Each month we highlight 2 issues covering business issues or tax updates.
From 29 March 2018, the bright-line test that is used to determine if you have tax to pay on the sale of residential property has changed.
If you entered into an agreement to purchase residential property on or after 29 March 2018 and sell it within 5 years, you’ll need to consider if it is taxable under the bright-line test. If a property was purchased on or after 1 October 2015 through to 28 March 2018, the bright-line test will look at whether the property was sold within 2 years.
The bright-line test doesn’t apply if the property was bought for the purpose of your main family home or it was transferred to you as part of an inheritance. There are special rules that apply for property transferred under a relationship property settlement/matrimonial property settlement.
If you bought the residential property after 1 Oct0ber 2015 but before 29 March 2018, the two year bright line rule applies.
Do you have a side hustle or side business to complement your salary and wages? Perhaps you are a member of USANA or receive affiliate referral fees. Or you may be a bit more ambitious and looking at turning your hobby into a serious venture. If your activity is deemed to be a business, you have to pay tax on the net profit. But that's ok. Because being in business allows you to deduct expenses.
One such expense is your home office expense. You may be a graphic designer and use one or two rooms in your house as a design studio. You can claim a portion of your rental/utility/rates/mortgage interest expense as your home office expense. If you don't want to keep track of all the water, power bills, home phone bills, IRD offers you the option to use the standard cost approach.
For the year ending 31 March 2018, the standard cost formula to calculating the home office expense is $41.10 multiplied by the floor area of your home office PLUS a percentage of your rents/land rates/mortgage interest.
Mr Tax NZ is run by tax agents registered with Inland Revenue Department NZ. All our accounting staff at Mr Tax NZ hold degrees from the University of Auckland and are either Xero Partner Certified and/or members of the Chartered Accountants Australia and New Zealand.
Edward, Tax Manager
"Our vision is to be our client’s first choice for tax and accounting advice and to provide high quality, relevant and timely tax and business advisory services. We follow best practice and adhere to the profession’s code of ethics. This includes acting with integrity, acting with due diligence and professional care, maintaining client’s confidentiality, and acting in a professional manner. Integrity and quality underlies our culture."