IR23B for reduced PAYE

[Roberto]

I mentioned to a colleague the use of an IR23B for property investors who wish to reduce their PAYE i.e. claim their tax losses during the year instead of waiting to until the final tax return for the year. So I went to grab details on this form on the IRD website and noticed that .... there is no longer an IR23B. There is however a similar IR23BS but it does not openly include the property investor case.

Can someone enlighten me on what's happened to the IR23B and what's IRD's view on this matter.

[whitt]

Sorry not sure on what happened to form.
However I once considered using this form to reduce my weekly tax paid and be slightly better off ( in theory) but changed my mind. I prefer to get my tax refund in a large lump once a year. It is like a savings plan otherwise I would just waste it if received weekly.
As a side note some property seminar firms recommend the use of IR23 as it does help with reducing the heavy negative cashflow they sometimes have.
I firmly belive tax refunds are dependant on income earned. So if you stop work you get less refund. So I treat any refund as a bonus.

[CJ]

Top question of second page - any other income such as rents etc. Just put in in brackets or with a negative sign.

[Stevegoodey]

What do you think the BS stands for?

[janesco]

I'm way passed the BS. The latest form sent to me by my close friends in the IRD had the letters "ES" at the end of it.

I know what BS means I can only figure that the E stands for "Extraordinary" or "extraneous" or "Explicit". I'm getting a bit nervous about next year if it continues in the same vein. I mean what would the "F" stand for?

Any way I prefer to get my tax reduced because it helps with cashflow. The trick is to put the money back straight into the business account. The purpose of the rebate is to repay tax on depreciation, interest costs etc. So why not use it for that purpose?

Spend it it is gone.... invest it you still have it.

My humble opinion

[Perry]

Special Tax Code

IR23 is the critical part. There's also an IR23ES. The
"E" is a renewal. (As in "extension," perhaps?)

Which Box?
In panel 5, under 'Employer's name' I put "self-employment
loss" and enter a minus figure in the dollar column. But CJ's
idea is every bit as good and may even be more correct.

My view is that cash-flow is better than lump sum. Just be
sure to understand the consequences, come March 7, when
the figures start to look good. (And April 7, too!)

[essence]

Word of warning

Read the application carefully. In box 4 is asks "...why you are applying for a special tax code." You can put in "...my wife has left me..." (okay no chances of getting tax rebate with that one!), or "...to assist with cash flow...", whatever.

If you application is successful, about early February the following year, BEFORE the existing IR23BS expires, the IRD will send out an IR23ES (Extension perhaps?). If you want the rebates to continue unchallenged YOU MUST use the same reason (box 4), or you will be back to square one and have to completely re-apply.

Box 5 - employer's name if you have one, or as Perry stated "self-employment loss".

If you are employed, the Special Tax Code/Deducation Rate Certificate, will be sent directly to your employer, so that each pay period you pay will be amended by $x's.

Don't be tempted to spend the money, remember that money is your year end tax refund paid weekly/fortnightly. Use it judiciously.

Good luck.

[Roberto]

Thanks and IRD said....

Thanks for all those thoughts and opinions - all good. I thought I'd call IRD and got this reply ....

Yes IR23BS is the correct form and section 8, top of page 2 is correct section. Mr IRD said it's best to put Type of Income as "Loss from Rental Activity" to make it extra clear to the person processing it that it is a loss. And the amount will be in brackets.

I'll give this to my colleague and suggest that, once the PAYE saving is determined, that he deposit the same amount into the floating rate portion of his mortgage.

Cheers.

[murray-spi-investments]

IR23BS is still on the IRD web site. I downloaded it midway through last week (early March) for a client to check if my copied version was still up to date.