Do I need an accountant?

No - you can prepare your own financial statements and tax returns. However many business owners like to seek the advice of a Chartered Accountant to ensure that they are doing things right and maximising their profits.

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Whats the difference between an accountant, a Chartered Accountant and a tax agent?

Anyone can call themselves an Accountant so you should check the relevance of their qualifications and experience to your needs.

A Chartered Accountant (CA) is a member of the NZ Institute of Chartered Accountants. To become a member you need to have a University qualification in accounting and three years practical experience working under the supervision of a CA. CA's are required to undergo minimum levels of continuing education each year and may work in industry, government or in public practice. If you are looking for an accountant to advise you on business or tax you should consult a CA who has a certificate in public practice (CPP). This means they are qualified to advise members of the public and are subject to regular reviews by the institute.

A tax agent is someone who is registered with IRD to prepare tax returns for their clients. Tax agents do not need to be (but can be) Chartered Accountants.

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What should I be asking my accountant?

What is the best structure for my business and my personal situation (sole trader, partnership, company, LAQC, trust etc;)?

What taxes do I have to pay and when?

How can I maximise my profits and minimise my taxes?

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What is the best structure to use for my business?

The simplest and easiest is to operate in your own name as a sole trader. However there are tax benefits from operating as a company and a company can appear more commercially professional. A company structure also provides opportunities to sell your business by selling the shares in the company and to expand or obtain further investment in the company by selling shares to new investors. Trading trusts are sometimes used but IRD has been known to look carefully at these. More details on structures are available here.

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What is the best structure for property investment?

If your property is going to make a loss for tax purposes then you may want to use a loss attributing qualifying company (LAQC) as the losses may be offset against your other income. If your property is going to make a profit for tax purposes then you may wish to use a trust to own the property. More details on structures are available here.

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How do I set up a company?

You can set up a company online for $160 at the Companies Office website at www.companies.govt.nz. There are step by step instructions there. If you do it during normal working hours it should only take IRD a few hours to process it. You will need to decide first on the name for the company, and who will be the directors and shareholders (you can have a sole shareholder and director). You can now also obtain an IRD number while setting up the company. You’ll need access to a fax machine and credit card. The Companies Office will email you with forms for all directors and shareholders to sign agreeing to be shareholders and directors of the company and these need to be faxed back to the Companies Office.

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How do I wind up a company?

You need to have a special resolution of the shareholders agreeing to close down the company usually because it has ceased to trade and you need to organise to distribute the assets of the company. You have to advise the Registrar of Companies that there are no outstanding creditors and provide written confirmation from IRD that all taxes have been paid. Annual returns need to be up to date.

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How do I set up a Trust?

You should see a solicitor to set up a trust but there are plenty of free seminars and books on trusts that are well worth reading before you see a solicitor. The solicitor will prepare a Trust Deed setting out the person(s) settling or selling assets to the trust, the trustees who will manage the trust and the beneficiaries who will receive benefits from the trust. If you are selling a house to the trust the solicitor will also set up the Deeds of Acknowledgement of Debt and the Partial Forgiveness of Debt and the first gift duty statement.

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How much does it cost to set up a Trust?

It will cost around $2,000 to set up a simple trust and transfer your home to the trust but you should shop around and make sure that you are aware of the actual cost before the trust is set up. While it doesn’t cost anything to file the annual gift statement with IRD if you use a solicitor to prepare the ongoing Deeds of Partial Forgiveness of Debt and then complete and file the gift duty statement with IRD the solicitor will usually charge around $300. If the Trust is engaged in a taxable activity then an income tax return may also need to be filed with IRD.

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Are Trust gifting costs tax deductible?

No because there are not directly related to earning taxable income.

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What tax do I pay on a redundancy payment?

If you are on PAYE your payroll section will be the best people to tell you exactly what tax will be taken out. Additionally there is a redundancy tax credit you may be eligible for – there is more info on this on IRDs website here. Depending on the amount of your redundancy you can get up to $3,600 (for $60,000+ redundancy). You need to apply directly to IRD for this using a IR524 form available here.

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What costs can I claim against a rental property?

You can claim any cost necessarily incurred in deriving taxable income. This means that if the cost was directly related to earning the income then it is deductible. The usual expenses that are tax deductible are interest on the mortgage (but not principal repayments), rates, insurance, property management fees, body corporate fees, repair and maintenance costs, any minor equipment costs less than $500. There may also be some travel costs. If you are managing the property yourself and particularly if you have several properties you can claim home office costs.

