|Posted on 23 June, 2019 at 0:50|
Start Preparing for 2019 Year End
As the end of the financial year approaches, it always pays to spend a little extra time examining your financial records and considering ways to increase your after tax income.
There is a high chance that you will find a couple of extra savings. It is also a good time of year to reflect on your financial position, and think about goals.
Here are a couple of our top tax tips for preparing for the 2019 end of financial year:
Prior Year 2018 Taxes Are Due
Ensure 2018 tax returns have been filed with the IRD as they are due on 31 March 2019.
Write off bad debts
Businesses with outstanding amounts owed, no matter the size, that are unlikely to be recovered in full should consider writing these off as bad debts. Bad debts can be used as a tax deduction, effectively reducing your taxable income for the relevant year.
By pre-paying for tax deductible expenses before March 31, you will be able to minimise your tax bill. Some categories of business expenses can be pre-paid. Examples include stationery, vehicle registration, and accounting.
Split business income
In some circumstances, it may be possible to minimise your tax liability by redistributing the flow of income from your business. For example, if your partner is a low income earner, it may be advisable for you to split the business income with them. It may also be possible for you to redirect some of your income towards your children. This should be planned prior to your end as there are rules around how this can be done. Please call to discuss.
You are able to claim a deduction for a discount reserve, for example a discount for speedy payments, if your debtors are traditionally entitled to this discount.
Trading stock valuation
Trading stock must be valued using a cost valuation method, unless the market selling value is lower than the cost. It is very important to value your stock at 31 March each year, where the stock is worth less that the cost price this should be recorded.
Bonuses and holiday pay
It is possibly to claim amounts payable to your employees as a deduction for the current financial year, so long as the full amount is paid to the employee within 63 days of the balance date. This may include bonuses and holiday leave paid within 63 days of 31 March.