Quarterly Newsletter

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Don't get caught out!

Potential taxpayer pitfalls

Taxpayers who earn income from various sources may get caught short if they don't plan ahead. This could come about in various ways:

• Airbnb

• Overseas investment

• Shares in an overseas company

Learn more about this...

Creditors get more protection from indebted businesses

A threshold for reportable tax debt is now in effect, giving creditors greater protection from businesses owing tax debts of more than $150,000. The IRD is now allowed to disclose to certain credit reporting agencies, information about companies with significant tax debt. An Order in Council set a threshold of $150,000, so a company's tax debt over that amount may be disclosed. This took effect on 29 June. Disclosure may inform smaller creditors who would otherwise not know they were dealing with a business with a significant tax debt.

A tax bill passed in May made changes that affect cashflow.

Companies get more choice with RWT

From 2017/2018, companies can choose to not deduct resident withholding tax on a fully imputed dividend paid to a corporate shareholder. A fully imputed dividend has a tax credit passed on because the company's already paid tax.

Another option for some shareholder-employees

Shareholder-employees of close companies (with five or fewer participants) who receive regular salary or wages, and variable amounts of other employment income, now have a third option as to how they pay tax.

They can now split their income so the base salary is subject to PAYE and the variable amount is paid out before tax. Previously they had to choose either one or the other.

A shareholder-employee who decides to either apply provisional tax to all their earnings, or use the new split method, is committed to their choice for three years.

Learn more about this...

Contractors get more tax choice

The way contractors pay tax changed on 1 April, giving greater choice, and making it easier to get tax right. The rules around schedular payments have changed to allow this, and are compulsory for all contractors hired by a recruiter - or other labour hire business - and those previously under schedular payment rules. Other contractors can opt in if their payer agrees to deduct tax on their behalf. Learn more about this...

Key tax dates - a quick overview

Contact Us

If you wish to discuss any of the matters raised in this issue of Dollars and Sense, please contact our office - a member of our friendly team will be happy to assist.

Kind Regards

The team
Ean Brown Partners Limited

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In this issue:

• Don't get caught out - potential taxpayer pitfalls

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• Creditors get more protection from indebted businesses

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• Fairer tax rules affect cashflow

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• Contractors get more tax choice

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• Key tax dates

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