1.
What is Taxable Income Taxable Income is the final income amount on which tax is calculated or levied. It is made up of the gross income that an individual earns from a salary or wage less any allowable deductions off that income .... As far as a business is concerned taxable income is made up of the gross income of the business less all allowable deductions attributed..
2.
Assessable Income Assessable income means income of any kind which is subject to income tax. It is simply arrived at by taking the total gross income you receive. After deducting any deductions allowable from the Assessable Income you get Taxable Income. It is on the taxable income figure that the tax is levied. Income really means incoming or what comes in in reference to money..
3.
What is Income Tax The key point about income tax is that is a tax on income and nothing else. Income tax is levied in New Zealand for 2 main reasons ... for the economy and is therefore an important financial tool. Who Pays Income Tax Every person that is resident in New Zealand pays income tax on all income that is earned. The income must be that which is classified as taxable income..
4.
What is Taxable Income Taxable Income is the final income amount on which tax is calculated or levied. It is made up of the gross income that an individual earns from a salary or wage less any allowable deductions off that income .... As far as a business is concerned taxable income is made up of the gross income of the business less all allowable deductions attributed..
5.
Characteristics of Income It is not always easy to determine whether a receipt is income in the ordinary sense or whether it is income for tax purposes. Over the years case law has set down some basic rules. These are as follows: Income ... a person from incurring expenses the savings is not income. Income is what comes in not what is saved from going out. Income is also something that is money..
6.
When is Income Derived Every person is deemed to have derived income ... interest or on behalf of the taxpayer This means income doesnt necessarily have to be paid in cash for it to be assessable as taxable income ... income to that shareholder. Accounting Methods There are two methods of tax accounting when it comes to income cash method and the accruals method. Accruals..
7.
and partnerships. Income is received by 2 classes of people: Non Self Employed employees ...Who is Responsible for the Income Generally it is the recipient of the income .... Additional income may come from other sources of investments such as money on loan company shares and rental property. Your income from work as an employee ... year. 2. Self Employed If you own a business dairy taxi driver are engaged..
8.
How to Pay the Correct Amount of Tax When you receive income from your job or other taxable income: Give your IRD number to your boss or other payer ... at the non-declaration rate of 45 cents in the dollar. The tax deducted from your income may range ... does not take account of any other income you may receive eg ... which will show whether you are entitled to this refund. Inland Revenue Cautions Against Income Splitting..
9.
and partnerships. Income is received by 2 classes of people: Non Self Employed employees ...Timing When Income is received Income is received for tax purposed ... even though it may not be entered yet in your bank book. Income .... If you are in business and have adopted an accrual basis of accounting income consists ... the following 20th of the month. However it is income to you from the date of the sale..
10.
New Zealand residents are liable for income tax on the income that they earn from all sources including overseas. That is they are taxed on their world income. If you are a NZ resident for taxation purposes you will have to pay income tax on all the income receive if you come in within certain criteria that is explained ... of each of those countries. Both countries will obviously tax you on your world income..
11.
Records of Income You should keep the following records of your income: Tax invoices if you are registered for GST and invoicing a customerclient or another GST-registered person see an illustration of a tax invoice containing the necessary information for tax purposes Other invoices e.g for supplies of 50 or less which do not require a full tax invoice even if you are registered for GST Credit..
12.
Records of Fixed Assets An asset is something the business owns. A fixed asset is an asset you generally expect to use in your business for more than a year. You cannot deduct the full cost of purchasing these assets from your taxable income in the year of purchase. You can however claim depreciation. You need to prove the purchase and sale of any fixed asset with a tax invoice. If you start..
13.
Records of Payroll All your pay records must be held in New Zealand for at least 7 years. These records include: pay sheets PAYE payment receipts Tax code declarations completed by employees. Records must be in English. If you wish to use another language for keeping your records you need special permission from IRD. New employees must complete a Tax code declaration IR330 when they start working .....
14.
The Trading Trusts Income The trusts income is deemed ... or beneficiary income of the beneficiary of that other trust. A settlement of property on a trust which property would but for the settlement have constituted: gross income ... or if the settlor had been a resident in New Zealand and subject to income tax at that time ... from gross income for New Zealand tax purposes. These settlements of property..
15.
Rent or Business Income When you receive rental or business income ... when you are running a business. Trust Income New Zealand resident beneficiaries Beneficiaries who are New Zealand residents are liable for New Zealand income tax on all their income from any source in the world. Beneficiary income they receive from any trust will be taxable in New Zealand at their normal income tax rates..
16.
What is Income for Tax Purposes New Zealand also taxes all income sourced ... of income can be derived from New Zealand. Income includes: income from any business wholly or partly carried out in New Zealand income from contracts made or wholly or partly performed in New Zealand income from the sale of tangible ... in New Zealand income derived directly or indirectly from any other source..
17.
What is Exempt Income Many types of income are expressly exempt from income tax ... on all or some of the income they receive. We do not propose to go into detailed .... The list below is wholly exempt from tax. List of Tax Exempt Income The list .... Charitable bequests. Charitable business. Charities income. Community task force ... monetary annuity. Farm vendor finance bond or farm vendor mortgage income..
18.
How the Trust Earns Income Usually the money or property settled on the trust ... operation. This revenue becomes the trusts income as it is earned. The trusts income is deemed to include certain settlements of property on a trust. The trusts income is separated into two parts for tax purposes: beneficiary income and trustee income. The tax on these two parts is then calculated separately to arrive..
19.
after the end of that income year. As well as these 2 types of income trusts ...Dividing the Trust Income Heres how the income is divided: Beneficiary income is all income derived by a trustee of the trust during any income year that either: vests absolutely in the beneficiary during that income year or is paid ... after the end of that income year. Trustee income is all income the trust earns in its income..
20.
Who Pays Income Tax in New Zealand Every person that is resident in New Zealand pays income tax on all income that is earned. The income must be that which is classified as taxable income. The person receiving the income is the important criteria rather than where the income comes from. Income Tax is imposed on the taxable income of every taxpayer for each income year. In N.Z the income year runs..
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