The Real Year End
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GRA Blogs
Articles by John Rowe
,We have just started a new calendar year but are running rapidly towards the end of the financial year. What we all want is to reduce tax and stress, so here are a few tips to get you started:
Bad Debts
In order to claim a tax deduction for a bad debt, the debt must be written out of your debtors’ ledger prior to 31 March. You must have undertaken all reasonable steps to collect the outstanding sum. Remember, writing a bad debt off does not mean you cannot continue to pursue it.
Subvention Payments
If you have been advised to make a subvention payment between your profit and loss making companies, the payment must be made prior to 31 March. Occasionally we hear of clients attempting to do cheque swaps and having difficulties with their bank. If you are experiencing difficulties with your bank manager not understanding what you are attempting to do, let us know. We will talk to them or alternatively find you someone further up the food chain.
Stock Take / Work in Progress
If your business has stock or work in progress (WIP) you must complete a stock take or value your WIP (including its labour portion) at 31 March. There are exceptions for some tax payers whose turnover does not exceed $1.3m for the year. These people are permitted to use the value of opening stock as the value of closing stock provided that they reasonably estimate that the true value of closing stock is less than $5,000.
Holiday pay / Bonuses
Holiday pay and bonuses paid within 63 days of balance date are deductible in the 2010/11 year as long as they relate to the 2010/11 financial year.
Banklink
If you want to take advantage of our Banklink service to potentially reduce your accounting fees for the 2011/12 year, you need to urgently complete and return the forms to us.
Fixed Assets
Review the fixed asset register and perform a stock take to ensure the assets exist and to identify assets that are no longer used in order to claim a deduction for the remaining adjusted tax value of the asset.
Assets can be written off if they are no longer used but have not been disposed of. Remember, assets costing $500 or less qualify for an immediate write-off provided.
Prepaid Expenditure
Certain prepayments can be claimed as a tax deduction even if they span financial years. This includes payments like insurance which may relate to both the 2011 and 2012 years. There are thresholds and other requirements to meet so please contact us if you would like further details.
Resident Withholding Tax (RWT) on Dividends
The RWT rate on dividends remains at 33%. This means that any dividends with imputation credits attached at 30% will require a top-up of 3% RWT. This RWT is payable by the 20th of the month following the date of the dividend.
If you still haven’t filed your 2010 accounts please get in touch with us asap so we can help you get up-to-date and try to avoid any extra fees from IRD. In the meantime, if you are preparing for the end of the current financial year and still need help, please contact us or your Senior Account Manager so we can make sure things go smoothly and on time.
For those of you who don’t have an accountant and don’t want the hassle of filing year end accounts, contact us for a free no obligation quote.
John Rowe
Director/Partner
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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