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What home office costs can I claim?

First you need to work out the proportion of your home that is available for your business activity. You may have a separate office set aside and you may work solely from home. In this case then your home office proportion will be the size of that room as a percentage of the whole house plus around 5% for the shared spaces such as kitchen and bathroom facilities. You need to claim reasonable costs so shouldn’t go over 20%. If you do not have a separate space set aside or if you just own one property then 10% of your home costs would probably be reasonable. Costs you can claim are the interest costs on your mortgage (but not the principal) or rent, rates, insurance, repairs and maintenance, electricity, gas and telephone.

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What entertainment expenses can I claim?

Definitive answers on what you can and can't claim are contained in IRD's IR268 booklet on entertainment here.

Usually entertainment expenses (meals and drinks consumed off the office premises) are 50% deductible. If you bring food or drinks into your office (e.g. Friday afternoon drinks) then it is fully deductible

If you are travelling for work any of your accommodation and associated costs (meals etc;) are fully deductible. However if while travelling you are paying for meals for work related guests then the cost of the meal is only 50% deductible.

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How do I offset rental losses against PAYE?

You can do this either at year end when your tax return is filed or during the year. If waiting till year end then you will need to file a tax return and show the loss there. This loss will reduce your taxable income and you will be refunded any overpaid PAYE. This means that you will receive an annual lump sum refund. If you would prefer to receive the refund as part of your fortnightly pay then you can complete an IR23BS available on IRD’s website www.ird.govt.nz. This form requires you to estimate the amount of loss for the next year. IRD will then calculate the effect on your PAYE and provide you with a special tax rate certificate. You should give this to your employer who will then deduct a lesser amount of PAYE. You will still need to complete a tax return at year end and if the actual loss was the same as the estimated amount you will not receive any further refund. If the actual loss was more than the estimate then you may receive a refund. If the actual loss was less than the estimate then you may have tax to pay. Remember to get the special tax rate adjusted back if you sell the property during the year. Otherwise you may have a large tax bill at year end.

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What if I’m self-employed and pay provisional tax?

If you pay provisional tax then the loss will usually result in a refund at year end and this will reduce the amount of provisional tax you have to pay next year. If you want to have access to the tax benefits of the loss sooner then you can estimate your provisional tax and this will reduce the amount of the provisional tax payments you need to make. Remember though that if you estimate your provisional tax then you will have to pay interest if you end up owing more tax than you had estimated.

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What is provisional tax?

Provisional tax is a method of paying tax as you go during the year but without the formalised PAYE system. If you are earning income as a sole trader or as a shareholder employee then you are not required to deduct PAYE from your earnings. Instead you can pay provisional tax during the year with a “wash-up” at year end. Each year the amount of provisional tax you need to pay is increased to 105% of last year’s actual earnings if your tax for the year is $35,000 or less. This is on income of around $120,000. If your tax for the year is likely to be more than $35,000 then you are required to estimate your tax each year and pay it in equal instalments during the year. If at year end your tax was more than you had estimated then you will pay interest on any shortfall. If you paid more tax than was required then IRD will pay you interest as well as refund you any overpayment.

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What are the new 2009 provisional tax dates for individuals?

Assuming you have a 31st March balance date:

  - If you are not GST registered you make three payments - 28th August 2008, 15th January 2009 and 7th May 2009.
  - If you are GST registered (2 monthly) you make three payments - 28th August 2008, 15th January 2009 and 7th May 2009.
  - If you are GST registered (6 monthly) you make two payments - 28th October 2008 and 7th May 2009.

IRD have an important dates calculator here.

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Do I need to pay tax in my first year of business?

You may have heard that you don't need to pay provisional tax in your first (financial) year of business. This only applies in some cases. If you are a sole trader or shareholder/employee and your tax bill for your first financial year will be less than $35,000 then you don't need to pay provisional tax during the year. You still need to pay the tax due at the end of the financial year (i.e. it's deferred tax rather than no tax). If your tax bill will be more than $35,000 OR you are trading as a company or a trust you should pay provisional tax as you go based on your expected income for the year. If your tax bill for the year ends up being more than $35,000 and you haven't been paying the provisional tax you will be charged penalties by IRD.

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What is chattels depreciation?

