NZ Accounting: claimable non-cash expenses v taxable income

NZ Accounting: Claimable non-cash business expenses vs. taxable non-cash income.

There are some non-cash expenses all businesses should be claiming – and some non-cash income that could cost business owners big-time in 2011, warns Michael Fresnel, the Principal, NZ Accounting.

“Income can be goods you use personally (even spoiled goods), gains on assets sold – these are the usual suspects,” Mr Fresnel says.

“But be aware that from this year with the changes to Inland Revenue building depreciation rules, you may well be up for an increase in provisional tax to pay.”

Mr Fresnel believes this will have quite an impact on many New Zealand businesses and wants to make sure all business owners are fully informed.

He is also concerned business owners suffering hard times are not aware of the rules around discounts or negotiated full and final settlements.

“For those people in business negotiating cents in the dollar creditor petitions, be aware, you’re up for the tax on that gain. And this tax to pay needs to be built into the repayment proposal,” explains Mr Fresnel.

On the flip side, he suggests business owners make sure they are getting the maximum benefit from non-cash expenses they can claim that are sometimes overlooked.

“Using your home for the business (including rest room facilities) means you can claim a portion of the household expenses, and this can amount to quite a good tax saving,” says Mr Fresnel.

Also it can be more beneficial to claim vehicle expenses through a log book system over incorporating the asset into the business – but keep an eye on assets personally owned that are being used in the business, he says.

“These assets can be introduced into the business – which means a GST claim back now on the second-hand value of the asset, and over the long-term, a non-cash depreciation expense claim.”

Business owners who want advice about non-cash income and expenses can visit NZ Accounting’s website and use their new “ask a question” service – a free service to anyone in business.

ENDS

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