Header Ad Module

Collapse

Announcement

Collapse
No announcement yet.

Accounting for cash from the bank

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Accounting for cash from the bank

    Many of the banks are giving you cash when you sign up for a mortgage - see http://www.interest.co.nz/borrowing/...oan-incentives for the full list.

    When they give you the cash, is it a gift? Is it income? Is it reduced interest? How do you account for it?

  • #2
    Personal or company?
    For company I have been told by accountant that it is income unfortunately.

    Comment


    • #3
      I'm quite interested to know why it's income.

      Originally posted by http://www.investopedia.com/terms/i/income.asp
      DEFINITION OF 'INCOME'
      Money that an individual or business receives in exchange for providing a good or service or through investing capital.
      I have not provided a good or a service or received this money as a result of investing capital.

      Originally posted by http://taxaccountant.kiwi.nz/define-income/ordinary-income
      Characteristics of Income

      • Income must have quality in the hand of recipient, and it must have money or money’s worth.
        • Need to stay in the taxpayer shows that why this income has been received
        • For example a gift on a birthday cannot be income in the hands of the recipient

      • Income is something which comes in, which means coming into your pocket.
      • Income may not be in cash but even if this can be converted into cash it would be income.
      • Income is something which is periodic in nature, which comes in regularly such as rent, interest, salary & wages.
        • Winning lottery tickets or money from tab cannot be regarded as income
        • A one off gift where love & affection is involved is not income in the hands of the recipient.
        • Holiday package offered to an employee by the employer is not his income; however it would be subject to fringe benefit tax.
        • Tips received by the hotel staff would be income since it is regular or periodic in nature. Because the income they received it is in lieu of services they provide. But if an accountant received $200 gift from their client which is not in lieu of his service, will not be an income of the accountant.

      • The important thing is motive, what was the motive behind the whole transaction. Courts have determined that you must stand in the taxpayer shoes.
      Isn't this more like the gift from the client to the accountant?

      Comment


      • #4
        let's see how the accountants respond.
        By what you posted it isn't
        - a winning
        - a one off gift with love and affection
        - a holiday package
        - a tip

        Comment


        • #5
          Originally posted by Wayne View Post
          let's see how the accountants respond.
          By what you posted it isn't
          - a winning
          - a one off gift with love and affection
          - a holiday package
          - a tip
          Are you sure my bank doesn't love my company, and my company doesn't love my bank?

          My company (and I) love my bank because I say can I have some more money, and they say sure. My company (and I) pay my bank loads of interest. Surely that's as much love and Kim Dotcom and Mona had.

          Comment


          • #6
            Originally posted by brendan View Post
            ...... or received this money as a result of investing capital.
            Would you have received this cash if you did not have capital in the property ?

            Comment


            • #7
              Originally posted by brendan View Post
              Surely that's as much love and Kim Dotcom and Mona had.
              I have no idea what their relationship was based on.
              Love is a very difficult emotion to define.

              Comment


              • #8
                Claim that it's 'koha.'
                Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

                Comment


                • #9
                  Originally posted by Perry View Post
                  Claim that it's 'koha.'
                  Originally posted by https://www.waterfrontauckland.co.nz/wa/media/Documents/PDF/year-2013/mar/Koha-Payment-Policy.pdf
                  Waterfront Auckland may give koha to Māori as an unconditional gift to another individual, party or group where the recipient is not obliged to provide services in exchange. The giving of koha carries with it no obligations to account for tax (apart from FBT if the recipient is a Waterfront Auckland employee or family member).

                  ...

                  Koha is sometimes incorrectly used to describe a payment for services. This is not a gift and this policy does not apply to payments for services. It should be noted that such payments for services attract withholding tax. Guidelines are provided on when it is appropriate to pay koha and the appropriate amounts. A good test is whether the payment relates to activity on marae or off marae. If it is off marae, it is almost certainly not koha as the recipient has left their marae to do something for Waterfront Auckland. If it is on marae, it is more likely to be koha within this policy.
                  As the recipient, I did not provide services in exchange, however I was also not on a marae. So probably not a koha

                  Comment


                  • #10
                    Originally posted by Wayne View Post
                    Personal or company?
                    For company I have been told by accountant that it is income unfortunately.
                    So if the rental property was purchased under the purchaser's own name then the bank cash contribution is not considered income?
                    www.PropertyMinder.co.nz
                    # Property Management
                    # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

                    Comment


                    • #11
                      Interesting question, and not one that I particularly considered last time they offered it.

                      It all seemed to be verbal, they rang me and asked where I wanted the money put; I just naturally gave them my personal account number, and that's where the money went. I guess if I get asked about it in future years I will ask the Bank to explain why they put it there, might have a problem if I get asked I guess !

                      Comment


                      • #12
                        Originally posted by Nice View Post
                        Interesting question, and not one that I particularly considered last time they offered it.

                        It all seemed to be verbal, they rang me and asked where I wanted the money put; I just naturally gave them my personal account number, and that's where the money went. I guess if I get asked about it in future years I will ask the Bank to explain why they put it there, might have a problem if I get asked I guess !
                        I've never considered it as an income before but keen to hear from the accountants on this forum.
                        www.PropertyMinder.co.nz
                        # Property Management
                        # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

                        Comment


                        • #13
                          Originally posted by BigDreamer View Post
                          So if the rental property was purchased under the purchaser's own name then the bank cash contribution is not considered income?
                          I didn't say that. I only have experiance with one time, in a company structure and the accountant said it was income.
                          More than happy if it turns out otherwise.

                          Comment


                          • #14
                            I see kiwibank are calling it a "gift".

                            Comment


                            • #15
                              Originally posted by brendan View Post
                              . . . , however I was also not on a marae. So probably not a koha.
                              There is no requirement to be at any physical place for a gift to be defined as koha.

                              Originally posted by IRD
                              Income tax is not paid on koha
                              Any unconditional gift given by non-members of the marae
                              isn’t liable for income tax. Any gift from a member of
                              the marae is not unconditional because they’ll eventually
                              receive some benefit from it. However, these gifts are also
                              not liable for income tax as they come from within your
                              circle of membership.
                              Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

                              Comment

                              Working...
                              X