretty complex rules and calculations!

What we need

  • If you have a property used solely for Airbnb purposes, and not used privately (or by family and friends), and rented at market rates, then great! Ideally, you’d have a bank feed going into your Xero file, but if not, we’ll need a summary of income and expenses from your bank statements
  • If your situation isn’t as outlined above, we’ll ask about your specific situation and ask for additional material. Rather than go through everything (and there’s a lot!), take a look at our Airbnb blog which has the reasoning and some of the calculations in the section ‘Income tax’

Why we need it

Your net income from Airbnb operations needs to be included in your tax return. This is calculated by taking the income (including any ‘deemed income’) and deducting (a portion of) expenses associated with that income.

Crypto-currency

What we need

A summary of your crypto-currency transactions.

Why we need it

There has been a significant increase in people holding and ‘trading’ cryptocurrency. Inland Revenue has recognised that many transactions, even if minor, may not be declared as income.

This is a seriously complex topic. If you’re impacted (or likely to be impacted), we suggest you read our blog here.

After submitting

Another reminder…

All questions for all organisations need to be completed before submitting – we cannot start working on your financial statements unless all organisations are completed and you click on “Send to accountant”

Once you’ve submitted your questionnaire, it’s our hands. We aim to complete our work within four weeks after receiving all information. You can expect additional questions from us throughout our process to get a better understanding of a transaction.

Your Beany accountant will send out draft accounts and tax returns for you to review and set up a meeting to discuss the figures and answer any questions you may have. Once you’re OK with the numbers, we’ll provide you with a final set of financial statements and file the tax returns with the Inland Revenue after receiving your approval.

We want the process of preparing your financial statements to be quick and efficient. Providing information promptly, via our questionnaire and to your accountant, allows us to prepare your financial statements, and determine your tax position so you can plan for payment.

You can contact our friendly Support team at any time to help you prepare and submit the questionnaire.

Who are Beany?

We’re an online accounting firm that is always right here for you, your accounting pain relief. The most advanced technology lets us work way more closely with you than a normal accountant would. 

We have a dedicated team of remote accountants to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today. 

Tess, Problem Solver

Got any questions about Beany?

Chat to one of our friendly problem solvers today to get clarity.

Kim

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