When it comes to filing business tax returns, compliance is the key to getting everything right. Business owners can be 100% compliant by knowing their responsibilities as a taxpayer under New Zealand’s laws.
If your business falls under rental accommodation, here are the basic tax laws that apply:
Taxable Rental Income
Any amount earned from renting out a land or a building (including having flatmates or borders) falls under the provisions of taxable rental income. Payments received for damages and rent arrears from the Ministry of Business, Innovation and Employment are also considered income. Nonetheless, payments received for tenancy bonds and passed on to the Ministry are not.
Expenses that can be deducted from a rental income include:
– Administrative and maintenance costs
– Insurance and interest rates
– Agent’s fees and commission
– Repairs and maintenance
– Motor vehicle expenses
– Travel expenses
– Mortgage repayment insurance
– Accounting fees
On the other hand, the following expenses cannot be deducted for tax purposes:
– The amount paid on buying the rental property
– Mortgage repayment that is part of the capital
– Interest on a loan used outside the rental accommodation business (applies even if the rental property is collateral for a loan)
– The amount for rental property improvements, repairs and replacement of damaged parts
– The amount paid for real estate and legal charges during property purchase
Besides these basic tax return laws for rental property businesses, there are rules that apply to certain conditions. Some provisions has certain exceptions to the rules mentioned above when it comes to business tax returns.
Enlisting the help of a tax agent is highly encouraged. Even the tax bureau of New Zealand recommends hiring an agent for the accurate filing of income tax returns.