Forum Home
Press F1
Thread ID: 41575	2004-01-15 07:58:00	[OT] Tax Advice	Lohsing (219)	Press F1

Post ID	Timestamp	Content	User
207629	2004-01-15 07:58:00	Hey guys... there must be someone out there who can answer this... it's to do with tax. Anyway... here goes... Currently, I'm a salary wage earner but an opportunity has come up to do a project outside of work which would be worthwhile to undertake. The fee will be a one off and definitely under the $40,000p.a. threshold for requiring to register for GST. This being the case, how do I invoice the company which wants me to do the project? Do I need to add tax or GST or neither? I have been informed they need an invoice to be able to pay on completion of the project. Any help would be good... the IRD site kept saying something about how I wouldn't need to register for GST, but nothing else about the tax situation. Cheers, Lo.	Lohsing (219)
207630	2004-01-15 08:45:00	If you are under the threshold to register for GST then you do not charge it either. If the job was $10000 then that is the cost, however if your were registered it would be plus $1250 which you pass on to IRD less GST paid for anything you have purchased that attracted GST such as your isp account. As I see it to a small business where you are being paid only by invoicing, GST is quite neutral, you charge it and then just pass it on. (However, a cash business such as a dairy is different) If your expenses are incurred in earning the $ then the GST paid comes off your amount to pass back to IRD. It is worth reviewing your outgoings to see how much you would get back. On the income tax side remember to put about 33% of the gross away for income tax, again depending on the project there may be ways to minimise this, such as the cost of paying a secretary (your partner if they earn less than you) to do the paperwork and make the tea. This helps me as my wifes tax rate is 19% while mine is 39%. Be careful that you do not become liable for provisional tax as you will need to pay this again next year (provisionally means in advance) even if your income next year is less, it balances out at the end of year 2 when you get it back if you haven't earnt the additional income in year 2. Beleive it or not IRD are really helpful and will assist you to set things up correctly, they will not rip you off, tax is tax and you only pay if you make money. You may hear people groan about a $60K tax bill, but that means they earnt about $180K in the first place. If you earn nothing you pay nothing, but a good accountant may help you minimise the tax, and their bill will be a business expense too which you deduct off the income. You may even be able to depreciate your computer gear at 33%. Get some free advice also from bizinfo. www.biz.org.nz	Bestie (5071)
207631	2004-01-15 09:05:00	You will be required to and be expected to pay tax on secondary earnings. Looking for a way to dodge this issue, is frowned upon by all the hard working NZ taxpayers, so pay whats due and shorten the hospital waiting lists. You will feel so much better for doing so. A.	albatross (343)
207632	2004-01-15 09:16:00	Yeah - cheers for the tip but I'm not looking to "dodge" any tax. I'm only looking to see whether I need to speak with an accountant to get the full picture of what options are available to me. eg. Family trusts for assets, depreciation, etc. The issue for me also is that this one off project is unlikely to occur again, and also to determine what I need to charge for this project. For example, if I felt the work was worth approx $5,000 then I would need to consider GST as well as income tax on top of that amount to be able to realise the $5,000. From the information given so far, I am concerned about the provisional tax for the following year... Anyway, I think I will have to put this in the too hard basket and seek professional advice on the matter. Cheers anyway, Lo.	Lohsing (219)
207633	2004-01-15 09:32:00	I was having you on...... Seek proper professional advice Lohsing..it will save you money in the long run.And quite honestly this probably is the best advice you will receive here IMHO. Cheers A.	albatross (343)
207634	2004-01-20 06:51:00	I would suggest that if you are going to make any salary or wage contributions to a spouse that you obtain approval in writing from the IRD before hand . Section GD4 of the Income Tax Act 1994 gives the Commissioner the authority to void any payments made to a spouse without prior consent from the Department . In addition any amounts to be paid must be at market rate for the type of work performed . These provisions were entered into legislation by Parliament to assist in the prevention of tax avoidance, which such a transaction would otherwise be . In answer to the rest, if you are under the $40,000 then you do not have to register for GST, though you may choose to register voluntarily . If you are not registered for GST, you may still issue an invoice for the work, it simply cannot be a TAX invoice (that is, you must not charge GST on it) . . . if you do charge GST whilst not registered then you are purporting to charge GST and not returning it . This is tax evasion and may be prosecuted as such or as Tax Fraud under the Crimes Act . In I think the person who said go see an accountant has given the best general advice . . . if the job is big enough that the company wants you to provide an invoice, I'd suggest that it's worth spending a bit and going to see an accountant for . . . . . .	Yeah Right : Tui (5120)
207635	2004-01-20 07:04:00	Hey some good info for everybody here thanx all	Nodrog (4738)
207636	2004-01-20 07:41:00	If this job is worth more than a few hundred dollars to you, then I would recommend registering for GST; first it looks more professional and most companies expect it to be included (they, of course, can claim it back) . Also if you have any expenses in relation to this work, you can claim the GST component back if you are GST registered (you can't if you don't) . And I love the IRD . They are just so fair, I mean, they don't care what your situation is . Just pay your tax like a nice god fearing citizen and don't even question it, cos if you do, we have massive powers if you step out of line . Oops, got carried away there . . . sorry who's that at the door . . . THE IRD :O	Dolby Digital (160)
207637	2004-01-20 10:27:00	Glad you`re comfortable with paying tax, pay double and feel twice as good.	brewer (4389)
207638	2004-01-20 12:19:00	I was advised to avoid becomming GST regeistered unless absolutely neccessary. It is a complete dog to get out of and unless you have a lot of outgoings you gain nothing but accounting problems, To be honest because you will have to get involved in provisional tax for a relatively small project I don't think it is worth it. I can understand how you would like this project but I think it might be more bother than it is worth unless you are going to do more in the future. >(they, of course, can claim it back) If they aren't charged it they have nothing to claim back. >we have massive Who do you work for.	mikebartnz (21)
1 2 3 4