Tax Updates: 22 April 2024

Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion on any national or international tax issues, please contact Richard via email at richard@gilshep.co.nz.

May 7 fast approaching

Following all the excitement of the past few weeks, the last seven days have been relatively boring in the world of tax (well, at least from a New Zealand perspective), with nothing of any great interest coming across my desk.

Consequently, I thought it might be timely to remind you of the final instalment date for 2024 provisional tax for standard balance date taxpayers, which is fast approaching. Alongside this comes the ability to mitigate exposures to the use of money interest (UOMI), if the expected residual income tax (RIT) for the year will exceed $60k and the expected RIT amount has not been fully paid yet. In this regard, if the first two instalments have been paid as required for the year, then ensuring that any remaining amount required to equate to the estimated annual liability is paid by May 7, will result in any exposure to UOMI being eliminated.

Gone are the days of when, if you didn’t get things quite right, UMOI often applied as far back as the first instalment date (often July 7). Effective from April 1 2017, amendments to the UOMI rules meant that not only could UOMI exposures be eliminated in the above scenario, but equally, if your RIT was less than $60k for the income year, then as long as you have paid your first two instalments for the year as required (or preceding year RIT was less than $5k so you had no payment obligations). UOMI exposures are now only triggered if your final terminal tax payment obligation (RIT minus provisional tax paid to date) is not met – fully paid – by April 7, for those taxpayers using a registered tax agent. The more taxpayer-friendly rules, coupled with better real-time data, provided by XERO and other similar cloud-based accounting software that can be directly accessed by your accountants, provide a golden opportunity not to have to pay a single dollar more than necessary to the Revenue. So, make sure you take advantage of what is available to you.

This article was originally published through the ‘A Week In Review’ newsletter. If you would like to receive Richard’s tax updates every Monday morning, you can subscribe here.