Small to medium businesses
For small to medium businesses, there is the annual reminder about getting the basics right. Businesses are reminded of the following tax compliance basics:
- Ensuring that the correct deductions are made from employees’ salaries and that the employer monthly schedule is filed accurately each month.
- With regard to GST, the most common mistakes made are:
- Not accounting for GST on the private use of assets
- Not including all taxable supplies in the GST return
- Reporting sales and expenses in the incorrect period
- Not registering early enough or not deregistering when the business closes
- FBT returns: identifying all fringe benefits provided, choosing the right rate and filing FBT returns on time
- Keeping accurate records (both electronic and paper)
Inland Revenue has invested significantly in online resources, tools and services in order to make it easier for businesses to get things right.
Independent contractors due to lack of tax knowledge & awareness about accounting rules end up making mistakes which can attract fine & penalties form tax office & other departments . Common issues for this group include failing to file IR 3 income tax returns on time, not including all contract income in tax returns, failing to register for GST once taxable supplies reach $60,000, not accounting for GST on income, claiming private expenditure and incorrectly income splitting income with a partner or spouse.
Miscellaneous Issues for High income earners (Companies/ individuals)
Once again high-wealth individuals are under scrutiny. For this group of taxpayers, examples of issues that will attract attention include:
- Large or one off unusual transactions
- Unexplained tax losses
- Unusual classification of income or expenditure between capital and revenue
- Mismatches between tax paid and net wealth
- Complicated structures or intra-group dealings
- Unusual financial instruments or financing arrangements
- Mixed business/private use of assets – especially lifestyle assets