From 01 April 2011, depreciation on building and items attached to the building are depreciated at zero %, thus there is no deduction for you.

However, there are lots of assets in your rental property for which you can claim deduction and reduce your taxes.

Commissioner’s view (TIB vol 22 No 4 May 2010) on a depreciable asset is to follow a 3 step process to ascertain whether the assets are a part of the building or are individual assets.

Increasing mobility of capital, cross-border investments and international trade have all necessitated the need for ‘Double Taxation Avoidance Agreements’ between countries, aimed at eliminating ‘double jeopardy’ and facilitating global partnerships.

New Zealand has such agreements with many countries including Australia, UK, European Union and India (to mention a few) but the increasing Trans-Tasman trade and investment has necessitated a better understanding of the financial impact and more importantly, filing appropriate tax returns. While the importance of tax compliance cannot be undermined, individuals and companies must ensure that they are not burdened beyond their taxable limits.

New Zealand Double Tax Agreement with Australia does not allow tax credits received on Australian dividends as tax credits in your tax returns filed in New Zealand. 

There has always been a different opinion between taxpayer and the Commission of Inland Revenue in defining repair or capital expense. A taxpayer will always try to encompass its view in such a way that it can label the expenditure as repairs to avail tax advantage in the year of expense. If the expense is labelled as repairs & maintenance you can avail deduction immediately otherwise it is capitalised and depreciated over the useful life of an asset.

Capital can be defined as a tree, and repair is like watering to that tree. In the other words capital expense is something which gives you a brand new asset, and repairs is usual maintenance of that asset. Sounds simple, but it’s not that easy.

Significant changes are being made to the financial reporting standards from 01^st April 2014. What does this mean to you as a small business owner? Basically the changes are being made in the way your end of year accounts are prepared. The whole idea is to make it simpler to prepare end of year accounts so you will have less compliance cost and can focus more on growing your business.

The initial draft suggested that financial statements were not required for all businesses with less than $30 million turnover, but the IRD objected to that and suggested financial statements are required with a minimum standard level. The requirement for the IRD is to have a basic set of accounts on which they can rely upon in the event of auditing a business.  To reflect those changes The Tax Administration (Financial Statements) Order 2014 has been passed which is effective from 01 April 2014, which means your first set of accounts prepared on this basis would be for the year ending 31^st March 2015.

New Zealand GST is pretty unique in the world as it has very little exemptions. Almost all countries have similar kind of tax in their jurisdiction called VAT or GST. New Zealand’s goods and services tax (GST) system is based on the “destination principle”. This principle ensures that tax is charged by the provider of goods and services to the consumer based on their destination.

In cross border business to business transaction sometimes it is hard to determine the destination of a recipient. In determining the location of the recipient, New Zealand has, since relied on Wilson & Horton decision [Wilson & Horton v Commissioner of Inland Revenue [1996] 1 NZLR 26], which provides direction in determining the location of the recipient.