Wow!
That was an amazing experience running the webinar for the first time!
While we had a very modest crowd of about 12 people – they were 12 very engaged and inquisitive people, just the kind of people we want to be talking to!
Jimmy Ling was amazing as always, answering questions with his superior technical knowledge on tax issues. I wasn’t too bad either (haha).
So to quickly re-cap, we covered the following topics:
Tax Relief in the COVID-19 crisis
The IRD in NZ are really nice people -they’ve gone out of their way to make paying taxes an easier and less stressful process for all Kiwis. Basically, if you are in a position where you cannot make tax payments, you can get in touch with IRD and request for instalment payments, payment deferrals or even straight up tax write offs (for really serious cases). We couldn’t give any specific instructions as to what individuals can do to apply for tax relief as it is up to you to consult with IRD or your accountant and work out what you can apply for.
I also spoke about some of the new tax law changes, like the change to provisional tax assessment and the minor asset depreciation threshold (which I have covered before here).
Being tax aware
Jimmy spoke at great length about some of the mistakes that businesses commonly make when it comes to paying taxes. Many business owners try to claim anything and everything under the sun as a business expense. The truth is that business owners need to be more aware of what they are claiming for and that they need to be more conservative in claiming. If you are unsure if you can claim something – chances are that you can’t.
Some of the common tax mistakes that business owners make are claiming personal meals as entertainment (they are supposed to be drawings) and claiming other personal expenses as business expenses (such as personalised, monogrammed lingerie – yeah, it was a pretty WILD discussion!).
Staying resilient
I got a chance to share a bit of my personal story, having given up my life back in Malaysia and moving to NZ for a better future and the challenges that entailed. Losing my job at the start of the financial crisis was quite shocking but fortunately I had the emotional resilience to suck it up and keep trucking on. Now I’m the proud owner of my own little business and I’m quite keen to put in more effort into this and see where it goes!
Cash management
Yeah, you guessed it, accounting fans – of course I would talk about cash management. It is my most favorite thing to talk about! I talked about how putting cash aside is important, but if you don’t have cash right now, you should try to drum up whatever you can from benefit claims or the wage subsidies that the government has put in place. Once you have some cash, you can start planning and budgeting how to use that cash.
We also got asked some really interesting questions. Some of the questions asked were:
Do I need to pay taxes on any gains made on the share market?
Jimmy answered this question really well. The short answer is that no, you don’t have to – especially if you are investing for the long term. If you are a short-term trader then yes, it would be construed as business income and you have to pay taxes on it. If you hold shares through Exchange Traded Funds/Kiwisaver – you don’t have to worry about calculating the tax rate on that as your service provider will withhold tax for you on your behalf and submit the returns to IRD.
What sort of changes will the IRD be making to tax laws in the months to come?
Apart from the changes to provisional tax and depreciation, there is a proposal to allow businesses to use any losses made this year to offset any gains made in previous years. Effectively giving them the ability to claim a tax refund for profit made in the past, if they made a loss this year. Currently, you can only carry losses forward, you cannot use the retroactively.
I also spoke about the possibility of the debate around Capital Gains Tax to be renewed as the government looks for ways to increase its revenue in the months following the huge financial aid package we’ve been receiving. I also touched on the feasibility of having a 0% tax rate on all income below $10,000 – which would give more spending power to all low income earners and all Kiwis in general. Spending power is key to kicking the economy out of recession – but I will write more on this later when I’ve done more research.
Should I register each one of my side hustles as a separate income source on my tax return?
This was an interesting question. But the short answer is no. Mainly because unless you are making a significant amount of money from each side hustle (say, upwards of $60,000 per annum each) you are better lumping it all together as a single source of self-employment income. For the record, for wage subsidy purposes – you can only make the self-employment claim once, so you can’t be claiming it for multiple self-employment sources. If you are making more than $60,000 per annum from your side hustles, then perhaps you should consider starting a company and paying taxes for that income source separately.
That’s about it for the key highlights of our webinar! Jimmy and I are slowly coming down from the high of running our first webinar and we are already starting to plan our next webinar soon! So stay tuned!!!
If you are looking for a recording of the webinar (especially if you missed it) check it out over at this link.
Sudhir
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