Dorian Crighton - PKF Goldsmith FoxWith 31 March 2020, the tax year-end fast approaching for most taxpayers, there are several steps that you can take prior to balance date to help you maximise any tax opportunities.

VALUATION OF TRADING STOCK – Year end stock should be valued as cost however obsolete stock can be valued at market selling value or disposed of and written off before 31 March.

ASSETS – If you have assets that have been scrapped or are no longer fit for purpose, either dispose of or write off before 31 March.

LOW VALUE ASSETS – Separate assets with a value of $500 (GST exclusive) or less can be claimed as a full deduction in the year of purpose.

BAD DEBTS – Individual trade debts should be reviewed and written off in your debtor ledger prior to balance date for them to be allowed as a deduction in the financial year.

INVOICING IN ADVANCE AND RETENTIONS – If you have invoiced in advance for deposits or services not performed by year end, this income can be rolled into the next tax year. With retentions on construction projects – retentions become taxable income once they are due for payment.

PREPAID EXPENDITURE – Certain expenditure can be incurred in advance of the 2020 year end and may be claimed as a tax deduction.

LEGAL EXPENDITURE – Businesses with $10,000 or less of business – related legal expenditure can claim a full deduction in the year the expenditure occurs.

EMPLOYEE RELATED EXPENSES – An employer can obtain a deduction for employee-related expenses that are owing at year-end (e.g. holiday pay, bonuses, long-service leave), providing payment is made within 63 days after year-end.

DONATIONS – Companies (other than LTC’s) are allowed a deduction for gifts of money made during the year to organisations which are approved for donation tax credit purposes.

HOME OFFICE EXPENSES – Areas in the home used primarily for business, or as a storage area for the business, can be claimed as part of the overall costs of running the house as a business expense. Floor area is the most common base used for calculating the portion claimable.

LOAN ACCOUNTS AND CURRENT ACCOUNTS – If your company has loan accounts which have debit balances (including overdrawn current accounts), there could be undesirable tax consequences. Please contact us to find out whether there might be problems, and how they can be avoided.

REPAIRS AND MAINTENANCE – The end of year is a good time to look at spending throughout the year in order to determine whether items are deductible or need to be depreciated.

DIVIDENDS – If you intend to declare a dividend in March 2020, the company must pay the RWT on 20 April 2020.

The list above identifies some of these steps together with important tax reminders. This list is not intended to be exhaustive, so please contact us for further clarification.

Important Tax Dates

March 2020

  • 20 PAYE – All employers returns and payments for PAYE
  • 20 RWT – Residential Withholding Tax return and payment due for February
  • 28 GST – Payment and Return for February (monthly processing)

April 2020

  • 5 PAYE – Large employers returns and payments annually over $50,000
  • 7 Income Tax – Terminal Tax with Extension of Time for 2019 financial year
  • 20 PAYE – All employers returns and payments for PAYE
  • 20 RWT – Residential Withholding Tax return and payment due for March

May 2020

  • 7 GST – Payment and Return for February / March Period – extended time
  • 7 GST – Payment and Return for March (monthly processing) – extended time
  • 7 Provisional Tax – Third installment for 2020 year (March balance dates)
  • 20 PAYE – All employers returns and payments for PAYE
  • 20 RWT – Residential Withholding Tax return and payment due for March
  • 28 GST – Payment and Return for April (monthly processing)