School of WooHoo - Chapter 8: Tax Returns - Activity 3

Welcome to Chapter 8: Tax Returns - Activity 3

After completing this chapter, you will be able to evaluate if the customer has a tax return requirement. You will also be able to demonstrate a good understanding on explaining to a customer the requirements and stress the importance of completing a tax return so that they meet their tax obligations.

If you get an answer incorrect, it will tell you the correct answer and on occasion, a further explanation. Please do not attempt the question again, just move on to the next question.

Use your resources such as Woogle wisely and ensure you fully read the question before answering.

Good luck!

Chapter 8: Tax Returns

1. Henry has called the office as his wife has passed away and would like assistance in the process of finalising her tax affairs.

2. Fill in the Blanks

Sole Trader (Self Employed):

a person is a sole trader when they decide to go into business by themselves. The person keeps their own IRD number and gets  of the business profits and is personally responsible for all taxes and debts. At the end of the standard tax year a tax return is and the person will need to include any financial statements and calculate income tax in the net profit.

Partnership:

A partnership is formed when two or more people get together to form a business. Each partner will contribute and in return receives a share of any or losses. At the end of the tax year, an IR7 tax return is required from the partnership to show how the profit and losses are split. Please note that if there is no income from the partnership, we will still require the IR7 or statement. The partnerships pay income tax; partners do, so this is when the tax return is required per person so they can show how much profit or loss was made from the partnership.

Company:

A company is a separate legal entity that is formed by registering the company through the Companies Office and obtaining an  at the same time. When people form a company, they each get shares, usually in proportion to the amount of money they each contribute. Unlike partnerships, companies pay income tax and complete an IR4 to declare the profit. Shareholders and directors file a tax return  to show how much income that they received. Note – a return filed even if there was no income.

GST:

GST is a tax that you collect on behalf of the government. You charge GST on your sales, and claim it back on the things you buy and your expenses. All businesses with a turnover of more than have to register for GST and file GST returns. If the business is going to employ staff, then the business will also need to register as an employer.

 

3.  Match the packages!

  • A person that has arrived in New Zealand
    Part Year Package
  • Withholding Tax, No expenses
    Lite Package
  • Airbnb
    Property Package
  • Overseas Income
    Standard Package
  • Withholding Tax, With expenses
    Standard Package
  • Overseas Based Borrower
    Part Year Package

4.  Fill in the Blanks

Transactions:

A transaction is considered to be one amount of income or an expense that we are required to process individually.

Examples of a transaction:

 

  1. A schedule/spreadsheet summarising several transactions 
  2. A single receipt provided that requires scanning
  3. Customer completion of a WooHoo template
     

Our standard and property packages allow the customer transactions with the ability to purchase more as an add-on. This allows you to let us do all of the hard work, we just need the customers paperwork (receipts, invoices etc) and we do all of the processing.

Extra transactions are at a cost of per 20 transactions. 

 

Tax Calculation:

A tax calculation is our process that determines the tax payable from specific  activity. Our standard package includes one of these calculations:

  1. Self-employment income and expenses
  2. Rental Property income and expenses

If the customer requires additional tax calculations we have an add-on an additional including GST.

 

Extra Tax Return Filing:

If the customer requires additional tax returns filed, we will charge an extra , for example, Partnerships or Trusts. For the property package, this may be for things like jointly owned property (eg husband and wife) 

 

Extra Tax Calculation:

Sometimes, additional tax calculations may be required to meet the customer’s obligations. There are available for  each, for example, Foreign Investment Funds (FIF) and Self Employed income.