Page 11 - Tawanui, Aywon, Te Kupe Sale 2021 ebook

CMK
CAPPER MACDONALD & KING LTD
CHARTERED ACCOUNTANTS
solving the business puzzle
USING INCOME EQUALISATION
Mr and Mrs C came to CMK in mid 2015 having just secured a 50 /50 share-milking position on a farm that they had been
working on for some time. Their old accountant had just given them the following tax to pay over the coming months:
Mr C
$ 2,706.39 payable 7 April 2016
$ 4,265.00 payable
28 Nov 2015
15 Jan 2016
$ 4,265.00 payable
7 May 2016
$ 4,265.00 payable
$ 4,640.93 payable 7 April 2016
Mrs C
28 Nov 2015
$ 4,658.00 payable
$ 4,658.00 payable
15 Jan 2016
$ 4,659.00 payable
7 May 2016
Total Tax $ 34,117.32
TOGETHER, THIS IS WHAT WE DECIDED TO DO.
We decided to keep their income at a level of $14,000 each in order to use the lowest possible tax rate of 10.5% and make
an income equalisation deposit of $99,000. This deposit will be held with Inland Revenue for a period and Mr and Mrs C
have to finance this.
Mr C
refund due
$ 8,005.50
refund due
$ 8,762.86
Mrs C
Total to be refunded $16,768.36
This also now means that no provisional tax is required to be paid for the 2016 year, and also in the 2017 year, as when the
income equalisation money is refunded to the client and becomes taxable income, there is a loss made on the livestock to
offset this. Therefore, no tax will be payable.
This is a total cash saving of $50,885 for Mr and Mrs C. Not bad for a day’s work!
If you've been landed with a large tax bill and you'd like a second opinion, we'd be happy to have a chat to see if we can
help you achieve a similar result to this. At CMK we are committed to helping you plan, grow and develop your business. If
you feel that we can help you in any way, please contact us on 06 765 6178 or email us on cmk@cmk.co.nz www.cmk.co.nz
CONTACT WWW.CMK.CO.NZ CMK 87 Regan Street, Stratford. Taranaki 4332, New Zealand | PO Box 334, Stratford 4352 | Taranaki | 06 765 6178 | www.cmk.co.nz
solving the business puzzle
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