As we countdown towards the end of the 2024 financial year, here are some some tax planning opportunities to help you optimise deductions. These steps need to be completed and actioned before 31 March for it to take effect. Please call one of our client advisors if you are unsure about any of these items.
Cashflow and Year-End Tax Planning Tips.
- Debtors and Bad Debts
Review your outstanding debtors list. Write off any debt that you have been chasing for a reasonable amount of time but without success.
Remember if you don’t write them off before 31 March, you will be paying tax on it even though you may never recover the payment.
Ensure you keep a record of the time and measures you put into collecting the debt, before writing off the debt, should there be an IRD review/audit.
Just because you have written off the debt, it does not stop you from pursuing the debtor or referring them to debt collection agency. You will only pay tax when the debt is collected.
- Repairs and Maintenance
Finish any repair works that you have been putting off.
If the repairs work is completed before 31 March, you will be able to accrue and claim these expenses in FY2024, allowing you to delay payment till April 20th.
NOTE: For property investors, you can only claim repairs that have been paid for before 31 March.
- Obsolete Fixed Assets
Review the fixed assets schedule in your FY2023 financial statements.
Identify, remove, and write off all obsolete, non-functional assets or any assets that have were disposed in the year.
- Low Value Fixed Assets
Remember the $1,000 (GST inclusive) cost threshold. NOTE: if you are GST registered, then the threshold will be GST exclusive.
Subject to some provisos, you will be able to claim the item as an expense if it is below this threshold.
Please provide us with the asset details so that we can help you to evaluate against the conditions.
NOTE: if you purchased assets that cost over this threshold, please provide us with the asset details or invoices so that we can select the correct depreciation rate for the item.
- Stock & Work In Progress
Trading stock on hand must be calculated based on its cost as of 31 March. Therefore, ensure you have completed a physical stocktake.
Write off and physically dispose any obsolete stock before 31 March.
Costs incurred for work that has not been completed or billed as of 31 March must be recorded as Work In Progress. Please write off any costs you believe are unrecoverable.
- Pre-payments
If you are in a strong cashflow position, you can consider pre-paying some expenses before 31 March.
This following list of expenses will provide what you can claim when these expenses are paid for in advance.
| Accounting Fees
Postage & Courier Rates Road User Charges Printing & Stationery Subscriptions to newspapers, professional journals
|
No $ limit
No limit to number of months paid in advance
|
| Advertising | $14,000 limit
Maximum of 6 months payable in advance
|
| Insurance Premiums | Total annual premium cannot exceed $12,000
Maximum of 12 months payable in advance
|
| Rent for Land & Buildings | $26,000 limit
Maximum of 6 months payable in advance
|
| Service or Maintenance Contracts | Total annual amount cannot exceed $23,000
Maximum of 3 months payable in advance
|
| Trade Professional Association Subscriptions | Total annual subscription cannot exceed $6,000
Maximum of 12 months payable in advance
|
| Telephone | No $ limit
Maximum of 2 months payable in advance
|
| Travel | $14,000 limit
To be used within 6 months after balance date
|
- Staff Bonuses and Holiday Provisions
Staff bonuses that are determined before year end and paid within 63 days of year end (i.e. before 2 June) are deductible.
Holiday pay and long service leave owed and paid out within 63 days of year end are also deductible.
- Making Private Donations to approved charities
You can claim up to 33% of the donation as a charitable rebate provided you derived taxable income equals or bigger than the donated sum.
Consider bring forward and paying donations before 31 March so that you can claim the rebate in FY2024 income year.
Preparing for Year End Compliance Matters.
- When Filing the March 2024 GST return
Before filing your last GST return for period ended March, please remember to include any GST “overs and unders” adjustments that we had advised previously. Please call if you are unsure of the figure you need to adjust.
Please collate copies of your previous GST returns and workings for the year ended 31 March.
- Paying interest to private lenders
If you pay more than $5,000 interest to any lenders, you need to register for Resident Withholding Tax.
Please remember to deduct Resident Withholding Tax (when repaying local lenders) or Non Resident Withholding Tax/Approved Issuer Levy (when repaying offshore lenders)
Both tax payments and returns need to be filed with Inland Revenue by 20 April.