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