Top 5 Tax Time Tips from the Team at Warehouse Stationery
1. Do you work from home or is your business based in your home – if so, you may be entitled to a tax deduction
If you occasionally or permanently work from home, you may be entitled to claim a tax deduction for the costs associated with setting up and running your home office. From your desk chair, to the computer you use to undertake your work, through to the paper or ink used to print your work documents at home, you should consider these costs when completing your tax return.
In addition, you may be able to claim a portion, of your rent / mortgage interest, electricity, home office maintenance as well as considering vehicle and travel expenses undertaken for work, along with your telecommunication bills - landline, mobile and internet charges.
Warehouse Stationery has a wide range of home office furnishing and technology solutions to ensure that you are as productive as you can be when working from home or setting up you home office or business. See tip 5 below but any items that you purchase before the end of the tax year, may be able to be included in full in your 31 March 2020 income tax return.
2. Ensure you have documented evidence to claim your deductions
Ensuring you have all your paperwork arranged into well-organised files or easy to find and navigate locations, will assist with processing your tax return.
At Warehouse Stationery, we have a range of products that can assist with keeping your taxation documentation well-organised ensuring that the process of lodging your tax return is quick and easy, whether you are preparing your return yourself or lodging through your tax agent or accountant.
3. Consider purchasing computer software to help manage your tax affairs
There are many computer software programs that can assist with running your small business. In addition, many of these programs not only ensure you are on top of your finances, but they will also assist with completing your tax return.
Check out our friends at Beany for advice on products like Xero, MYOB, Reckon, Quick Books, by using the following link: https://www.beany.com/warehouse-stationery/
4. Make sure you plan ahead for tax time
You may be required to make a tax payment at the end of the tax year – as such, you should think about setting some money aside throughout the financial year for this.
Depending on how complicated your tax return is, you may wish to consider engaging an expert tax agent to assist with completing your return.
Please make sure you lodge your tax return on time, in this way you will ensure you do not incur any penalties.
It is also worth noting that if at any point you are struggling to meet your taxation obligations, you should reach out to the IRD and discuss your situation.
5. Is there any special treatment for items costing less than $500 and if so, should I buy them before 31 March 2020?
Most of us understand the concept of buying big assets (also known as “Fixed Assets”) to help us run our businesses. Such items may include the firm’s delivery van or some specialist machinery or equipment to help produce our goods or services. While we pay for these items up front, we only get to claim a tax deduction for a portion of the cost each year. That is because these assets last longer than one year and as such taxation law in New Zealand says that you can only claim a tax deduction for the portion of the cost that relates to this financial year. We calculate the portion of cost that is deductible for this year based on the number of years that we could reasonably believe that this asset will help us to run our business.
The New Zealand tax system however also allows for a different treatment of Fixed Assets that cost less than $500. This means that any Fixed Assets that cost you less than $500 can be “written off” in full and immediately and not depreciated over multiple years. Meaning that for any items you purchased to assist in earning income between 1 April 2019 and 31 March 2020, which cost you less than $500, you can claim a deduction for the full cost in this year’s tax return.
As such, if you have been thinking about buying a new desk or a new printer for your business or home office from Warehouse Stationery, you may wish to consider doing this before 31 March 2020 and if you do so then you should be able to claim the full amount (noting that the item must be less than $500 and be used to assist you generate income) against your income tax in this financial year.
Whatever you do, do not buy business related items just to save tax, as the deduction is only worth a portion of every dollar you spend (i.e. up to, but often less than, 33 cents for every dollar spent). But if you need these items, it may be worth your while to buy them before the end of the income tax year.
Always seek professional advice or support in relation to your tax matters
We must point out that the team at Warehouse Stationery are not registered tax agents or financial advisers and as such we cannot provide financial or tax advice. However, we hope the tips above will help you be better prepared when getting ready to complete your tax return, whether you are doing it yourself or engaging with your tax agent.
Lastly, we hope that the 2020 financial year has been a successful one for you and your business, and we would like to take this opportunity to wish you a “Happy New Financial Year” from the team at Warehouse Stationery.