Taxing Matters: Deductible Expenses

Taxing matters provides a summary of topical tax and business information relating to individuals and business.  This article discusses the deductibility of some common expenses for tax purposes.

Website Costs – For tax purposes, the costs of creating and/or upgrading a business website are classed as capital expenditure and should be capitalised and depreciated.  The ongoing costs incurred when maintaining an existing business website are deductible.

Combined Business and Holiday Travel - If travel is part business and part holiday (in NZ or overseas), the IRD look at the dominant purpose of the trip to determine deductibility of expenditure.  If the purpose of the trip is principally for business, the travel expenditure will be deductible with the exception of any expenses relating directly to the personal part of the holiday, which will not be deductible.  Conversely if the purpose of the trip is principally for personal pleasure, then the travel expenditure will not be deductible with the exception of costs directly incurred in carrying out business activities.

Details

Staff News: April/May 2013

We are delighted to welcome back Sarah Legg, who returns this week following maternity leave.

A very warm welcome to Katrina Whatmough who joins us this month as a BAS Senior.Jane C Graduation 3

Also welcome to Craig Mowatt who joins our Helensville office.

Congratulations to Jane Chea in our Audit team, who graduated on the 8th of May from the University of Auckland with a Graduate Diploma in Commerce and a Bachelor of Commerce.

 

Details

Corporate Tax Competition Heats Up

By Jim Martin, Tax Manager, UHY Haines Norton, Email jmartin@uhyhn.co.nz

In an increasingly globalised world, governments are under pressure to find ways to attract and retain businesses to their country and then to help those businesses compete against their international competitors.

An increasing number of government’s now realise that one powerful tool they have to achieve those goals is lowering the level of corporation tax that they impose on business profits.

Clearly a high corporation tax rate can make one business location unattractive compared to overseas economies with lower tax rates. A high corporate tax rate can also suppress a corporate’s growth by taking money out of a business and its shareholder’s pockets that could alternatively be invested in marketing or R&D to further grow the business.

The latest research project from UHY’s international network has found that some developed nations are still dragging their economies down and hitting businesses with far higher corporation tax rates than faster growing emerging economies.

Details

Please Let It Rain!

This time last year I wrote about the beneficial impact to the New Zealand economy of the wet summer as city folk complained about the lack of sunshine during January and February 2012.

Twelve months on and the tables have turned.  Sun worshippers and beach goers have had their wishes come true this year with summer recording exceptionally high sunshine hours. Now it is the turn of the farmers to suffer as the country is engulfed in a drought.

Auckland and Northland, amongst other regions, have been declared drought zones and the forecast for rain over the next month or so doesn’t look promising.  Many dairy farmers have gone down to once a day milking and beef and sheep farmers are selling stock due to lack of grass. The combination of drought conditions and the high dollar has resulted in a difficult summer for the rural sector.

Details

Rezoned Land Tax

grant_brownlee_med_2I read with great interest a New Zealand Herald Article by Brian Rudman published on 25 February 2013 entitled ‘Rezoning profits may go back to the community’.

According to his article, Auckland Council is undertaking a financial assessment of proposals on how to benefit from the increase in property values arising from rezoning.  He mentions that Vancouver Council policy is that 70 to 80 per cent of the increase in value should be used for community amenities, including affordable housing. Developers negotiate a levy with the council based on the rezoning gain.
In the context of the soon to be released Auckland Unitary Plan and the apparent buying frenzy happening in central Auckland I thought it was timely to explain an often forgotten piece of Income Tax legislation that seeks to tax gains arising from the rezoning of land.

Details

Tax Avoidance and Voluntary Disclosure

Tax Avoidance – voluntary disclosure deadline looms Inland Revenue has announced that taxpayers who may have reduced their income tax obligations through an income diversion arrangement have until 31 March 2013 to take advantage of Inland Revenue’s concession to make a voluntary disclosure. Inland Revenue’s Group Tax Counsel, Graham Tubb, has said that “If people…

Details