31 May ACC, Claiming Back GST and Audit Insurance
Almost at the halfway point.
As we come into June, almost half the year is behind us! This is a great time to review your progress to date. Are you on track to achieve what you set out to do this year? If you want a progress check, contact us.
What happens if…
You are injured and can’t work? Most of us don’t consider ever getting seriously injured, but statistics from ACC suggest that they manage 1.6 million claims per year. That’s a lot…
We are fortunate to have ACC, although it’s an imperfect system. It’s particularly challenging for self-employed people or the owners of small businesses. Unfortunately, if you are in one of these categories and are on the default ACC plan, there is a good chance that the cover that you have isn’t all that suitable.
However, there is an alternative cover offered by ACC, one that is far more suitable for most self-employed or small business owners. It’s called Cover Plus Extra and it costs a similar amount to the standard cover but offers far better protection for self-employed & small business owners.
If you want to check if you’re on the right ACC plan for your circumstances either contact us or get in touch with your insurance broker (your broker should have already taken care of this for you…). If you don’t have a decent insurance broker, let us know and we will put you in touch with someone.
Claiming GST back
Every year, we get many many questions about GST claims. Most come from clients, but some come from IRD, sometimes in the form of a review or audit… This isn’t a fun thing to have happen, so if you or your business is GST registered it’s important to get your GST correct at the outset.
What GST is charged on:
Most products or services that your business uses will have GST charged on them. Need some stationery for the office? GST. Fuel up the ute? GST. Purchase some Materials? You get the gist.
However, some things that your business consumes DON’T have GST added on them, so you can’t claim a deduction for them. For example, interest payments (you need to be particularly careful if you have vehicle finance), bank charges, many purchases from overseas and supplies from someone who isn’t GST registered.
The rule of thumb is this; if you don’t have a GST invoice (which includes the GST or IRD number) then you can’t make a claim. And yes, you do have a responsibility to keep your invoices/receipts for 7 years.
There are a number of complexities and exceptions within the rules, this is a brief overview of 3 common ones:
- Second hand goods: if you purchase a second hand good (for example, a vehicle) for use in your business from someone who ISN’T GST registered, you can still potentially claim a GST refund, even if you don’t have an invoice from them.
- Imports: if you import products for use in your business, they will likely attract customs GST (often paid via a freight forwarder). As long as these purchases are used for making taxable supplies (selling products/services that GST is paid on) then the customs GST can be claimed back in full.
- Property: If you purchase property and intend to claim the GST back on the purchase, you MUST get the vendor to complete the GST section of the agreement. If they aren’t GST registered, this should be recorded by the vendor. IRD’s position is that the onus is on the purchaser to make sure that they are allowed to claim the GST back from the purchase, and if you get it wrong, they will come after you!
Audits
For each dollar that IRD spend on audits, they aim to get back over $6. That’s a pretty good return on investment! Many people who find themselves in the IRD’s crosshairs have been chosen at random, so even if you have followed all the rules, you can still be subject to review. Even if you have done nothing wrong and have kept good records, going through an audit can be an expensive exercise! Because of this, we suggest to all our clients that they take up audit insurance.
All of our tax clients will shortly be receiving a letter about Audit Shield – the audit insurance that we recommend. We urge you to take this on. If you want to know more about audit insurance, please feel free to contact us.
