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Tax saving tips for NZ small business

Small business owner often face challenge in cashflow planning and tight budget. Among all the expenses saving tips, knowing how to do tax saving is always a key to your business success.

As financial year 2023 is close to the end. Here are some tax saving tips for you to keep in mind for your business year-end financial tax return. But please bear in mind that there is no one size fit all solutions, please contact our Chartered Accountant at The Number Studio to help you with a customized tax planning and get the most of tax saving for you.

Voluntary GST Registration

As we know the threshold for GST registration is $60k turnover, however, if you are doing a B2b (business to business) Business, it is still worthwhile to voluntary register GST even if your turnover is under $60k. Because, your customer is in business, it is the same for them if you are registered GST or not, they can claim the GST you added on your invoice. But, if you don’t register GST, you missed out the GST claim from the purchase.

Claim Home Office Expenses

If you work from home, no mater if it is a garage or a separated room to run your business, you may take expenses that related to business operation into your business. Expenses like, mortgage, insurance, rent or power can be put into business based on the area you used for your business.

Claim Motor Vehicle Expenses

Small business owners often mix use their vehicle with business and private. Like your home office, the business use portion of your vehicle expenses can put into your business to deduct tax. There are different ways to track your vehicle expenses on business. In general, You will need a logbook to record the vehicle usage to work out the business portion of vehicle expenses.

Purchase Low Value Asset under $1000

Starting from 17 March 2021, IRD set the Fixed Asset depreciation threshold to $1000. That means if you buying a fixed asset that price over $1000, you can’t claim the whole lot as expenses, you need to do depreciation (claim as expenses in a number of years). So, keep in mind that purchase low value asset that under $1000 always get you the benefit of tax deduction.

Take drawings

It is hard to predict business performance, sometime small business owners put themselves in the payroll, and realised the business end up in a loss (that means you are overpaid tax in an individual level). It is a better practise to do drawings during the year, it does not arise any tax issue and put you in a way flexible position at the end of the tax year.

Paying family member

Small business is often a family business, if you get help from your family members, no matter if it is paper works or help you doing accounts put them in the payroll and count their wages as your business expenses. Please bear in mind, you can only pay your family member in a reasonable market rate and based on the work they actually performed.

We can help

Our passion is to help small businesses success, we make sure our business owners get hassle free on the numbers and make as much time as possible to focus on their core business. Contact us to get the best accounting and taxation solutions for your business.

Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact The Number Studio office.