I love paying tax!
Sounds weird right? But I recently just filed my 2015 tax return and lo and behold I owe the IRD a chunk of money. I’m not altruistic - I’m no Ghandi. I’m more capitalist than most. However, paying tax feels good for one simple reason. Getting a tax bill means that I made a profit for the year.
If you have tax to pay, that means that you have made a profit and received the cash, a portion of which goes to the Government. Even after I pay the Government 33%, I keep the other 67% to spend or more often, reinvest in expectation of larger profits next year.
As accountants across the country are busy processing accounts and preparing tax returns, many people, maybe even yourself, will feel joy if you receive a call from us to let you know that you will get a refund from the IRD this year. It’s important to remember why you are getting a refund. In most instances a refund can represent your incoming earnings plus investment made a loss during the year.
If the IRD gives you 33 cents on the dollar back and you had to spend a whole dollar to get that 33 cent refund, you are still losing 67 cents per dollar overall.
If you’re a provisional tax payer, you are most likely receiving a refund because you made less profit than you did last year or, you overpaid your provisional tax giving the IRD the benefit of your money.
So smile should you be lucky enough to receive a tax bill this year - you earned it!