Filing Your Income Tax Return
As a New Zealand tax resident, you are liable to pay income tax on your overall taxable income from all sources, including New Zealand investments (i.e., Jasper) and foreign investments (e.g., Australian shares, US bonds). The level of tax liability derives from the corresponding tax rates depending on the investing entity (individual, trust, or company).
If you are not a New Zealand tax resident, you need to consider the tax rules of the country in which you are considered a tax resident. You may also need to consider any double tax agreements between New Zealand and the country of your tax residence.
Jasper strongly recommends obtaining professional tax advice for specific tax matters. Jasper has recently partnered with Baker Tilly Staples Rodway, a chartered accountancy firm, to act as our tax advisor on each Jasper scheme. They are happy to answer any general tax queries you may have regarding your Jasper investments.
We know tax can be a bit confusing, so we have put together some FAQs to help make the process as smooth as possible.
Does Jasper pay any tax on my behalf?
Jasper operates under a limited partnership structure and acts as a “flow-through” entity for the profits it derives. The Limited Partnership pays no tax on income, such as rental income derived by Jasper on behalf of investors. Each limited partner is responsible for paying income tax on their share of Jasper partnership income. Jasper will, however, distribute any tax credits received on income that has had tax deducted at source (e.g., interest income, dividend income) through to its Limited Partners quarterly. Any tax credits are made available in the Statement of Taxable Income.
What tax documents will Jasper produce, and what do they mean?
At the end of the financial year being 31 March, Jasper will engage a third party accounting firm to produce the following documents on behalf of each scheme:
Financial Statements - Includes unaudited profit & loss statements, balance sheet and cash flow statements. It reconciles accounting profit with taxable income.
Partnership Resolution - Provides a signed statement of solvency from the General Partner (Jasper) as at balance date.
Partner Tax Return IR7 and IR10 - These documents are filed with the IRD on behalf of the partnership to meet ongoing tax return obligations. These documents are confidential and will not be distributed to limited partners.
Statement of Taxable Income - Highlights the taxable income of the scheme so you can calculate your attributed share.
All these document are made available to you when you login to the portfolio section of your Jasper account. You will be notified via email as these documents are added.
What do I need to do with my Jasper income when submitting my tax return?
It is your responsibility to pay the appropriate amount of income tax on your share of the Jasper partnership income. Therefore, you need to return your share of the taxable income found in the Statement of Taxable Income in your personal/trust/company income tax return.
The standard balance date in New Zealand for filing tax returns with the Inland Revenue is 31 March. The deadline for filing annual income tax returns is 7 July for investors with no extension of time or 31 March of the following year for investors registered with a tax agent and who has obtained an extension of time.
As an example, on completion of the 2020 income tax year, 31 March 2020, investors are required to file their New Zealand income tax returns by 7 July 2020 (pending no extension of time) or 31 March 2021 (pending an extension of time).
How do I determine my proportion of taxable income?
1. Your shareholding percentage can be found by logging into your Jasper account and navigating to “My Portfolio.” Under “My Investments,” you will find Holmes Road Industrial.
2. In the Dashboard, you will see your shareholding percentage
3. The taxable profit or loss from the Statement of Taxable Income should be apportioned to your shareholding. This will determine the amount of partnership income to be included in your tax return.
As always, the Jasper team is available to help via email or directly through the Jasper web app.
What is the difference between “Cash Distribution Amounts,” “Accounting Profit,” and “Taxable Income”?
Cash Distribution Amounts: During each reporting period (or financial year), a scheme derives profit by earning income (e.g., rents) and paying expenses (e.g., fund-related costs). The scheme manager retains a proportion of these profits to meet any working capital requirements before making cash distributions to investors in-line with previous targets and the scheme’s performance.
Accounting Profit: At the end of a financial year, “Accounting Profit” is required to be calculated for preparing a scheme’s annual financial statements. Accounting Profit is determined by taking into account the income (e.g., rents) derived by the scheme during the year and deducting any expenses (e.g., fund-related costs), including any non-cash expenses (e.g., fair value movements on investment property revaluations) incurred during the year.
Taxable Income: A scheme’s “Taxable Income” is calculated to help investors determine their share of the Limited Partnership's taxable income, which needs to be included in their personal/trust/company income tax return. “Taxable Income” is calculated by adjusting “Accounting Profit” for any income/(expense) transactions that are deemed to be non-taxable – for example, non-deductible legal fees. Jasper’s Annual Financial Statements provides a tax note reconciling “Accounting Profit” to “Taxable Income,” which investors use to complete their personal tax returns.
Table 1 shows a simple reconciliation of Cash Distributions (received in the bank) vs. Taxable income (to be returned in your tax return) and Accounting Profit (recorded in the Financial Statements).
See Table 2 below for a summary of the income tax forms, the boxes to enter your Jasper partnership income, and the corresponding income tax rates required when completing your individual/trust/company income tax return.
Our property accountants, Baker Tilly Staples Rodway, are happy to answer any general tax queries you may have regarding your Jasper investments.