Introduction to Business Professional Historians Assn 11 October 2008 Presented by John Forde Business Tax Information Officer.

Introduction to BusinessProfessional Historians Assn

11 October 2008

Presented by John Forde

Business Tax Information Officer

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Going into business

• Banking and budgeting • Keeping records• GST• Income tax• Provisional tax• Business expenses

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Banking and budgeting

• Bank accounts

• Budgeting for:• ACC• Student loan• Income tax• GST

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Record keeping - Model Cashbook

Page 18 , 50 – Smart business IR320

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GST

• Do you need to register?

• Choose your

accounting basis: payment, invoice, hybrid

filing period

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Tax Invoices/Receipts

• Less than $50

• Less than $1,000

• More than $1,000

Page 47 – Smart business IR320

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GST

Page 10 – Smart business IR320

• 12.5% on sales and service

• GST on expenses and purchases

• File on time

• Online filing

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GST return

Total sales for period $1,125

GST collected from sales (1/9th) $125

Total purchases for period $900

GST paid or claimable (1/9th) $100

_______ $125 - $100 = GST to pay $ 25

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Business Expenses: Vehicle

Page 38 – Smart business IR320

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Business Expenses

Home Office – Calculation

• Mortgage interest

• Rates

• Insurance

• Power

179m ²

Total floor space

15m²

Floor space used 15m² X 100%

Total floor space 179m²

= 8.38%

Page 39 – Smart business IR320

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• Telephone

• Travel & Accommodation

• Insurance

• Interest

• ACC

• Depreciation

Other Business Expenses

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Income Tax

Profit and Loss Account

Sales (Gross Income) $30,000

Less ExpensesRent $4,000Materials $3,000Advertising $ 500Interest $ 500 Insurance $2,000

$10,000

Net profit $20,000

Drawings are not deductible expenses

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Provisional Tax

Example

Profit (2009 Income Tax year*) $20,000

Tax on profit at 19.5% $ 3,900 (due 07/02/2010)

Residual income tax >$ 2,500

Need to pay provisional tax next tax year

* 1 April 2008 – 31 March 2009

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Provisional Tax

Example

Residual Income Tax (2009 tax year) $3,900

Allow for inflation next year (add 5%) $ 195

Provisional tax 2010 $4,095

There will be 3 payments of $1,365 28 August 200915 January 2010 7 May 2010

Residual Income Tax $3,900 Due: 7 February 2010(2009 tax year)

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Provisional Tax

• GST and Provisional Tax Ratio option

• Early payment discount

Page 33, 27 – Smart business IR320

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Tax Rates

Individuals

• Under $38,000 19.5%

• $38,001 - $60,000 33 %

• Over $60,001 39 %

Company 30%

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Tax Rates from 1/10/08

Individuals

• Under $14,000 12.5%

• $14,001 - $40,000 21%

• $40,001 - $70,000 33 %

• Over $70,001 39 %

Company 30%

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Support and information

• Website

• Contact centre

• INFOexpress

• Newsletters

• Advisory services

• One on One

• Seminar/Group

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• Set up an efficient record keeping system

• Keep all receipts and Tax Invoices

• Budget for your taxes

• Work out if you need to register for GST

• Send IRD returns and payments before they are due

• If you can’t meet return dates call us

• Ask for help

Key Messages

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Questions