Tax on living expenses 09 Nov 2015

Did you know, you're never taxed on the money you take out of your business for living expenses?

This applies even if your business is operated through a company. Therefore, it doesn’t matter how much or how little you take out; it won’t affect the tax you have to pay.

Some clients think if they haven’t got much money left in the bank and have taken very little out for living costs, they won’t have much tax to pay.

They often overlook substantial payments for equipment, which are not fully tax deductible costs.

When you buy equipment you're allowed to claim only a proportion of the cost each year, because the benefit the equipment bestows on your business is spread over several years.

If you keep an eye on your profit, you can get an idea from the IRD website of how much tax you’ll have to pay.

Tax penalties are extremely high. Plan your finances well ahead to cater for your tax payments.

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