Tax debt write-offs are an important concept for businesses to run efficiently, but they are often poorly understood and either under or over utilised. If you don’t take advantage of a tax write-off, you end up paying too much tax. But if you claim more expenses than you should, you could find yourself in hot water wishing, hoping and dreaming for an IRD tax write-off.
Tax Debt Sorted is one of New Zealand’s most knowledgeable and efficient tax debt management specialists. We want to help you understand tax write-offs and how to use them properly.
What is a Tax Write-Off?
If we are going to explain how a tax debt write-off can help you, we should probably start from the beginning. After all, a lot of trouble with IRD debt starts with a confusion about what all the tax-related jargon really means.
Running a business is a delicate balance of income and expenses: tax write-offs are expenses that reduce your overall taxable income. You may have received $100,000 over the year, but if your expenses total $40,000, you should only be taxed on the remaining $60,000. Essentially, to determine how much tax debt you can write-off, you subtract expenses from total revenue.
What’s so Difficult About That?
Sounds simple, right? In theory it is, but in practice many people run into trouble. In fact, understanding tax-write offs and which expenses are legitimate is one of the most common areas where businesses go awry and end up needing to negotiate IRD debt write-offs.
The IRD sets certain rules when it comes to expenses and tax write-offs, so those unfamiliar with the rules could find themselves claiming more expenses than they should, and an audit will uncover this. Then you are in the tricky situation where you owe more taxes to the IRD than you are able to pay, putting you in tax arrears.
Legitimate Business Expenses
Here is a list of some common business expenses that the IRD recognises for tax write-offs:
- Software packages
- Car mileage and vehicle use
- Travel expenses
- Home business costs
How Can Tax Debt Sorted NZ Help?
If you are getting back on your feet after tax arrears, Tax Debt Sorted can take a look at your books and see if you should be claiming more expenses and writing off more tax, thus saving lots of money.
On the other hand, if you are in arrears or owe more to the IRD than you can pay, we can help as well. Our tax debt negotiators works with the IRD to offer you the best possible relief option. Because we understand tax laws and IRD policy, we can often reach an agreement that works both for you and the IRD. Sometimes this means payment instalments, but we can also sometimes negotiate either a partial or full tax write-off, giving you a fresh start.