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  Reply # 1496880 22-Feb-2016 11:30
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Remember, you don't need to be GST registered to operate a business, so if you don't get a GST receipt, maybe its just that they are not GST registered....

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  Reply # 1497106 22-Feb-2016 16:49
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macuser: Remember, you don't need to be GST registered to operate a business, so if you don't get a GST receipt, maybe its just that they are not GST registered....

 

 

 

True - as long as you get a receipt for the payment. If they are not GST registered then it obviously won't have a GST number on it.






 
 
 
 


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  Reply # 1497173 22-Feb-2016 18:06
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Geektastic:

 

macuser: Remember, you don't need to be GST registered to operate a business, so if you don't get a GST receipt, maybe its just that they are not GST registered....

 

 

 

True - as long as you get a receipt for the payment. If they are not GST registered then it obviously won't have a GST number on it.

 

 

 

 

And - this may sound obvious - if they're not GST registered, they cannot charge GST.


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  Reply # 1497305 22-Feb-2016 19:41
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I totally agree with the OP.

For those thinking they win by doing cashies, think again

I used to work in commercial banking, and guys who would take cashies (or money from the till) would come to us asking to borrow money. We'd ask for a copy of the final financial accounts as were sent to the IRD, i.e. accountant prepared accounts for tax purposes.

1) We'd say their income is too low to repay the loan they want. Their reply: I make more than this, what you see is just what is in the books. I take $XXX out each week from the till/cashies.

Our thinking: You've just told me that you lie to the IRD, hmmmm Will you lie to us also? Can I trust you? Go away, I don't want to put my reputation/job on the line lending money to a crook. These types are often difficult to deal with, usually financially illiterate, and have cash flow issues, which means they'll chew up lots of my time for little reward.
Our reply: Sorry, but we can only lend you money based on what you provide the IRD.


2) Hmmm so when you want to sell your business, you've got no equity left. Your business has terrible margins, the business looks appalling, you'll only get very low offers, to buy the assets of the business.


3) Your accountant knows you are taking money, because your margins are out of whack with your industry.


4) Don't think that the IRD doesn't have statistics on industry margins or employ ex-accountants (see #4). Like your accountant the IRD knows too. It's just a matter of time before they knock on your door asking for their money.


The short of it, the only one being fooled is you. To the financially literate, you appear to be dishonest. If you want to live in a country where tax evasion is a national past-time move to almost-bankrupt Greece.



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  Reply # 1497314 22-Feb-2016 19:51
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dejadeadnz:

nakedmolerat:


 


My interpretation :


1. You maybe underestimated your neighbour(s)


2. Your neighbour(s) possibly manage their money well



Not necessarily an invalid interpretation but somewhat unlikely, especially re: (1). I am the BC chairperson here and also know what most of my neighbours do for work. Because I work for a bank, I frequently get asked for advice on how to borrow more and more money. Without wanting to go into too much details, as someone who also provides volunteer financial/budget management advice, many of my neighbours fit into what I would consider "Going crazily in debt to keep up with the Joneses" variety.


 


 



I've worked in financial services for years, so have seen many many people financially naked. The common scenario i.e. 90-95% of NZers is to borrow to fund their lifestyle. Borrow money to buy the boat, pay for the wedding, holiday, new TV, private school fees. And then spend a few years repaying the debt on a depreciating asset. I use the term asset very loosely here.

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  Reply # 1497372 22-Feb-2016 20:57
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macuser: Remember, you don't need to be GST registered to operate a business, so if you don't get a GST receipt, maybe its just that they are not GST registered....


Of course, only if you earn less than the threshold - $70k if I recall correctly.




 

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  Reply # 1497374 22-Feb-2016 21:03
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PhantomNVD:
Linuxluver:

I think I've found a variation. 

Some tree cutters ask that you make payment to their church. You don't get a GST invoice. 


Churches pay no tax. Do churches "reward" people who 'tithe' this way? It would be a way of laundering income through a church to avoid tax. The church keeps a cut....and the IRD doesn't get any. 


Even it is a straight donation to the church, it seems tax is being avoided by the person who earned the money. Is income donated to churches tax exempt? or do you pay income tax, then donate to the church....? 



You pay tax first, donate to the church 2nd, and then wait till year end to submit all your donations (to ANY non profit) and receive back the tax amount (less tax) that you paid on the donation.

