Experts can ease tax-return misery

Joanne Newman, with Tauranga's Smart Business Centre, has been helping people file taxes for 30 years. The deadline for individual returns is July 7. Photo / John Borren

The due date for income tax returns is July 7. And while salaried employees don't have to file, contractors and business owners do.

The Bay of Plenty Times spoke with local accountants who cited common mistakes people make when doing taxes. Joanne Newman with Tauranga's Smart Business Centre has been crunching numbers for three decades.

Ms Newman said many non-salaried workers miss deducting items such as a home office when doing their own taxes. She said she has seen other business owners file GST at the wrong time for the wrong months.

"They come see us and we have to fix it all up. While the IRD encourages everyone to do it online, a lot aren't equipped to deal with it and don't have the necessary skills to do the compliance side." Ms Newman said accounting advice pays off, because mistakes can be costly.

Mrs Newman said people with family trusts that include a single home won't need to file a return. She charges $100 to $300 (plus GST) to complete an individual tax return. "Our office is unique. We have set fees for every job we do. Clients know how much our fee is going to be. It doesn't matter if it takes us 15 mins or five hours."

She said anyone with tax compliance concerns or other Inland Revenue issues can meet with her staff for free.

Staples Rodway director Brent Rogers said people linked to an accountant have until March 31 the following year to file a return. Mr Rogers encouraged filers to check their income against bank statements, ensure GST sales match end-of-year-accounts, and to be careful when taking deductions for vehicle use. "There are some complexities in terms of vehicles and private use of business vehicles. They need to make sure they get it right."

Mr Rogers said he has seen increased demand at his Tauranga firm from basic bookkeeping involving data entry, to businesses changing hands, as well as clients in land development who have kept his employees "very busy".

Who gets the cash?

An Inland Revenue spokesman said 873,591 customers received a refund last year. The average refund was $409.09, with $357.4 million in tax refunds, overall.

The figures exclude customers who filed IR3 (individual) returns, such as contractors and the self-employed. More than one million Kiwis filed IR3 returns last year.

Inland Revenue does not check all customers to see whether they have a refund or debit.

It said the payroll system was designed to provide very small over and under-deductions of income tax.

The reasons most wage and salary earners might be due a refund are:

• They've only worked for part of the year
• They've had more than one job throughout a year
• They've earned less than $48,000 (meaning they qualify for the independent earner tax credit).

IRD said if people didn't meet those criteria, it was unlikely they would be due a refund.

The easiest way for customers to see if they qualified for a refund was to use a no-obligation online calculator within their myIR account - if the calculator suggested a refund was likely, they could request a personal tax summary and file a return.

People with 'other' income must file:

• Rental income
• Taxable property sale
• Overseas income
• Cash income
• Royalties
• Estate, trust or partnership income
• People who left or arrived in New Zealand part-way through the year also need to file an IR3. The tax year runs 1 April to 31 March.

- Excerpted from www.ird.govt.nz

New Zealand Tax at a glance:

• The US-based Tax Foundation in 2014 ranked New Zealand's overall tax system as second in the developed world for its competitiveness - and top for its individual (i.e. personal) taxes.
• The top tax rate is 33 per cent for income over $70,000. The tax rate for income up to $14,000 is 10.5 per cent. Companies and corporations are taxed at a flat rate of 28 per cent.

- newzealandnow.govt.nz