Tax Planning

Tax planning is a process of analyzing one's financial situation logically to reduce tax liability. Tax planning involves legally planning your income to avail various exemptions and deductions.

Tax planning is about being smart with how you arrange your tax affairs. It requires a thorough understanding of your business, your tax profile, and your commercial objectives.

What you can claim for

• vehicle expenses, transport costs, and travel for business purposes?
• rent paid on business premises.
• depreciation on items like computers and office furniture.
• interest on borrowing money for the business.
• some insurance premiums.
• work-related journals and magazines.

Business expenses are:

• Day-to-day revenue expenses for running your business, eg advertising or wages.
• Assets you buy, eg machinery, computers, or tools, are called capital expenses. Note: items that cost $1000 or more must usually be depreciated.

Generally, you claim your revenue expenses in the year you incur them, and you depreciate capital expenses over time.

GST

If you're registered for GST, your income tax return will exclude GST on your income and expenses — GST is accounted for in your GST return.

If you're not registered for GST, your income tax return will include GST on your expenses only.

Effective international tax planning can help you save New Zealand and offshore taxes.