Filing tax returns after many years

Our Experts Answer:

The hardest part is deciding to resolve the situation, which is what you have done already. Firstly employ a local accountant. They will not only guide you on the compilation of the rental statements they can also make a voluntary disclosure to IRD. When you bring a matter like this forward to IRD and seek to resolve it the IRD will calmly work with you to make the filing, there are penalty concessions available for full voluntary disclosures but you may have to pay some use of money interest on the tax money you have had the use of. It's far better to bring the matter forward than wait until the IRD catch up with you. If there is a large amount of tax owing the accountant can help you negotiate a payment plan.

The accountant will want to focus on core income and costs, rent receipts, mortgage interest, rates, insurance, maintenance and property management expenses. If a property manager was involved see what info they still hold. Often a task like this involves incomplete records. Build a spreadsheet by year colour coding numbers that are either facts or estimates and begin to fill in the gaps. Many costs relating to property can be calculated with reasonable accuracy, for example, if you know how much debt you had you can research the historic interest rates and make a well informed estimate, rates can be tracked down from the council and so on.

You should file in NZ first and determine the tax payable. Then you will need to file in Australia as well by converting everything to Aus dollars. In Australia though you will get credit for the tax already paid in NZ, hence the need to file in NZ first. I realise it may seem daunting but its surprising how it can be brought together relatively easily. Remember also that in NZ the building could be depreciated up until 2012, so this is also a deduction to factor in.