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fatjoez

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#27308 21-Oct-2008 18:29
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So I live in new Zealand and occasionally do a bit of website development on-line as a service to people. 
I get paid via paypal which i then withdraw to my bank account here in nz.
My first question is, is this income taxable based on new zealand laws and even if it is, how would the IRD even know I'm receiving it

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manhinli
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  #172586 21-Oct-2008 18:37
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fatjoez: So I live in new Zealand and occasionally do a bit of website development on-line as a service to people. 
I get paid via paypal which i then withdraw to my bank account here in nz.
My first question is, is this income taxable based on new zealand laws and even if it is, how would the IRD even know I'm receiving it


Firstly, you'll need to have this taxed as well, which will probably come under here.

And the IRD will need to know, or otherwise you'll be breaking the law.




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mdf

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  #172597 21-Oct-2008 19:48
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Yes, it is very likely taxable as income tax, as from the sounds of things you are earning it working in New Zealand and remitting those funds to NZ. It can depend a little on your circumstances (things like whether you are a NZ tax resident), but given the remittance I would be surprised if you are not.

The IRD finds out about it since you will have to disclose it on your personal income tax return (most likely an IR3 as posted by manhinli). This is exactly the same as if you were, for example, self employed in New Zealand. And its an offence to fib about this.

In theory, you may also be liable for GST on this amount (given that you are providing a "service"). There is a threshold on this however (you have to be earning over a certain amount, from memory something like $38,000). There are also certain activities that are exempt - most likely in your case if you are "exporting" a service, there is usually no GST.


On the flip side, if you are doing this professionally, you can do things like claiming back your own GST, or deducting your business expenses (which can include things like depreciation of assets - e.g. computer hardware). However, there are quite a few rules around this and it is only worthwhile if you are really doing it as a business, and it sounds like you are only doing this on the side.

A good accountant can provide a lot of good advice about all this. In particular, the rules are often very complicated and depend a lot on your particular circumstances. IMHO, this is really a must if you want to do it properly.

Failing that, if you ring IRD on the personal tax phone number (0800 227 774 I think is the right one), you can usually speak to someone very helpful who can let you know more about your particular position, though they cannot provide detailed advice. You can usually do this without necessarily providing your individual IRD number. You might also like to consider asking about what the rules are about self employed / small businesses in this field. Or have a look on the IRD website, there is some good info there.

 
 
 
 


scottjpalmer
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  #172605 21-Oct-2008 20:40
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They won't necessarily know you are doing it, but if they find out and you haven't told them when you should have, you will not like the consequences of earning a little cash on the side.

fatjoez

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  #172612 21-Oct-2008 21:09
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definately an on the side activity and almost certainly under 38,000, not even close to 10,000 i'd say
so not sure as of yet what i'll do and I haven't ever filled in an IR3 as this is only a recent thing and all my jobs in the past have been PAYE

mdf

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  #172633 21-Oct-2008 22:06
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IR3s are pretty straightforward. You need to fill one of these in if you are things like self employed, or even received dividends on shares. There will be a box to the effect of "other income" or "overseas income" or something like that. You just self-declare.
But as I say, highly dependent on individual circumstances whether you do/do not have to do this.

hushadog
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  #172647 21-Oct-2008 22:51
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It doesn't matter how much you earn. Could be $10 could be $10,000 you must declare it. It doesn't mean you'll end up paying tax though. Just save yourself sleepless nights and declare it, because you never know they might even end up owing you money.

Ragnor
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  #172656 22-Oct-2008 01:02
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My advice is get yourself setup properly as a business probably sole trader style.  There are alot of benefits in terms of claiming expenses and so forth.

 
 
 
 


nate
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  #172848 22-Oct-2008 18:29
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hushadog: It doesn't matter how much you earn. Could be $10 could be $10,000 you must declare it. It doesn't mean you'll end up paying tax though. Just save yourself sleepless nights and declare it, because you never know they might even end up owing you money.


+1

Remember the IRD have the power to go after you up to 7 years (I think, may only be 3) for unpaid tax, PLUS accrued interest.

Never ever ignore the IRD or try to cut around them.

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