Great Changes to Provisional Tax
The Government has introduced changes to the provisional tax regime which makes things simpler for us all.
The key changes are:
- Use of Money Interest will not be charged for any tax payer (individual, company or trust) whose total tax liability for the year (residual income tax or RIT) is less than $60,000, so long as the tax payer pays their three provisional tax payments based on their last tax return.
- For tax payers whose RIT is greater than $60,000, Use of Money Interest will only be charged from the third provisional tax date.
The impact of this is:
- Where you expect your tax liability to be equal to or greater than last year and your RIT is less than $60,000, you only need to pay your provisional tax based on your last tax return filed.
- Where your RIT is greater than $60,000, we only need to estimate to minimise Use of Money Interest for your third provisional tax payment.
This will simplify things significantly.
If you think your tax liability is going to reduce for the financial year, you can pay less than your liability based on last year at each of your provisional tax payment dates. Should your tax liability then be greater than you expected, you are able to purchase tax from the tax pool to top up the payments that you made, thus removing any short payment penalties.
Your Options for Paying Tax Through a Tax Pool
As mentioned in the previous article there are options to pay tax via a tax pool – an Inland Revenue approved organisation where tax payers who have not paid enough tax, can buy excess tax paid by another tax payer. The interest rate earnt and paid is more favourable than the Inland Revenue rates.
If you pay your taxes via the tax pool, you can also more easily receive refunds of provisional tax paid prior to filing your return.
Because there are some costs in arranging payments through the tax pool it only suits larger tax payers, but where there is a need to top up tax payments to minimise the impact of significant changes in tax and to manage cashflow difficulties, the tax pool can be of benefit.
If you think tax pooling may apply to you and haven’t had a discussion with your advisor, please contact them for more information.
What is the Secret Ingredient?
Mindshop recently released a brilliant article called ‘Value to Others’ by Chris Mason. Two questions that were asked were: What do you define as ‘success’? and What do you need to put in to be successful?
Most people would say that this is “hard work”, however lots of people who work hard are not necessarily successful. What about being well qualified? Likewise, many people who have degrees would not class themselves as having achieved success.
The ‘secret ingredient’ was in his opinion; ‘value to others’ or in simple terms ‘doing things for other people’.
“Imagine you have a person in your life who is the most important person in the world to you. What could you do for them that they would value greatly? Do you do this for them every day? If not, why not? If you’re honest it’s usually because they don’t do it for you. But with this attitude, you’re missing the point, I’ve found that the more I do for others, the higher my self-worth. And the higher my self-worth, the better I feel about myself, the less I self-sabotage, and so the more successful I am.
Self-sabotage is like talking yourself out of success, ‘I can’t do that because of x, y or z’ often ingrained in you from other people over many years, telling you that you can’t do something. When your self-worth increases because you have delivered value to others you avoid self-sabotage.
The key to value to others is the multiplier factor. When I put something good in, I find it comes back to me ten times over. But the catch is, this is no road to short term gratification, because building your self-worth may take many years. Think of it like a bank account, whenever you do something good for others it adds to your balance.”
Save time – Do it Online!
Misplaced that questionnaire you were sent? Or need to keep a record of those creditors and debtors that the accountant needs?
Click here to head to our downloads page to find the below information:
- Annual Accounts Questionnaires
- Annual Working for Families
- Annual Individual Questionnaires
- Creditors – Accounts Payable and Debtors Accounts Receivable
- Investment Entities Checklist
- GST and IR Forms
Have you changed your details lately?
Have you moved? Got a new phone? Then please let us know!
We want to make sure that we give you the best service! This starts by making sure your details are correct in our system.
Head over to our Contact Us page and fill in the Change of Address document
Please phone us we would love to hear from you on 09 430 4888
The Xero Road Show
Because we are passionate about giving you the best service, our team will be heading to the Xero Road show at Toll Stadium on Tuesday 29 August 2017.
We are looking forward to connecting with the product experts.
Not on Xero but want to know more? Talk to your accountant today!
Find out why they call it “Beautiful Accounting Software”.