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Vision Accounting

Welcome to the Vision Accounting e-newsletter for September. This is a great way for us to share important information you need to know, helpful tips and hints and practical resources to help you in business for 2014.

 

What's Important?

It’s time to finish off those end of year financials and get them completed for the 2014 tax year.

We know there are some of you who still need to get information to us - so now is the time to tie up those loose ends. 

It’s important to have these completed now so you know what tax you need to pay during the year and it doesn’t ‘hurt’ when payment time comes. And if you’re behind in putting aside your GST and Tax money – you have time to do that so you don’t get behind with the IRD and have to pay unnecessary penalties.

So please forward any outstanding information to the team at Vision Accounting and we can speed up completing your accounts for you. (any problems give Jane a call on - (09) 415 0319).
 

What you need to know:

Risk and Reward

Reduce the cost of paying late terminal, provisional tax

Anyone who has been hit hard by Inland Revenue (IRD) late payment penalties and use of money interest (UOMI) for unpaid or underpaid tax knows how crippling this can be.

It’s the last thing you want to happen.

However, using tax pooling to settle income tax liabilities reduces your exposure to late payment penalties and UOMI, meaning it is cheaper than paying the money directly to IRD.

Tax pooling allows you to purchase tax from someone who has overpaid and then apply that tax to meet your liabilities.

As such, you can eliminate IRD late payment penalties and significantly reduce UOMI costs by up to 30 percent.


When might it work?

If, having just paid your third instalment of provisional tax for the 2014 year, you think you might have underpaid at one of your earlier dates, you can top up at any time with Tax Management NZ (TMNZ) to eliminate late payment penalties and reduce UOMI interest costs.
 

How tax pooling works

Lord Sparkle Cleaning had a bumper 2014 financial year, with its income tax liability expected to be $300,000.

Because the year was better than expected, the company realises it has underpaid its first two provisional tax payments by $40,000 each. 

It purchased the underpaid tax from TMNZ for $83,048. By paying only $3,048 in TMNZ interest, it saved $9,219 in potential IRD late payment penalties and $561 in UOMI.
 

Provisional Tax – “buy now pay later” through Tax Finance

If cash-flow is tight, for either one, two or all three of your provisional tax payments, there is the ability, for a fee from TMNZ, to post-pone that particular tax payment to a later date (no more than one year later). On payment of that provisional tax to TMNZ the payment is then “back-dated” through their facility with the IRD to the date it was actually payable. This is a more cost effective way to pay your tax “late” than not paying the IRD and incurring their penalties and interest.

Contact us if you would like to talk through your tax plan and want to know more about using tax pooling to manage your provisional tax.

This Month’s Top Tips

Important Change:
 
We want you to know about an important change that will affect customers who make payments to Inland Revenue by cheque. From 1 October 2014, you’ll need to ensure Inland Revenue receives your cheque payment on or before the due date to avoid penalties and interest.

Paying on time
It’s important that your payment and return reaches Inland Revenue on or before the due date. If they’re late you may incur penalties and interest. This means you’ll no longer be able to post cheques on the due date. You can however, make payments online up to and including the due date.

The IRD recommend to go online: 
It’s easy, fast and secure to file returns and make payments online, and the service is available 24/7. Last year, over 70% of all Inland Revenue payments were made electronically. 

You can pay using the “pay tax” function provided by most New Zealand banks.

To make an online payment or find out more about making payments, go to ird.govt.nz and search "make a payment".

Ask us a question

Have you got an accounting question that leaves you worried or confused?

We love a challenge – see if we can come up with the answer that gives you the ‘ah ha! moment'.

Contact Virginia at Vision Accounting NOW on 09 415 0319
Tel: (09) 415 0319
Email:
admin@visionaccounting.co.nz
Web:
www.visionaccounting.co.nz
Postal Address:
PO Box 303 157
North Harbour
Auckland 0751

Physical Address:
106A Bush Road, Albany, Auckland
(When posting documents please use the PO Box address, as there is no mail delivery to our street address. Thank you.)

Remember

We hope you found these updates useful, and remember - we offer the service of a one on one meeting to review your financials and help you make better business decisions for the next 12 months.
This one meeting can make a huge difference to the cashflow and profit of your business.
If you would like to book in for a business review meeting, or to have a no-obligation chat - we’re happy to help.

Thanks,
Virginia and the team at Vision Accounting 

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