About Warnings Every taxpayer in New Zealand is required to abide by the regulations and requirements set out in the various taxation acts. However, some important areas need to be brought to taxpayers’ attention because they have a right to know about the information involved and, if necessary, take steps to safeguard their rights.
Warning 1
Your interpretation
The tax return you send to the IRD is your submission of what you believe is the tax payable by you, or the refund that is due to you, in the light of the Tax Act. That is, it is your interpretation. The point is you are perfectly entitled to this. The Tax Commissioner may put forward his interpretation and he is also entitled to.
If you both agree, then there is no problem. However, if your views differ - you have a fight on your hands.
Under the Tax Act the Tax Commissioner has an enormous advantage. He can legally take his interpretation as being correct but you, unfortunately, are given the task of proving him wrong. The onus is on you to prove the IRD wrong.
This differs from our normal system of justice where a man is ‘innocent until proven guilty’. With taxation you are guilty until you prove yourself innocent. The point is, the view of the IRD need not be final and can be challenged. You are both submitting interpretations as you see it of the same Tax Act.
This doesn’t mean that the IRD is wrong or acting illegally. It is simply that two parties may have differing points of view about a particular transaction. The IRD, in general, are reasonable and fair to deal with so put forward your views if necessary.
Warning 2
Your tax adviser may be dangerous to your ‘wealth’.
How often have you heard the remark ‘no thanks, I’ll leave that to my accountant’. This is heard from the self-employed and those in business. The thing is, you will never know whether you are receiving good tax help unless you take time to familiarise yourself with the basics of taxation and how it affects you.
There are many ways you can reduce your tax and save money. This can be done, and should be done, legally. You cannot afford to leave it to someone else. Tax advisers are people and they do make mistakes. Some are excellent at their work and others are less than competent. Make sure you get a good tax adviser because his/her services will be invaluable.
Do not leave it to your accountant, tax consultant or tax adviser. It is best to deal with someone who has expertise in tax (if taxation is the area concerning you in your business). Remember, it is not a question of ability, but it is simply that tax has become such a complex area that one cannot hope to keep up to date with the subject unless one specialises.
So, what is the recommendation? – See a good tax adviser.
Disregard the letters behind the person’s name. He/she may be the most brilliant person in the country as far as finances are concerned, but if they don’t know much about tax, maybe you need to find someone who does.