Six ways to stay on top of tax this year end
March 3, 2022
We’ve done a round-up of relevant tax information you may have missed, so you can make sure everything is in order and there are no surprises come 31 March 2022.
- Retain any documentation you have surrounding payments and subsidies you’ve received from Inland Revenue or MSD.
- Employees working from home? The 2021 COVID-19 Protection Framework means a new approach to covering their costs. Remember, if an employer pays for an employee’s expenditure or loss when they fork out for extra power, phone charges, printer ink, home office supplies or equipment, then the payment is tax-free, not subject to PAYE, and deductible for the employee. If you estimate the payment, you need to keep track of (and evidence of) how you calculated it.
Earning more than $180K?
- As of 1 April 2021, a new top tax rate of 39% applies. If you earn more than $180k any interest you earn from New Zealand bank accounts and investments will need to have the 39% resident withholding tax (RWT) rate applied. Update your records by selecting the 39% rate through your online banking portal or contact your bank or investment provider directly.
- As interest payers didn’t need to make this rate available until 1 October 2021, RWT will have been under-deducted from 1 April 2021 up until the date it was updated. Due to that under-deduction, you may have an end-of-year tax liability for the 2021-2022 year.
- Under-deductions of RWT may also affect provisional tax customers, including people who are already provisional taxpayers using the estimation method, or where the under-deduction will result in their residual income tax (RIT) exceeding $60,000 for people on the standard method.
From the 2021-22 income year there are new disclosure rules for domestic trusts. Trustees will need to prepare financial statements and provide extra information with their income tax returns.
Residential property investment?
- Now that interest on mortgages taken out for residential property acquired after 27 March 2021 is non-deductible, if you have a property with existing mortgage interest that fits the frame for the interest phase-out applying from 1 October, we can calculate the interest phase-out for this year for you.
- Let us know if you bought or sold residential investment property during the year so we can give you an accurate picture of your tax exposure now and going forward. The brightline test for property sales on or after 27 March 2021 is now 10 years (up from 5 years for properties acquired between 29 March 2018 and 27 March 2021).
Contact us today for your no-obligation consultation.