IBBZ Accounting

Chartered Accountants & Tax Specialist

 

Useful tips for Small Business

General update by IBBZ Accounting on latest tax news, business growth and technology tips.

Proposed Solutions to RWT for Small Businesses

on in Tax updates
  • Font size: Larger Smaller
  • Hits: 793
  • 0 Comments
  • Print

RWT on dividends between companies

With amendments being made to sections RE 2(5), this now limits the definition of “resident passive income”. This section excludes fully imputed dividends paid to a corporate shareholder if the paying company chooses to exclude the dividend from the definition.

This will allow a company to opt out of withholding RWT on a fully imputed dividend paid to another company.

The above amendments were needed because of company tax rate being lowered from 33% to 28%. Dividends were effectively overtaxed by the amount of RWT withheld.

RWT on dividends and interest payments made by closely held companies to their shareholders

Currently subject to the attachment of imputation credits, the RWT rate on dividends is a flat 33%. Due to the company tax rate being lowered to 28%, even fully imputed dividends must have RWT deducted.

This leads to over-taxation for individual shareholders who are not on the top personal tax rate. Any excess RWT then needs to be claimed as a refund when the tax return for the relevant income year is filed, which not only means refund delays but also a compliance burden on those individuals who may not otherwise have had to file a return.

Proposed solution

There have been discussions to allow a close company to elect to remove RWT on dividends and interest payments. One possible solution to do this is the company directors providing a guarantee RWT portion shall be paid. In the absence of non-payment, they will be personally liable for the payment. One this proposal is passed, there shall be forms published by the IRD which will allow small business to elect for RWT exemption. This will really help small businesses to declare divided without complication and compliance cost of managing and paying RWT. Recipient will be able to pay the RWT portion of tax via their tax return.

Watch this space for further development on this front

0

Saurav Wadhwa is a Principal Accountant at IBBZ Accounting Limited


 


Saurav Wadhwa 427x640


Saurav has 15 years of practical experience in tax & accounting services. He is qualified both in law and accounting. Saurav has worked in various tax & accounting specialist roles for large corporates in New Zealand. He loves to work with Small Businesses.


His key focus is on:



  • Tax advisory for small and family operated businesses on a wide range of taxation issues.

  • Legitimate tax saving structures.

  • Advising on range of new business issues.

  • Ensuring business growth is attained.

  • Effective cash flow planning.


Blend of skills in Tax laws and accounting, makes him perfect advisor for small businesses and individuals like you. Saurav understands how to safeguard your business from creditors risk, maximise the business growth and pay low taxes. He can be your good strategic and business partner. He is of a friendly nature and easily approachable.


Awards



2014 IBBZ Accounting won the award of Best Small Business 2014. 


2015 Saurav won the award of Best Accountant of the Year.


2017 Saurav was appointed as a committee member to New Zealand Public Practice Board of CPA Australia. 


2018 CPA Australia filmed Saurav Wadhwa and IBBZ Accounting for their marketing campaign to showcase successful accountants in New Zealand Public Practice.  


2018 IBBZ Accounting was Finalist in Westpac Auckland Business Awards: Strategy and Business Planning 2018


 


News Paper Articles.


Sunday Star Times -Fairfax Media -12-08-2018


InTheBlack Aug 2018 issue - CPA Australia In Practice Publication 



He can be contacted on saurav@ibbz.co.nz  or 09 272 8050

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Wednesday, 19 December 2018