Also sometimes referred to as a depreciation schedule a chattels valuation is a valuation obtained from a chattels valuer or general valuer. It allocates the purchase price over a property among the land, building and the various parts or chattels in the building. The chattels are usually items such as stoves, carpets, drapes, bathroom , tiles, light fittings etc. These items may be depreciated at higher rates (average 10%) compared with the 3% rate that buildings may be depreciated at. This increases the deduction that can be made for tax purposes. Until recently other items such as the electrical and plumbing reticulation, fitted furniture, paths and fences etc could also be separated out from the building cost and depreciated at higher rates but these may no longer be separated out from the building cost.

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What is depreciation recovery?

Depreciation recovery applies to an asset which is sold at a higher price than the value recorded in the financial statements. It is taxable income in the year of sale. The depreciation recovery is calculated as the amount of accumulated depreciation (or depreciation claimed to date) on the asset sold. No depreciation is claimed in the year of sale except for buildings. However we do not usually claim the building depreciation in the year of sale as it is then immediately added back as depreciation recovery.

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How much depreciation recovery will I have to pay back?

Depreciation recovery is the tax on the depreciation claimed to date on the asset sold. So the depreciation is never any more than the amount of depreciation claimed on the asset – it bears no relationship to the capital gain made. Remember that you are only paying tax on the amount of depreciation recovery – you are not paying back the depreciation recovery. So if the total depreciation claimed on an asset is $12,000 then the amount of tax the company will need to pay is $3,960 ie $12,000 x 0.30 (the company tax rate changed from 33% to 30% on 1 April 2008).

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Can depreciation be claimed in the year of sale?

Only on buildings. However claiming depreciation on buildings in the year of sale is usually pointless as the depreciation claimed is added back as depreciation recovery. The only exception to this is if the market value of the building has genuinely reduced to the depreciated value or less.

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What are the tax implications of renting out your own home?

You can rent out your own home and you will pay tax on any profit you make. If you want to buy a new home and rent out your existing home then if you only have a small mortgage on your existing home then you can deduct the interest cost of that mortgage from the rent you receive. However to reduce the amount of tax you will have to pay and maximise the interest deductibility you should sell your existing house at its market value to a company registered with IRD as a loss attributing qualifying company (LAQC) and then borrow the full market price from the bank, repay that to yourself, pay off the existing loan and use the balance to buy your new home.

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Can I sell my home to an LAQC?

Yes you can sell your home to an LAQC at at market value and then rent it out. However if you do this and then live in it and pay rent IRD does not see this as an arms length transaction and therefore will not let you claim any resulting loss.

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What tax are you liable for when buying and selling a property?

The tax implications depend on your intention when you bought the property. If you bought the property to live in yourself then there are no tax implications from selling (or buying) the property. If you bought the property as a long term rental property then again you do not have to pay any tax on any capital gain when you sell the property. Similarly you can’t claim a loss if the property decreases in value between the date of purchase and sale. However you may have to pay tax on any depreciation recovery if the property has not diminished in value to the depreciated or book value. If you bought the property to make a capital gain, for example, if you decided to do it up and then sell it or rent it out for only a short time before on selling it, then if your intention was to make a capital gain from the property when you bought it then you would have to pay tax on the capital gain when you sold it. If you genuinely bought the property for long term rental but your circumstances changed significanty and you had to sell it soon after purchase then you may not have to pay tax on any capital gain. Any sale soon after purchase with a large capital gain is likely to be looked at closely by IRD.

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Can I claim motor vehicle expenses?

Yes and you should. If you are a sole trader and you are using a vehicle that may be used for carrying passengers then you must keep a log book for 3 months to record the percentage of usage that is work related. You can then claim that percentage of the associated vehicle costs eg depreciation, petrol, registration, insurance, warrants of fitness, repairs, tyres etc. Your three month log book will last for 3 years but needs to be redone if your usage changes by more than 20%. Therefore you should not do your log book over the Christmas break when your business travel is likely to be low. If you are only doing a small amount of travel you may prefer to keep track of the actual trips completed and the kms travelled and claim these back at IRD rates (62 cents per km up to 3,000 kms in a year). If you are using a company then you can use a logbook or IRD mileage rates. However if you have a work vehicle that is not used for carrying passengers, has had the rear seats removed, has permanent business logos affixed and cannot be used for personal use then you can claim 100% of the costs. You can claim 100% of vehicle costs and have unlimited private use if you pay FBT on the value of the fringe benefits provided from the vehicle use.

