How does an accountant save you money?

SME Financial Accountants

Want to cut unnecessary costs, optimise the most profitable parts of the business, and increase your overall return on investment? Let’s talk about how we can work together to support your ongoing business profitability.

Continue reading

Surprise tax bill? Here are six possible reasons

Surprise tax bill

Did you, or someone you know, get a surprise tax bill they weren’t expecting?

Several Kiwi’s have recently been in touch after having received tax bills that took them by surprise, and they’ve been asking Inland Revenue what’s going on.

An Inland Revenue spokesperson has provided six likely reasons that more people seem to have been caught out this year:

  1. Last year, tax bills below $200 were written off as part of the pandemic support measures. This year, it’s back to the usual write-off threshold of $50.
  2. Inland Revenue is now doing tax assessments for everyone, so some people are getting bills or refunds who never have before, including some children with KiwiSaver funds or other investments.
  3. Anyone paid 27 fortnightly wage packets may have underpaid their tax – that can be fixed once IR has the correct information.
  4. Many incorrect tax codes were corrected last year, and for a few people (mainly aged over 65) the IRD made errors which they are correcting.
  5. Pension tax code changes were delayed, leading to some undertaxing which is now being rectified.
  6. Some people’s tax codes are still incorrect.

We can sort out any surprise tax bill issues

Ultimately, the Inland Revenue calculates your tax based on the information they have about you and your business. If they have the wrong information, you may be paying too much tax or too little tax.

We can look at your surprise tax bill and help you work out what’s gone wrong. We can also deal with Inland Revenue on your behalf to give them the right information and ensure you’re paying exactly what’s required and no more. We’ll work with Inland Revenue to get your refund sorted out or to come up with an affordable payment plan.

Get in touch – our tax specialists at SME Financial are here to help.

New tax rule you should consider when buying or selling a small business in 2021

Small Business Accountants

Are you thinking of buying or selling your business? A new tax rule comes into effect on 1 July 2021 that will have an impact on the way you negotiate.

The new rule is designed to create more certainty in purchase price allocation, which is the way the purchase price is divided up between the various types of assets.

Currently, buyers and sellers have been avoiding an agreed allocation, then often allocating different prices to the same asset in their tax returns. This tends to mean underpaid tax, so Inland Revenue (IR) has introduced new legislation to prevent mismatched allocations.

Under these new rules, the buyer and seller of a business should agree on the asset price allocation and then both follow it in their tax returns. If they can’t agree, the seller can set the allocation and notify IR (who can agree or or dispute it). If the seller misses the three month deadline to do this, then the buyer has their chance to set the allocation.

You can read more about the new rules here.

This should now be part of your negotiations

For all sales after 1 July, you should now be negotiating purchase price allocations along with everything else during the sales process. An agreed allocation will be much more straightforward if you can achieve it.

The new rules are quite complex and detailed and it is possible that they will increase compliance costs. If you’re in the process of buying or selling, or are soon to be, you may want to consider the timing. SME Financial is here to guide you through your decision-making-process.

As IR says: “It’s best to talk early with a tax professional to make sure you get the details of your sale right from the start,” so do get in touch with us immediately if you’re considering buying or selling a business.