Help I have no idea what it all means.
Ok, so you have received your tax return from the accountant and it looks like gibberish with no recognisable term’s, yet.
Below is a number of the term’s that you may find on your tax return summary, these are in order that they would appear, and a description of each. If its not on your summary don't worry it does not apply to you. If you have something that is not on the list, please feel free to email us so we can update this page. We have written this page so if you happen to be reading your emails outside of office hours you can still get some help without spending all night stressing about something that doesn't apply to you. If it does apply and you have tax to pay but don’t know how don’t stress we can normally work out a payment plan or utilise tax pooling.
This is the total of the income from those types listed above it. Including, WINZ payments, Interest, Trust/ company distributions, NET business income, Shareholders salary and even your normal PAYE income. This often does not include PIE income or your Kiwisaver income
Tax on Taxable income
Congratulations IRD are going to take a cut of your hard earned dollars. This is the amount of tax that you need to pay. Now before you have a heart attack this is before all the credits for tax paid already, so keep reading.
Less Tax Credits
Overseas Tax paid
This is the amount of tax credits paid overseas in New Zealand dollars (note it maybe less than the actual amount received due to IRD legislation).
Since you have received dividends you have probably also received some imputation credits for tax already paid.
This is just a line totalling the above, “Tax on Taxable Income” Less “Tax Credits” keep reading
Less paid at source
You guessed it, this is the amount your employer has already deducted from your Wages and set to IRD on your behalf
So you have a savings account, maybe a term deposit. This is the amount of tax the bank sent to IRD on your behalf on the interest earned.
Since you have received dividends you have probably also received some RWT credits for tax already paid.
This is just a line totalling the above, “Tax on taxable income” less “Tax Credits” Less “Tax Paid at Source”
Less 20** Provisional Tax Paid
Congratulations IRD thinks you have already paid them some money for the year (maybe it was transferred from last year, maybe it was an overpayment on your GST account). If this amount is negative, there is a chance it is a penalty from not filing on time in the past.
Residual Tax to Pay
Ok so this is the total payable for the year, and the sum of all of the above, hopefully its not too unexpected.
20** Provisional Tax
Ok so now that you know what your tax bill is for this year. If you have gone over a set threshold than IRD will want provisional tax for next year. In simple terms IRD does not like being used as a bank so rather than paying
Use of money Interest
Ok this can be here for a couple of reasons, perhaps you short paid your provisional tax from last year, or you made so much money in your first year that IRD thinks you should have sent them money already, in short it is interest since IRD does not like being used as a bank.
Ok now you are looking at a bit of a table the below are shown in columns
1st inst, 2nd inst, 3rd inst,
This is the provision tax from above broken up into equal instalments, if we are finalising your return after a date the amount may be nil and included in the next instalment.
This is normally payable 7th of April the year after the tax year (i.e the tax year 1 April 2018 to 31 March 2019 will be payable 7 April 2020). This will have your Residual Tax from above listed as Residual Tax to Pay. It will also include the provisional tax payments made already, and possibly any amounts transferred to you (donation rebates, or associated returns)
Posted on Wed, 1 May 2019
by Shawn O'Grady