Filing IR4 2019

[Beano]

I meant "down " not "done" for your business.

[Rosco]

By
1: using "s"
2: filing your IR4 by 7th of May
3: paying all your provisional tax correctly
4: paying all your terminal tax before or on the 7th of may
You avoid the use of money interest
Which could be material when year on year taxable income has substantially increased
Many thanks to anthonyacat for his clarification and research.
Ps is this enough encouragement to file in April ?

Hi Beano,

For most property investors
- if they pay standard 28/8/18 (1st prov tax) based of 2017 taxable income or 2018 if filed.
- if they pay standard 15/1/19 (2nd prov tax) based of 2017 or 2018 if filed
- if they pay standard 7/5/19 (3rd prov tax) based of 2018.
- Final tax due 7/4/20 if have extension of time. Then no interest or penalties.

So makes no difference if you do tax return before or after 7/5/19 for most property investors!


If Residual Income Tax (RIT) is over $50k (NOT MOST PROPERTY INVESTORS), then slight difference, and interest from 7/5/19 if haven't paid enough tax.

Ross

[Anthonyacat]

If Residual Income Tax (RIT) is over $50k (NOT MOST PROPERTY INVESTORS), then slight difference, and interest from 7/5/19 if haven't paid enough tax.

For clarity to the rest of the community, 50k threshold applies only to individuals (including LTCs flowing through to individuals). If property is held in a company or trust, threshold is only $2.5k, and very easily reached.

[Rosco]

Company and Trust also have interest from 7/5/19 if haven't paid enough tax.

BUT - generally for property investors, both can pay income to beneficiaries or shareholders, so then back to no interest and penalties for most property investors.

Ross

[eri]

minor question

when filing the rental returns for an apartment on the new IRD website

should BC Charges be listed, as such, in the "repairs + maintenance" box

or separately listed beneath as "other expenses"?

[Rosco]

minor question

when filing the rental returns for an apartment on the new IRD website

should BC Charges be listed, as such, in the "repairs + maintenance" box

or separately listed beneath as "other expenses"?

Are they repairs or other expenses?

Body Corporate charges are generally some of each, so technically you should seperate the repair part of your body corporate into repairs.

Also has the BC actually spent all you have paid, or do you own a portion of a bank account for future maintenance?

Ross

[eri]

i think that may be overthinking the issue

the ird can't be expecting 450? owners to pick apart a million dollars of annual expenditure into that detail

then enter it all in 1 line of a form...

hoping there was a "standard" response to a question that will affect 10,000s of rental properties

but like many things in NZ

it seems it's too early to ask for direction

as it's still soon after the goal posts were marching around in the fog

for a consensus to have been reached on where they actually stopped!

...

after living + working in a few countries

it strikes me that the nz urge to change everything

every few years

is starting to become counterproductive

our systems are becoming everly more complex

and the institutional? memory lost when the rules of the game are tossed out

is leading to greater inefficiencies + inconsistenciesthan the actual "change" is able to counteract

we've grown up now

and our love of the game twister

now just leads to days hobbling around on pulled muscles

[Rosco]

The information in a tax return gives IRD information. An area of real mistakes and issues is repairs.

So IRD would like to know the total of your repairs. Whether you pay, the body corporate pays or your property manager pays is meaningless to IRD.

Say for example there is a leaky building issue and you pay $50,000 to BC for this. IRD would like to see this transaction so they can consider if they need to review it.

If you don't file correctly then you can lose some rights if there is a dispute, and might not be able to stop IRD looking at old years.

Ross

[Rosco]

So not overthinking the issue. Pretty simple to work out the repairs (divide total repairs by 450), and your share of the future maintenance accounts that hasn't been spent yet.

If tiny repairs then is probably not an issue, but if major repairs then better to report correctly to IRD.

Ross

[eri]

thanks Ross

but i doubt it can practically be done

ie where would $50,000? spent engaging engineers to debate

council engineers questioning

of the original architectural assumptions lie

repairs + maintenance, or other?

if other...then that should be divided by 450 first to reflect 1 owners contribution?
remember the BC committee generally take a year to tell owners what happened after they got the resolution passed to engage the 3rd set of engineers.....you give permission to spend the money in 1 year....but you don't actually know if it was spent until a year later

.....

drug sniffer dogs - maintenance?

installation of better CCTV systems?

replacement of the entire buildings hard wired smoke alarms - repairs or maintenance?

remember, this doesn't appear to be the old form where you could attach extra pages

you get 1 or 2 lines....i wouldn't want to crash my return by submitting 50 extra lines to that part of the form

am thinking if 1 of the 450 owners entered 50 lines of itemised repairs and maintenance

most won't

and of the few that do

the chances that they all do it in the same format is zero...

a nightmare

seems to me

IRD would prefer a simple line of "Body Corporate Levy"....which is why i question the loss of the address of the property...they can't remotely check your BC costs now without calling for an audit

maybe i should call tomorrow

just to log my protection for plausible deniability

hope i get in before the other 449

or the lines will be jammed

[Rosco]

If you are filing your own tax return it is your responsibility to know what items are claimable as repairs, what are claimable as other expenses, what are assets to be depreciated and what is not claimable at all!

So if you claim your 1/450th as body corporate costs, it is not likely to be correct and you need to look further at the actual costs.

Otherwise why don't you just make up a figure and use that? (this is a joke to illustrate my point and I'm not actually suggesting you do this).

Unfortunately tax and property is not simple!

Ross

[eri]

thanks

the call goes in tomorrow

[BlueSky]

I would not "cease " and cancel gst registration as it looks like you are still in business
Slowing done but when business comes you still work
Just estimate a lower income for the pending year for the ird

Not doing any business at all now. Focusing on other things .
So tax paid for 1st year YE2018. Now I have received a request to pay x amount provisional tax but have only worked 8 months for Ye2019. I guess one way would be to do the actual return before 7 May ?

And how does this affect the assets depreciation calculation.

[Beano]

BC levies

If you are filing your own tax return it is your responsibility to know what items are claimable as repairs, what are claimable as other expenses, what are assets to be depreciated and what is not claimable at all!

So if you claim your 1/450th as body corporate costs, it is not likely to be correct and you need to look further at the actual costs.

Otherwise why don't you just make up a figure and use that? (this is a joke to illustrate my point and I'm not actually suggesting you do this).

Unfortunately tax and property is not simple!

Ross

This is a very good point Ross
1: Many expenses like engineer fees may need to be capitalised and if you claim the whole BC levies as expenses you would be open to the IRD rejection
2: Building reserve levies portions in the BC levy again is another area where the amount is not deductable
3: I suggest every person who is renting out a property break the BC levy into the correct IRD classification
4: I suggest everyone writes to the BC managers and suggests the BC managers place the expenses in the correct classification.

[Rosco]

Not doing any business at all now. Focusing on other things .
So tax paid for 1st year YE2018. Now I have received a request to pay x amount provisional tax but have only worked 8 months for Ye2019. I guess one way would be to do the actual return before 7 May ?

And how does this affect the assets depreciation calculation.

Often you would guess your tax due and pay this. Don't actually estimate!!!

This means if you get it wrong you could use tax management NZ later to buy the tax at 7/5/19 and avoid any penalties and interest.

Then when you complete your tax return there would be a washup

Ros