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What is FBT?

FBT (or fringe benefit tax) is tax paid by a company or employer on non-cash benefits paid to employees. This includes shareholder employees. The usual fringe benefits are cars, low interest loans and the personal use of business assets. It is payable quarterly or annually for some employers.

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How much is FBT?

We tried to answer this question with a simple calculation but it ran to many pages so rather than burden you with that perhaps a rule of thumb will do. For motor vehicles that are used 100% privately you have two choices, pay FBT of approximately $150 per $1,000 of the original purchase price of the vehicle (including GST) each year, OR pay approximately $270 per $1,000 of the book value of the vehicle (as calculated at the start of each financial year) with a minimum annual FBT payment of $2,253 (because there is a minimum book value you can use of $8,333). Read on...

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Are there any benefits in buying a company car?

Sometimes. With a company car you can claim the GST, depreciation and all running costs. If its available for personal use then you will have to pay FBT. We have found that if the car costs less than about $8,000 then this usually works out to your advantage but for cars over $8,000 the cost of the FBT will probably outweight any savings you get claiming expenses, depreciation etc;

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Can I buy a company vehicle without paying FBT?

Yes if you can prove to IRD that it is not available for private use. This is easier to prove if your vehicle is clearly a work vehicle that would not be used privately - e.g. a van or truck or a vehicle that has had the back seats removed, and with work signage. In other cases its harder to prove - you should write a letter to the shareholder employee (yourself) advising them the vehicle isn't available for private use, the shareholder employee needs to agree to this in writing, have another vehicle available for private use and keep a logbook of the company's vehicles actual use to show it is only used for business.

Note: Under NZ’s self assessment tax system you can claim what you like but if IRD looks at it and isn’t happy then you may be charged penalties.

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Are there exemptions from FBT?

Yes you can pay employees including shareholder employees benefits of up to $200 per quarter (if filing quarterly) or up to $800 per year if filing an annual return without needing to file a return. From 1st April 2009 this increases to $300 per employee per quarter.

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Are IRD penalties tax deductible?

NO!

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Is Use of Money Interest tax deductible?

Only if you are operating a business. So if a company and a shareholder employee have to pay use of money interest to IRD then the company’s interest will be deductible but the shareholder employee’s won’t.

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Should I sign up for Kiwi Saver?

Kiwi saver works well if you are an employee and your employer is contributing. If you are self employed or a shareholder employee there is less benefit and you may be better off paying off mortages or investing in your business.

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Where can I find out about the recent small business tax changes?

You can read about the tax changes announced in February 2009 here and here and here.

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How do I get started with Xero?

Have a look at our Getting started with Xero guide.

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What is the Xero Cashbook version?

The Xero "Accountants Edition" is a simplified version of Xero that is available only through Xero partners for their clients. The main differences between it and the full Xero versions are that in the Accountants Edition:

1. You can’t change the chart of accounts or add items to the dashboard. These need to be set up by your accountant.
2. You can’t create invoices for accounts receivable or accounts payable.
3. There is an “Ask your Accountant” option on the help menu – this sends questions to us via email.

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How do I code money I put into or take out of the business?

If you transfer money into the organisation (e.g. to help pay for mortgage interest for a rental property) code to 970 Funds Introduced.

If you are paying yourself a salary and paying PAYE to IRD code to 477 Salaries. The PAYE component can be coded to 477 Salaries or 477/PAYE IRD PAYE Tax. Otherwise code all money you take out of the organisation as 980 Drawings.

Also have a look at What do I code tax payments to?

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How do I manage my business credit card?

The easiest way is to set it up as a bank account and then reconcile the transactions as you do for an ordinary bank account. If you have a BNZ credit card you can get automatic daily statement feeds so it works just like your other accounts. If you don’t have a BNZ credit card you can still set up the card in Xero but you will need to manually import statements on a regular basis so you can reconcile them. A simple way to do this is early each month import transactions from the second day of previous month to the first day of the current month – e.g. on or after 2nd February import transactions from 2nd January to 1st February. That way you won’t miss or duplicate any transactions.

Just remember if you have the card setup as a bank account when the payment goes out of your transaction account to pay the bill code this as a Transfer not a payment (see Transfers below).

