May’s Tax Talk

by Shawn O’Grady
3 Minute(s) to read

May’s Tax Talk

Changes to Director requirements to take effect from 1 May 2015

Unlike many other countries (e.g. Australia), there has historically not been a requirement for a New Zealand company to have a New Zealand resident director.

This has made it fairly easy for non-residents to set a company up in New Zealand and not have to engage a person in New Zealand to act as director for the company.

Some time ago proposals were raised that would significantly change the director requirements in New Zealand.  These proposals resulted in the Companies Amendment Act (No 4) 2014 being enacted on 24 June 2014.  This legislation has increased the information requirements and strengthened the registration process of New Zealand resident companies. 

Effective from 1 May 2015, all New Zealand incorporated companies will be required to have at least one director who:

Is resident in New Zealand, or

Lives in an enforcement country and is a director of a company registered in that enforcement country.

As noted above, this criteria is an “or” therefore having a New Zealand resident director is not critical provided a director satisfies the alternative criteria.  At present only Australia qualifies as an enforcement country. for the complete article go to… http://www.taxman.co.nz/itm 

 

Provisional Tax Tips & Traps

A common misconception is that your first year in business is tax-free. Although you may not be making tax payments during your first year, the year is still taxed.

You’ll have to pay this tax by 7 February the following year or 7 April if you have a tax agent with an extension of time.

If the residual income tax (RIT) your business has to pay after its first year of operating totals more than $2,500, you might have to pay your first year’s tax in instalments during the following year. These payments are known as provisional payments.

Be aware that if your RIT is more than $2500 and has been brought about by a one off activity  like a large sale for the year, or if you're a property investor you sold your rental property for more than you purchased it for, there’s likely to be depreciation recovery then you may not need to pay provisional tax for the following year.

But you do need to be careful and perhaps seek the advice of a Tax advisor also if you know that you're not going to achieve the same results in the following year.

You also have the option of paying voluntary tax, if you think your residual tax is going to be considerably lower than the previous year, but once again I recommend you seek the advice of a Tax advisor.

When your financial accounts and tax returns are prepared for 31 March 2016 - all that provisional tax you've paid will be sitting as a credit against your name to offset your final tax bill for the year. Any overpayment will be refunded to you, any underpayment will become your terminal tax and will be payable by 7 April 2017.

 

By Dennis O’Grady

 

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Give us a call on (04) 563 6965 or email: dennis@taxman.co.nz or shawn@taxman.co.nz

Keep an eye out for June’s article!

 

TAX DATES TO REMEMBER

  • 7th May 2015 - Third instalment of 2015 Provisional Tax…
  • 20th May 2015 - Monthly employers PAYE payment…
  • 28th May 2015 - Bi monthly GST Return for Feb/Mar 2015…