Filing your first IR3

The IR3 is the annual income tax return every self-employed person files, and the first one can feel daunting. It doesn't need to. With your records in order, the return is mostly transcription, and this guide covers the parts that aren't. It walks the process from the end of the tax year through to an assessment, and how to plan for the bill.

When it happens

The tax year ends 31 March; the IR3 for it is due 7 July if you file yourself. A tax agent brings an extension of time (usually to 31 March the following year), which matters less for the filing and more for the terminal tax date that follows. It's worth filing early rather than at the deadline for one concrete reason: the sooner the numbers are certain, the longer you have to arrange the payment they imply.

Before you start: the three piles

• Income: every invoice for the year and what was actually received. If you were paid under schedular payments, that income and its withheld tax largely pre-populate in myIR. Income that nobody taxed at source is yours to declare.
• Expenses: the year's deductible costs, totalled by category, receipts filed (not submitted, but kept, for seven years).
• The part-year extras: if you left a salaried job mid-year, the PAYE months pre-populate; your self-employed months stack on top and are taxed accordingly.

Filing it in myIR

The return itself is a guided form in myIR. The pieces a first-time sole trader meets:

• Pre-populated income: salary, wages, and schedular payments with their tax credits appear automatically, so check them rather than re-typing them.
• Self-employed income: your gross business income and your expenses. The result is your net profit, the number the brackets apply to.
• The IR10: a financial statements summary that accompanies business income, your year compressed into standard boxes (income, expense categories, assets). With tidy records it takes about twenty minutes. Without them, it is the reason this guide keeps mentioning records.
• Other schedules if they apply: rental income, overseas income, and adjustments each have their own attachment.

What happens after

Inland Revenue processes the return into an assessment: your residual income tax, minus anything withheld or already paid. After that, the dates on the calendar take over:

• The bill (terminal tax) is due 7 February following, or 7 April with an agent. It was earned across the year just gone, which is why the set-aside habit makes the difference between a simple transfer and a scramble.
• If your residual income tax passed $5,000, you're now a provisional taxpayer, and the double-hit year is scheduled. Read that guide before February, not after.
• Mistakes are fixable. You can amend returns in myIR after filing, so an error you find later is a correction, not something to worry about.

How Coffer helps

How hard your first IR3 is comes down to how messy the year's records are. Coffer keeps the inputs return-ready as you invoice: every invoice and payment date on file, expenses categorised, GST held separately so your figures are GST-exclusive, and the tax already set aside against the bill the return works out. By the time you file, the return is mostly transcription.