Whangarei Accountants - Elevate CA - Tax, Xero, Business Development, Accounting

Whangarei Accountants serving Northland, Auckland and Whangarei Loving what we do: bringing fresh energy and innovative thinking to your business! Phone 09 430 0910.

  • Home
  • Budget 2020
  • Business Post COVID-19
  • Events
  • Contact
  • CloudCA

Tips ahead of the Financial Year End

The end of the financial year is fast approaching for the majority of businesses. Here are a few areas you may wish to look at now which will help us minimise your tax bill.

1. Trading stock

We’re not talking about livestock here, but the general rule is that inventory must be valued at the lower of cost or realisable value. A general adjustment for obsolescence will not cut it with the IRD. Any business that carries more than $10,000 in inventory must perform a physical stocktake at year end – and you should take this opportunity to dispose of obsolete stock or write it down to its net realisable value.

2. Repairs and Maintenance

It may be worthwhile to bring forward repairs and maintenance before the end of the financial year, as this will also bring the tax deduction forward by a year.

3. Retentions

Retentions on building contracts are generally taxable in the year the contractor becomes legally entitled to receive them. Building contractors should be mindful of this at year end.

4. Employee Expenses

Expenses such as holiday pay, bonuses, long service leave or redundancy payments can be claimed as a tax deduction in the year ended 31 March 2012 as long as they are physically paid by 2 June 2012. Keep this in mind when planning these payments.

5. Business expenses paid privately

Business expenses paid privately often fall through the gaps – and the opportunity to claim a tax deduction is lost. Now is a good time to gather up any receipts – and to reimburse yourself from the business so there is a clear paper trail.

6. Bad debts

Where you write off a debt that has no reasonable expectation of being paid after taking all reasonable steps to recover it, this is tax deductible. The catch is that you must have physically written the debt off before the end of the financial year, so now is the time to consider this.

7. Fixed Assets

Now is a good time to review last year’s fixed asset schedule, as the book value of assets can be written off as a tax deduction where they are no longer used by the business and the cost of disposing of the asset is likely to exceed the value.

8. Prepayment of expenses

Most expenses cannot be fully claimed as a tax deduction if you choose to prepay them just before the end of the financial year. But there are some potential exceptions like stationery, postage, courier charges, vehicle registration, road user charges, rates, journal subscriptions or accounting fees which can be paid in advance and claimed as a tax deduction. No, we’re not fishing for payment in advance for this year’s accounting fees – but I’m sure you can see some possibilities here.

And for those few clients who have not yet provided their records for the year ended 31 March 2011, do it now! The final deadline for most clients for filing with the IRD is 31 March 2012 – and there will be almost no chance of us getting your work completed on time unless we have your records before the end of February!

 

You Might Also Enjoy Reading

  • Hiring a Xero-Savvy Accountant - 20th February, 2017
  • Christmas Break - Office Reopening 11 January 2016 - 11th December, 2015
  • Returning Kiwis with Australian Rental Properties - 26th May, 2015
  • Payments for hurt and humiliation – asymmetric tax treatment - 24th May, 2015
  • Valuation of your Business - 23rd May, 2015
avatar

About Fraser Hurrell

Fraser Hurrell is a Chartered Accountant and one of the three directors of ElevateCA Limited. He loves to be a part of bringing great ideas to fruition. See Fraser's full profile here ....

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Avatars by Sterling Adventures

Copyright © 2021 · Elevate CA Limited. Chartered Accountants and Business Specialists · Login