E.g. I earn $100,000 gross [I wish!] , pay 30,000 in tax (rounded) , then 10,000 in tithe to the church.

At year end I get the $3000 tax-I-already-paid-on-donation-money back, less around $915 in tax ON the rebate!

So I get roughly the same as if I'd earned 90,000 gross (and given the 10,000 directly) as the tax I paid on the gift is reworked back into the gross and retaxed.

The small win for IRD is holding that money all year and only paying out my 'overtaxed' amount May/June the following year...


Source:
http://www.salaries.co.nz/a/2008-tax-rates-on-earnings/


Payroll giving - set it up with your employer. Donations come out of your pretax income, so there's no rebate to worry about. If you're happy for your employer to know who you give to, that is.




 

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  Reply # 1497424 22-Feb-2016 21:46
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TinyTim:
PhantomNVD:
Linuxluver:

 

I think I've found a variation. 

Some tree cutters ask that you make payment to their church. You don't get a GST invoice. 

 

 

 

Churches pay no tax. Do churches "reward" people who 'tithe' this way? It would be a way of laundering income through a church to avoid tax. The church keeps a cut....and the IRD doesn't get any. 

 

 

 

Even it is a straight donation to the church, it seems tax is being avoided by the person who earned the money. Is income donated to churches tax exempt? or do you pay income tax, then donate to the church....? 

 



You pay tax first, donate to the church 2nd, and then wait till year end to submit all your donations (to ANY non profit) and receive back the tax amount (less tax) that you paid on the donation.

E.g. I earn $100,000 gross [I wish!] , pay 30,000 in tax (rounded) , then 10,000 in tithe to the church.

At year end I get the $3000 tax-I-already-paid-on-donation-money back, less around $915 in tax ON the rebate!

So I get roughly the same as if I'd earned 90,000 gross (and given the 10,000 directly) as the tax I paid on the gift is reworked back into the gross and retaxed.

The small win for IRD is holding that money all year and only paying out my 'overtaxed' amount May/June the following year...


Source:
http://www.salaries.co.nz/a/2008-tax-rates-on-earnings/


Payroll giving - set it up with your employer. Donations come out of your pretax income, so there's no rebate to worry about. If you're happy for your employer to know who you give to, that is.

 

If you read the link, that's not quite true. It doesn't come out of your pre-tax income, rather you get a tax credit of 33.33% applied directly to your PAYE. So, again, if you're on a lower tax rate, you're even better off.


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  Reply # 1497455 22-Feb-2016 22:20
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Kiwifruta

 

 
I've worked in financial services for years, so have seen many many people financially naked. The common scenario i.e. 90-95% of NZers is to borrow to fund their lifestyle. Borrow money to buy the boat, pay for the wedding, holiday, new TV, private school fees. And then spend a few years repaying the debt on a depreciating asset. I use the term asset very loosely here.

 

 

 

Speaking of private school fees, nothing amuses me more than parents who have already paid a massive premium to live in suburbs with excellent state schools sending relatively mediocre kids to expensive private schools. The tragic and often financially wasteful results have often been readily apparent as some of these kids go to university, get taught by yours truly (and others - I teach part time), and are basically told that their work is of a very average standard. These kids can sometimes get rather indignant and sometimes resort to statements like "I came from X school; I have always done well...". 


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  Reply # 1497528 23-Feb-2016 07:22
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As a teacher in a private school, nothing bugs me more than the parent who thinks that throwing money at their child will 'fix' them... academically/socially or behaviourally.

But on the other hand, many children DO have a better schooling experience just because the school they are in doesn't 'have to' take individuals who might be extremely disruptive or aggressive too.

[Primary] School these days is not only seen as a way to educate a child, it now seems to be the school's roll to teach basic morals and socially acceptable behaviours too... Even more so now that normal parents feel guilty disciplining their own children at home. Sue Bradford has a lot to answer for, as parents who 'abuse' their children are not the ones who obey those laws in the first place.

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  Reply # 1497923 23-Feb-2016 16:01
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sir1963:

Sideface:


sir1963: <snip>


You mean like Google etc who pay 90% of their profits to an overseas rights holder sitting in a tax free haven.


The big corporates are underpaying through loopholes and tax dodges by far more than cash jobs will ever do.


Its just the little guy is a much easier target.



+1  The big corporates are ripping off taxpayers in New Zealand, and in many other counties, on a huge scale.


