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Why is a chattels valuation necessary?
Typical valuations assign a valuation to chattels of $10-15,000. However, they often miss many depreciable items, such as driveways, fences, decks, paths, hot water cylinder, letterbox, garage door motor etc.
When you obtain a chattels-specific valuation, typically the value of the chattels for a new home is $45-50,000+ and for one built in the 1980’s $25-30,000. Even if your chattels valuation comes out at only $30,000 then the value for the tax refund will be around $10,000. The higher the chattels value, the more depreciation can be claimed, which means less tax to pay or larger tax refunds.
Are there any exceptions?
The only exception to the chattels valuation, is if it was a rental already owned by you or another entity you controlled, and you had already filed a tax return for that property at least once. In that case, we can’t “re-value” the chattels.
What will it cost and who does this?
We know of only one firm: ValuIt. Visit their website www.valuit.co.nz or call 0508 482 583 to book a valuation. Please note, we receive no financial incentive or otherwise for recommending them. However, we encourage you to do this without delay, as they are very busy and it can often be 2-3 weeks before someone can get to see your property.
Depreciation: Simple Overview (video)
6 Minutes on Depreciation (video)
Depreciation Clawback and Your Rental Property
Depreciation of Chattels in Your Rental Investment Property
Valuation of Chattels - Why Necessary
First, open your sheet on your iPhone or iPad.
Next, touch the three dots at the top right-hand corner
Then, choose Send a Copy
Lastly, email to us or share to your Google Drive or Dropbox.com, then share to firstname.lastname@example.org
Tax Return Filing Dates
Q: When does my tax return have to be in i.e. filed with IRD?
A: If you have an Extension of Time to file, the date is 31 March. If you are linked to a Tax Agent or Accountant, then usually you will have this extension. Note that the IRD must receive your tax return by this date i.e. if you post it on this date, it will be late.
Q: Cool, so I can send my info to you guys about the middle of March and that will be ok then? That gives 2 weeks to get it sorted, right?
A. Sorry, but no. In order to get the figures right, there is a process of many eyes checking your financial statements/tax return/s. So we recommend that you allow 8-9 weeks at least for us to collate, code, compile, check and file your financial statements and tax returns.
Q: I didn't earn any income last year, but I am a shareholder in a Look Through Company. Do I have to file a tax return?
A: Yes. You will have income or loss from the LTC and this has to be declared to Inland Revenue via a personal tax return.
Q: I don't see any impact of the LTC losses to the final tax figure?
A: You'll see your LTC losses (if applicable) shown in box 19E (on the personal tax return, or IR3).
How Do The Amounts On The Profit & Loss Relate To My Tax?
Here is a typical Profit & Loss report. You can see the Profit hi-lighted in yellow, and the Expenses hi-lighted below (also in yellow). Then at the bottom, you can see that the result is a Loss - which is why it is written in parentheses (brackets).
This loss amount (or negative amount) is then put on your tax return. It offsets other income you have received. In this sample, assuming the person is being taxed at 33c in the dollar (ie they earn over $70,000 per year), then they could expect a refund of about $3,500.
How is the Tax Calculated?
All sources of income are added, e.g. wages, interest, dividends. Next, all sources of loss are added, e.g., LTC losses. Then tax is calculated on the sum of all of these figures. After that, tax that you have already paid is deducted, e.g., RWT, PAYE, provisional tax. The resulting figure is either a debit (tax to pay) or a credit (a tax refund).
Dividends - AECT/Entrust
Q: Why does the IR3 (personal tax return) you sent me show a dividend of nearly $500 from Entrust (formerly the Auckland Electricity Consumer Trust or AECT)? I only got about $300-something?
A: The Entrust dividend is shown on the tax return as follows
Using this formula, we arrive at the $300-something you received. You can see the exact breakdown here
Q: Why does the tax return show this? I wanted the refund to be credited to my bank account?
A: That's exactly what this means. It says, in effect: "do you want to receive the refund in cheque format?" The answer is "No." IRD only gives one other option, and that is a refund to your bank account.
Q: Does my LTC get a refund as well as me?
A: No. If you have an LTC, the refunds go to you. The company is Looked Through at tax time, hence the name Look Through Company.
Q: Is the amount shown as a refund what we're going to get?
A: Probably. All returns filed are subject to review by IRD, and sometimes they don't agree with our calculations. There are a number of reasons for this:
However, don't panic. All errors, wherever they are made, can be easily rectified.