If you don’t set the card up in Xero then when you pay for the credit card bill from one of your business bank accounts the payment will come up as a transaction to be reconciled. When you reconcile the payment in Xero use the Add Details link on the Create tab to add line items for each of the purchases the payment is paying off, coding each to the correct account code. This will only work if you always pay off the full amount rather than the minimum payment.

There is a good explanation of how to manage credit cards on the Xero help centre here.

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How do I manage my personal credit card when I use it for business?

If you use it mostly for business then set it up as a business credit card as above and code any personal transactions to Drawings. If you use it mainly for personal use and occasionally make a business purchase then claim the expenses back as detailed below.

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How do I reimburse myself for business expenses I’ve paid for?

For individuals and small businesses we recommend keeping a breakdown of expenses in a spreadsheet and periodically making a payment from the business account to yourself for the amount of the expenses. When you reconcile the payment in Xero create a transaction and add a line for each of your expenses selecting the appropriate expense code.

Alternatively you can use the Xero expense claim facility and then either transfer the money to pay you the total of the claim or pay it out of funds introduced. Coding it to Fund Introduced adds it to the amount the business owes you and will be offset it against drawings at year end. There are more steps involved in using an expense claim but it does mean you don’t need to keep a separate spreadsheet for expenses. The steps involved are:

1. Create an expense claim and add receipt(s)
2. Submit for approval
3. Approve
4. Pay the claim (transfer money or from Funds Introduced)

Regardless of which way you do it make sure you put plenty of detail in the description field so you don’t have to go hunting later to find out what the payment was for.

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How do I code expenses I invoice a client for?

If you invoice a client for expenses you incur then you should code the payment from the client for the expense to the same code you put the expense to. For example if you paid for travel within New Zealand you would code the payment to 493 National Travel and when the client pays the invoice you would code the portion reimbursing your travel cost to 493 also.

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How do I code transactions to individual rental properties?

In other accounting systems you would usually set up separate ledger codes for each rental property then code the transactions to these. This gets unwieldy as you end up with a lot of account codes that are effectively the same thing. Xero has a better way of doing it called "Tracking". You set up a tracking category (e.g. Rental Properties) and then add each rental property as an item (e.g. 53 Marine Parade, 17 Hill St) and whenever you reconcile a transaction you can select the category and property that the transaction relates to from a drop down list. The Xero reports have options that allow you to report by tracking category.

There is more detail on this at the Xero help centre here.

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What do I code equipment purchases to?

For purchases of equipment less than $500 (excluding GST) per item code to the appropriate expense code (e.g. for a printer code to 310 Computer Equipment).

Equipment costing $500 or greater (excluding GST) is treated as a fixed asset and must be coded to an asset account in the 700 series (e.g. 710 Office Equipment). At the end of the financial year we will calculate the depreciation for the assets and code it to the assets depreciation account.

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How do I code entertainment expenses?

Definitive answers on what you can and can't claim are contained in IRD's IR268 booklet on entertainment here.

Usually entertainment expenses (meals and drinks consumed off the office premises) are 50% deductible so you code half of the payment to “420 Entertainment” and half to “424 Entertainment – Non deductible”. You can do this in Bank Reconciliation by clicking the Add Details link on a transaction and adding a second line.

If you bring food or drinks into your office (e.g because people are working late) then it is usually fully deductible - code to 453 Office Expenses.

If you are travelling for work any of your accommodation and associated costs (meals etc;) are fully deductible - code to one of the travel expenses codes. However if while travelling you are paying for meals for work related guests then the cost of the meal is only 50% deductible - code 50% to travel and 50% to 424 Entertainment - Non deductible.

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Can I claim GST on overseas purchases?

No (and that no includes the New Zealand portion of overseas flights). When you reconcile the payment make sure you click Add Details and select No GST or create a ledger code specifically for the overseas expenses that defaults to No GST. Don't be fooled by the Australian GST - its not the real thing and you can't claim it in New Zealand.

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How do I code refunds I receive?

Refunds you receive will appear as receipts in the bank reconciliation. Code them to the same account you coded the original payment to.

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How do I code refunds I give?

Refunds you give will appear as payments in the bank reconciliation. Code them to the same account you coded the original receipt to.

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What do I code tax payments and refunds to?

