Tax Checkups

Monday, April 14th, 2014

TaxTax Checkups

Another tax year has gone by and that is a trigger to check up on a few things. Not everyone is required to send in a tax return every year and so it is easy to let things slip by that should be attended to.

Firstly, check to see if you are entitled to a tax refund. This might occur if, for example, you only worked part of the year, you had more than one employer during the year, you have expenses you can claim or you qualify for an independent earner tax credit. It is common for students to qualify for a refund if they have only worked part time, and also investors who have paid a management fee to a financial adviser, as the fee is usually tax deductible. While there are companies who will check your refunds, you can find out very simply yourself, without having to pay a fee, by registering on the Inland Revenue website and using the online services account. You can do this from mid-May.

The next thing to do is to ensure you are using the right tax code for salary and wages and for investments, especially if your circumstances have changed. For example, if you have turned 65 and are now receiving NZ Superannuation as well as income from employment you may need to use a secondary tax code. A change in income may also affect your Prescribed Investor Rate (PIR) which applies to investments in Portfolio Investment Entities (PIEs) such as KiwiSaver, PIE managed funds and PIE bank deposits. Your PIR is determined by your previous two years income and, as it is a final tax, if it is set too high you will not be able to get a refund so it is important to get it right.

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