Year End Tax Tips 2014

Grange Associates Ltd - 22 January 2014

With the end of the tax year soon approaching, it’s a good opportunity to consider the following issues and make sure your accounts are in order for 31 March 2014.

Provisional Tax
If your income looks to be significantly higher than last year, you may need to consider making a voluntary provisional tax payment or increasing the amount you pay in your final 2014 provisional tax installment coming up in May.  If you think this may be a concern, let us know and we can conduct a quick review of your situation.

Bad Debts
Ensure you have written off all debts you consider “bad” prior to balance date.  Debts must be written off prior to balance date for them to be allowed as a deduction in that tax year.

Employee Remuneration
Keep in mind that expenses such as bonuses, holiday pay and long service leave can be claimed as a tax deduction in the 2014 tax year as long as they are physically paid within 63 days of balance date (2 June 2014).

Repairs & Maintenance
If you have any repairs or maintenance work that you’ve been contemplating, consider getting it started before 31 March 2014 so you can claim the deduction in the 2014 tax year.

Business Expenses Paid Privately
It’s very easy to forget about business expenses paid privately, so now is a good time to go through and check you’ve included these and made the necessary reimbursements.

It’s time to start collating all your donation receipts for the 2014 tax year.  You can claim a deduction of 33% of any donations over $5.00 that you hold a receipt for.  

repaid Expenses
You may wish to consider prepaying some of your expenditure.  The IRD allows certain types of expenditure to be claimed as a tax deduction in the year it is incurred, even though the goods or services will not be used until the following tax year.  You can find a schedule of the allowable deductions, amounts and timings here. The rules can be complex, so if you want to discuss this further, please contact us.

Trading Stock
Businesses carrying more than $10,000 in stock (excluding livestock) must perform a physical stocktake at year end with stock to be valued at the lower of cost or realisable value.  If your business carries less than $10,000 of stock you can choose to value your closing stock at the opening stock value and do not need to complete a stocktake.

Fixed Assets
Now is a good time to review your fixed assets schedule for accuracy, making sure all additions, disposals and write-offs have been included.  Keep in mind that fixed asset purchases under $500 (excluding GST) do not need to be included in the schedule, they are allowed as an expense.  

Imputation Credit Account
Regardless of your company’s balance date, you must ensure that the imputation credit account is not overdrawn at 31 March 2014 to avoid penalty payments to the IRD.  If you have made any dividend payments during the year that we are not aware of, please let us know so we can advise on any additional tax payments required to cover any potential shortfall in imputation credits.

Shareholder Current Accounts
Shareholder current accounts should be checked for any overdrawn balances as these could cause FBT or deemed-dividend issues.  Although this is something that we usually look after, if you have taken unusual and substantial drawings, please let us know and we can advise on how best to deal with them before year end.

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All information is correct at the date of article publication. Please note we provide the information as a service only. Accordingly, the contents are not intended as a substitute for specific professional advice and should not be relied upon for that purpose.   

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