FAQ

1. Business Expenses:
– Deductible business expenses include costs directly related to running your business, such as office supplies, equipment, and tools.
– Costs associated with maintaining a home office, like a portion of rent or utilities, may also be eligible.

2. Travel Expenses:
– If you travel for business purposes, expenses like mileage, public transportation, and accommodation can be claimed.
– Keep detailed records of each trip, including the purpose and duration.

3. Professional Fees:
– Fees paid to professionals, such as accountants or consultants, are deductible.
– Legal fees directly related to your business activities are also eligible.

4. Advertising and Marketing:
– Costs for promoting your business, including advertising, website development, and marketing materials, can be claimed.

5. Insurance Premiums:
– Premiums for business-related insurance, such as liability or professional indemnity insurance, are deductible.

6. Training and Education:
– Expenses for courses, workshops, or training directly related to your business can be claimed.

7. Vehicle Expenses:
– If you use your vehicle for business purposes, you can claim a portion of vehicle expenses, including fuel, maintenance, and depreciation.

8. Utilities:
– Deduct a percentage of your utility bills (e.g., electricity, internet) if you use them for business purposes.

9. Bank and Credit Card Fees:
– Fees associated with your business bank account or credit card can be claimed.

10. Home Office Expenses:
– If you have a dedicated space for your business at home, you may be able to claim a portion of home-related expenses, such as rent, mortgage interest, and utilities.

Remember, it’s crucial to keep detailed records and receipts for all expenses claimed. Consulting with a tax professional is advisable to ensure you’re maximizing your deductions while staying compliant with tax regulations.

Interest as a Charge for the Use of Money:

Interest is not a penalty; it is a charge for the use of money. This means that the IRD may:
Charge you interest on late provisional or end-of-year tax payments.
Pay you interest if you overpay your provisional tax.The interest charges are calculated once you’ve filed your income tax return.
However, the IRD will not charge or pay interest if the underpayment or overpayment is $100 or less.
Note that if you use the Accounting Income Method (AIM), interest is not paid if you overpay your provisional tax.

Different Options and Their Impact:

Statement of Activity:
If you pay late or underpay your provisional tax, interest is charged from the day after the instalment was due.
Penalties and interest are charged once the Statement of Activity is filed.

Ratio Option:
No interest is charged if you pay on time.
Interest may be charged if you owe more than $100 after your end-of-year tax due date.

Standard Option:
RIT (Residual Income Tax) of Under $60,000:
Interest is charged from the day after the end-of-year tax due date.
Before the 2023 income year, interest was charged from the day after the missed or short-paid instalment.
RIT of $60,000 or More:
Interest is charged from the day after the final instalment date if payments are made in full and on time.
If only the final instalment is unpaid, interest is charged from the final instalment due date.

Estimation Option:
Interest may be charged from the first provisional tax instalment date if you use the estimation method.
If you underestimate, penalties and interest are charged on the difference from the provisional instalment dates.

Exceptions:

These rules may not apply if you are associated persons and one of you:
Is a company not covered by the standard option rules.
Uses the GST ratio option.
Has entered a provisional tax interest avoidance arrangement.
Remember to consult with a tax professional for personalized advice. The IRD’s interest rules can be complex, and it’s essential to manage your provisional tax payments effectively.