COMMON QUESTIONS ABOUT YOUR FINANCIAL STATEMENTS

Jun 29, 2014

Questions about your financial statements? Here are the answers to some common ones:

Q: I don’t understand my Financial Statements!
A: Have you read our guide here?

Q: 1. I take it the ($10,000) showing is a loss? It is in brackets and says “surplus before taxation”?
A: Yes, that’s correct.

Q: How do these figures work out to become tax refunds?
A: Unless it is a loss from rental property, the loss is offset against your income. Let’s say you earned $100,000 salary. You paid $23,920 PAYE tax.  We now take the $10,000 and deduct that from your income, making it $90,000.  Tax on $90,000 is $20,620.  The difference of $3,000 is your tax refund.

NB: Losses from rental property can only be offset against rental income and can’t be offset against any other income. Excess loss is carried forward to next year and so on.

Q:  I notice that there are Retained Earnings showing for 31/3/23 of $14,884 and then nothing for 31/3/24?
A: Yes, that’s correct.  The earnings weren’t “retained” as at 31/3/24. They became “retained” the day after.

Q: On page 9, it says Shareholder Loan Accounts: $2,444 and $1,629. Are these the amounts that we have contributed to the company, then divided up between us?
A: Yes, that’s correct. They are determined according to your actual contributions.  

Q: On page 4 there is a Directors Report: do we have to print this out and sign it?
A: Yes please.

Q: The Annual General Meeting report (last page): do we have go out to a restaurant and action this? When do we have to have this done by?
A: No, you don’t have to go out to a restaurant but it’s a good idea. Keep the receipts and don’t forget your parking and baby-sitter receipts.  Yes, you must action it, i.e., print, sign and return it.  When?  This will depend on what month you have to file with the NZ Companies Office. You can check their register here to see when your filing month is.

Q. Notes on page 11 under Income Tax Expense. Payable by us? Isn’t this the amount IRD pay us?

A: These comments don’t directly relate to whether you will have tax to pay or not. Rather, they are a standard comment in financial statements which explains how Income Tax is accounted for in the statements. Financial statements may or may not show how much income tax you have to pay. Generally, the ones we produce for rental property investment show the loss/profit from the business. We take this figure and include it in your tax return/s, and the tax to pay/refund is shown on those returns.


These questions are actual 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?
ANNUAL 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 TAX RETURNS
UNDERSTANDING FINANCIAL STATEMENTS

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