Q: What's an IR3 form? How long does it take to file a return?
A: That is what the personal tax return form is called: an IR3. (If you are not NZ tax resident, the form is an IR3NR). The actual filing online takes about half an hour. Then IRD processes it, which can take anywhere from 1 week to 12 weeks or longer. Once they’ve processed it, you then receive your tax refund.
These questions are basd on questions asked by customers. We'll be adding more examples to this page as they occur.
Other FAQs you might have:
RENTAL PROPERTY: WHAT RECORDS DO YOU NEED TO KEEP?
USING ACCOUNTANCYONLINE.CO.NZ/MY TAX QUESTIONNAIRE
HOW DO I DOWNLOAD TRANSACTIONS FROM MY BANK'S ONLINE INTERNET BANKING?
WHAT IS XERO.COM?
WHAT'S THE PROCESS FOR MY TAX RETURNS?
COMMON QUESTIONS ABOUT YOUR FINANCIAL STATEMENTS
What does this have to do with your tax? Well, we might have asked you to supply information, clarify a request etc etc. We know you're busy! But we don't hear from you promptly. Instead, it drags on and on.
Frankly, that doesn't help you, us, anyone!
So, what we ask is this
1. stop for a moment,
2. send through the info,
3. get their tax refund sooner!
Moral: Stop and sharpen your axe. Work smarter, not harder!
What is the NZCO?
NZCO is short for New Zealand Companies Office.It is part of MBIE (Ministry of Business, Innovation and Employment) and administers a number of registers, including a register of companies, their directors and shareholders, and related documents.
What's a Companies Office Return?
All companies are required by the Companies Act 1993 to file an annual return with the Companies Office regardless of whether or not they are trading.
If an annual return is not filed by the due date, the company risks being removed from the register as the Registrar may be satisfied that the company has ceased to carry on business.
An annual Companies Office return is not a tax return, it's simply an annual requirement for a company to provide certain details to the Companies Office.
For more details, see this page at the Companies Office.
Does EpsomTax.com Handle This For Me?
We certainly do. At this time, we don't charge for filing your annual Companies Office return. Most accountants charge $80-$100 + GST, but we don't. Honestly, it only takes a minute or two so we don't feel we can justify charging for it.
We also offer an optional compliance package, which we'll contact you about at the same time. Questions? Please contact us.
Do I Have to Have an Annual Meeting?
Yes, it is a requirement for all NZ companies. But don't despair! It's a great chance to go out for dinner on the company. Keep your receipts for the meal, drinks, taxi, babysitter. While you're out (or shortly thereafter), make sure to complete this annual meeting form, which will be sent to us when you click Submit. You can even attach your receipts to it!
As always, if you are not sure or need more information, please don't hesitate to contact us.
We often get asked "how much longer will IRD take?" How can you check on the progress of your tax return at IRD? Are they processing it? Is there a problem?
Well, there is a free, simple and easy way you can check yourself:
1. Create a myIR account.
Make sure the address in the bar at the top starts with https://www2.e-services.ird.govt.nz. This is to make sure you haven't ended up at a fake website. There should also be a little padlock showing in the title bar at one end.
Generally you will be wanting to find out how the processing of your personal tax return is going, so choose this option (see graphic)
2. Next, enter your IRD number and then click Continue.
3. Then, enter your details and click Continue.
4. Check the details, and tick the box, then click Continue.
5. Voila! You will receive an email confirmation. You are now ready to view your info using myIR, including the status of your tax return processing.
Most people and business owners have no idea. Fear not! Would you like:
1. It explained in plain English? Translated to your particular circumstances?
2. To know how to comply with minimal time and cost commitment?
3. Real life practical examples of what to do, and what not to do, and
4. Tips and tricks on how to approach health & safety risk management?
This practical and down to earth session does all this and more. Just click the word "Register" below to book your place; there are less than 30 spaces left so be in quick!
You might have read about Audits, and Risk Reviews here. But what does the first step in the process (sometimes) look like? Here it is. A request for "more information."
If you'd like to get a quote on AuditShield, please contact us today.
Note that this is only available to our clients. If you are not an EpsomTax.com client, ask your accountant about AuditShield (and why they don't have it!)
Yes, another scam is doing the rounds. Please see the press release below or download from the link.
Accounting for your rental residential investment property; general taxation advice.