Checklist: The end of the financial year

Lauren Simpson Mar 29, 2021 6:15:42 PM

With the end of the financial year just around the corner, on March 31, you may be checking that you have all your ducks in a row.

As this date also comes the possibility of paying too much tax, or not paying enough and having to fork out later – it’s important to get it right.

There are a number of actions businesses can take to minimise 2021 year tax, says Richard Burge, tax consultant and chartered accountant.

The following actions should be completed by March 31 to ensure minimal tax, says Burge.

  1. Review your accounts receivable for uncollectible accounts. Also referred to as bad debts, these are the debtors that will not be paid to you or collected. Review the debts you are owed, and if there are some which you have taken all the necessary actions with, but still haven’t been paid - then these need to be written off in your accounting system before 31 March.

  2. Undertake physical stocktakes if necessary, or calculate your work in progress. Make sure that all unrequired stock is returned so it isn’t included in the calculations.

  3. Make sure any unused fixed assets are discarded by the end of the financial year, to guarantee disposal losses can be claimed.

  4. Resources under the value of $5,000 that were purchased on, or before 16 March 2021 can be claimed fully, rather than being depreciated. This margin drops to $1,000 following that date.

  5. Cash donations need to be paid by 31 March to donee organisations to be claimed this tax year. To claim a donation tax credit, you will also need a receipt for the donation, your bank account number and to be registered to a donation tax credit account. When the financial year has concluded, and IRD has calculated tax amounts – you will either get paid your tax credit or if you have outstanding tax debt, the credit will be put towards it.

  6. Ensure that logbooks are up to date. Logbooks are required by IRD to help you calculate the business use of your vehicle. Logbooks should be used to record odometer readings, dates, distances and reason for each trip, for three successive months. The data you get from your logbooks can be used to calculate the portion of each expense (relating to that vehicle) you can claim. This includes petrol, WOF and insurance among other things. If your vehicle usage doesn’t fluctuate much, then you can continue using this data for three years. However, logbooks must be kept and renewed for 3 consecutive months, every three years.

Leave a Comment