But thousands of "little people" are also ripping off other NZ taxpayers, by illegally avoiding tax.  It all adds up to a lot of money.


"Cash jobs" are not victimless crimes - we all pay for it, indirectly.



 


I agree, but the truth is the government(s) are only targeting the little people, the easy targets.


 



IRD also targets the corporates http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10602135

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  Reply # 1497927 23-Feb-2016 16:16
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Actually, IRD primarily targets things where it will receive a ROI for the time invested (think staffing and expenses for the audit), it's less worth while auditing a sole trader who may have a 1-2000 tax liability than a multi million dollar company that has hundreds of thousands that may not be accounted for.

 

Small business is not immune to IRD scrutiny and shading dealings do raise red flags but just like GST for imports under $400, there is no real financial sense to get too involved.

 

This really is a distraction from other tax issues that the govt doesn't want to address that directly effect its donation base (that would be far more profitable) - gains tax and making a new tax bracket for the super rich

 

I don't think too many of you are self employed, but if you've ever paid GST or income tax late, you will know the penalty fees are huge - they probably make a killing off that alone.

 

 

 

 

 

 


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  Reply # 1497982 23-Feb-2016 17:41
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Kiwifruta:
I've worked in financial services for years, so have seen many many people financially naked. The common scenario i.e. 90-95% of NZers is to borrow to fund their lifestyle. Borrow money to buy the boat, pay for the wedding, holiday, new TV, private school fees. And then spend a few years repaying the debt on a depreciating asset. I use the term asset very loosely here.

 

We've got friends like this, borrow for heaps of stuff. Rubbish things too, like excessively expensive sports gear for their kids (why does an 11yr old need $300 footy boots???), beauty treatments when feeling low, and all that kind of non-important stuff. 

 

I think some are relying on future inheritance to some degree -- but I suspect many people are going to have miserable retirements as soon as they lose the ability to service new debt. 

 

I'm the opposite, never get into debt, ever. But, that is probably a handicap too. 

 

 

 

 


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  Reply # 1497989 23-Feb-2016 17:54
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macuser:

 

Actually, IRD primarily targets things where it will receive a ROI for the time invested (think staffing and expenses for the audit), it's less worth while auditing a sole trader who may have a 1-2000 tax liability than a multi million dollar company that has hundreds of thousands that may not be accounted for.

 

I don't think too many of you are self employed, but if you've ever paid GST or income tax late, you will know the penalty fees are huge - they probably make a killing off that alone.

 

 

 

 

My partners brother (painter) was audited and he was on a rather low income. I didn't see the point in putting the screws into him as his earnings were quite low and his annual tax liability wsa very small .

 

Regarding penalties, use of money interest is a penalty.  In the IRD manual...

 

"Interest isn’t a penalty—
it’s a charge for the use
of money."

 

I call BS on that. The IRD UOMI interest rates are devised by loan sharks.     

 

You can pay all your tax amounts on the correct dates yet IRD will still charge you a huge amount of interest totally out of alignment with bank rates. I got charged 8k UOMI for paying my tax on all the correct dates.  If I'd had the money in the bank I'd have earned less than 1k after tax.


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  Reply # 1498017 23-Feb-2016 19:02
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surfisup1000:

macuser:


Actually, IRD primarily targets things where it will receive a ROI for the time invested (think staffing and expenses for the audit), it's less worth while auditing a sole trader who may have a 1-2000 tax liability than a multi million dollar company that has hundreds of thousands that may not be accounted for.


I don't think too many of you are self employed, but if you've ever paid GST or income tax late, you will know the penalty fees are huge - they probably make a killing off that alone.


 



My partners brother (painter) was audited and he was on a rather low income. I didn't see the point in putting the screws into him as his earnings were quite low and his annual tax liability wsa very small .


Regarding penalties, use of money interest is a penalty.  In the IRD manual...


"Interest isn’t a penalty—
it’s a charge for the use
of money."


I call BS on that. The IRD UOMI interest rates are devised by loan sharks.     


You can pay all your tax amounts on the correct dates yet IRD will still charge you a huge amount of interest totally out of alignment with bank rates. I got charged 8k UOMI for paying my tax on all the correct dates.  If I'd had the money in the bank I'd have earned less than 1k after tax.



Why did you get charged 8k for paying your tax on all the correct dates?




 

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