For most business owners, tax is not at the top of the list of what they want to focus on when the new year hits. But managing taxation is a business requirement you cannot ignore, especially now that the Inland Revenue Department (IRD) is making technological changes to modernise tax administration.
As a trusted tax accountant in Auckland, we are sharing these top tax tips that will help keep you informed, as well as helping you to meet your tax obligations in 2017.
1. Proposed PAYE system changes being considered
The IRD proposes to further integrate the PAYE (Pay As You Earn) system into day-to-day business operations. This is to improve the accuracy of employee deductions and reduce the compliance effort for employers.
It also proposes to adjust the threshold for electronic filing of PAYE from $100,000 a year of PAYE and ESCT, to $50,000 a year. There are also minor changes proposed to PAYE rules for holiday pay paid in advance and when threshold changes come into effect.
Further there is a proposal to end the payroll subsidy that subsidises employers outsourcing their PAYE obligations to a listed payroll intermediary.
These proposals are subject to the parliamentary process and are due to be considered by Parliament in 2017. We will keep you posted with any updates.
If you want to know more about these proposals, please consult the IRD's website.
2. GST refunds
All businesses and individuals registered for GST will get refunds within two (2) days starting February 2017 provided you have given them your bank account number in advance. You won't need to wait for your cheque to come in the mail as it will be direct credited to your nominated bank account.
3. "Regretted Choice" no longer applies
Inland Revenue now has a wider discretion to modify a tax position to one that is more favourable for the taxpayer provided it is legal and well justified. To ensure the chances of success, it is highly recommended that you include all the relevant details in an easy-to-read document when you file your amendment request with the commissioner.
4. Inland Revenue risk reviews
Look out for risk reviews as the IRD are getting more active in this area. A risk review is an early stage tax audit where the IRD will explore all aspects of your taxation, analysing and seeking justification and supporting documents for all income and expenditure.
If you think you made an error as the review progresses, make sure to do a voluntary disclosure. This disclosure will protect you from shortfall penalties if you do discover a mistake you weren't previously conscious of.
Whether you disclose it or not, Inland Revenue will use all its resources to find your mistakes. So, save them the hassle, and come clean if you find any before they do!
5. End of your taxes due on 7 February
End-of-year income tax, student loan or Working for Families Tax Credit payments for 2016 are all due on 7 February 2017. If you are working with a tax agent or an accountant, ask them if they have an extension beyond this deadline. Tax agents are usually able to extend the deadline to 7 April provided clients are up to date with all tax return filing requirements.
6. Offshoring records and files
If you are planning to automate or put your files and records offshore, you need the IRD's permission to do this as all your records need to be readily accessible and available for an audit or risk review. Cloud accounting providers such as Xero and MYOB already have permission from the IRD for all clients using their software.
As business advisors and chartered accountants in Auckland, we like to share tips like these with our clients. Whether they are about annual accounts, tax returns, GST, or small business accounting services, we share a range of topics to help them in their businesses.
For business strategy, business planning, accounting tips and taxation updates, talk to our business experts and chartered accountants today.
Request an appointment online now or call (09) 576 4166.