After processing the first Xero accounts for a full year we have found there is some confusion over where to code various tax payments to IRD to – it’s not surprising as there are a lot of them! To simplify things for our clients we have removed some extra codes that are not needed and renamed the remaining tax codes. You should code the multitude of IRD tax payments/refunds as follows:

FBT payments/refunds: 427 IRD Fringe Benefit Tax (FBT)
PAYE payments/refunds: 477/PAYE IRD PAYE Tax
Residents withholding tax payments/refunds: 635 IRD Residents Withholding Tax (RWT)
Income tax and provisional tax payments/refunds, and any penalty payments: 830 IRD Income and Provisional Tax
GST Payments/refunds: 820 GST

A couple of things to note:

1. Don’t code anything to 505 Income Tax Expense at Year End – it’s for us to use when finalising the tax position at year end.
2. If you type IRD in the account code box on the reconciliation screen it will bring up all the relevant codes for all taxes except GST.
3. If in doubt code to 830 IRD Income and Provisional Tax.

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What do I code GST payments and refunds to?

Code all GST payment to IRD / refunds from IRD to 820 GST.

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How do I fill out the IRD online GST form?

First of all make sure you have reconciled all your transactions in Xero, run the Xero GST report and checked the Xero GST audit report. Then you go to the IRD website and follow the "Get it done online" link on the main page to get to the GST return here.

Enter your name, GST number and DLN number (from the paper form they send you) and the period you are doing the GST return for. For Sales and Income select "I know the GST on sales and need to work out the total sales" and for Purchases and Expenses select "I know GST on purchases and need to work out total purchases". Where it asks "Are you a provisional payer?" answer NO unless you are on the ratio method (if you are not sure ask your accountant!). Then on the next screen put in the GST on sales (box 8) and purchases (box 12) from the Xero report. The figure that IRD tells you to pay/refund should match exactly what the Xero report says. Finish and file the GST return.

Now all you need to do is pay the GST to IRD or if its a refund watch it come into your bank account. Remember when you reconcile the payment or refund in Xero code it to 820 - GST.

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What do I code provisional tax payments to?

These get coded to 830 IRD Income and Provisional Tax. At the end of the year your accountant will calculate total amount of tax expense for the year and use 505 Income Tax Expense at Year End to record that.

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What do I code PAYE tax payments to?

Code to 477/PAYE IRD PAYE Tax. If this code is missing use 477 Salaries.

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How do I change the account code on a reconciled transaction?

You can edit a reconciled transaction to change the account it has been coded to provided it doesn’t affect GST.

1. Manage Account/Account Transactions
2. Click the transaction you want to change - this will take you into it
3. Click the Payments Option button and select Edit Transaction
4. Change the account code then click the Save button.

If the change does affect GST you will need to delete the affected transaction and then re-reconcile it:

1. Manage Account/Account Transactions
2. Delete the transaction by clicking the cross on the right hand side of the screen (it goes red when up put the mouse over it)
3. Then go back into the reconciliation screen – the transaction should appear there and you can reconcile it with the correct code.

If you several transactions to change its often faster to delete them all and then re-reconcile them.

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How to I handle transfers between bank accounts?

In Xero you can code transfers between bank accounts directly in the reconciliation screen. On the right hand side of the reconciliation screen there are Match, Create, Transfer and Comments tabs.

1. Source account: When reconciling a transfer select the Transfer tab and then select the bank account the transfer is going to. Click reconcile.
2. Destination account: When you reconcile the transfer transaction Xero should match it up with the transfer you created in the source account and show it on the Match tab. Click OK to reconcile.

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Why is my bank balance in Xero wrong?

The bank balance Xero displays is worked out from the opening balance set in conversion balances plus the transactions reconciled to date plus any unreconciled transactions. If the opening balances did not match the bank statements or there are missing transactions (a gap before automatic bank feeds started) then it won’t match the actual balance as seen on your bank statements. You can click Manage Account/View all statements and see the actual bank balance at the bank when the statement download occurred. This doesn't work for Kiwibank as it doesn’t provide this information to Xero.

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Where do I find out more about coding transactions?

Have a look at our Xero Coding Guidelines.

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How do I use credit notes in Xero?

There is a really good explanation of credit notes on the Xero Help site here.

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How do I reconcile a partial payment on an invoice?

You can now apply a part payment to an invoice from withing the bank reconciliation screen. On the Find and Match screen tick the invoice or expense claim that you want to apply the partial payment to then click the blue "Split" link on the line you just ticked. There is more detail on this at the Xero help centre here.

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