END OF FINANCIAL YEAR CHECKLIST
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Articles by John Heaslip
For most clients, 1 April signals the start of the New Year for business and tax purposes, and the month of March brings opportunities to minimise tax and maximise cash surpluses for the coming year.
A well known quote is “if you fail to plan, you are planning to fail!”, so with this in mind we give you some things to think about going forward. For those of you in business, consider the following points:Year End Tax Planning Checklist
Before 31 March
Bad Debts
Review your debtor’s ledger. In order to claim a deduction for bad debts, the debts you believe will not be collected MUST be written off in your debtors ledger prior to 31 March.
Repairs & Maintenance
You may want to consider undertaking any necessary repairs & maintenance on assets prior to the end of the financial year, but please talk to us to ascertain if a full deduction for taxation is applicable.
Asset Purchases
Consider the purchase of needed low-value assets prior to 31 March. All assets costing under $500 (ex GST) may be claimed as an expense in the year of purchase. Once again, please talk to us to ascertain if a full deduction for taxation is applicable, as there certain rules relating to assets under $500.
Review Last Year's Fixed Asset Register
The book value of assets can be written off for taxation purposes if the asset is no longer in use by the business and the business has no intention of using the assets in the future.
Pre-paying Certain Expenses
Some expenses can be prepaid in March and claimed as a tax deduction in the year to 31 March, regardless of the amount. These include stationery, postage and courier charges, vehicle registration, rates, and subscriptions for papers or journals. Other expenses have limits, including rent, consumables, insurance premiums, travel & accommodation, advertising, periodic charges and other services. The rules surrounding prepayments are complex so if you are planning this type of expenditure, please talk to us.
New Tax Year Planning Checklist
Are you dreading supplying information to us so we can complete your 2015 affairs? If so, why not make a New Tax Year's Resolution to make life simpler in the coming year.
Step 1
If you haven't already, talk to us about a suitable electronic cashbook such as Xero (pricing from $20 per month).
Step 2
Start to develop your regular accounting procedures by separating your tasks by expected frequency: weekly, monthly, two-monthly, tri-yearly, six-monthly or yearly. General accounting chores will fall into each category, and tax-related tasks typically come up no more than monthly.
Weekly & Monthly Tasks
These tasks are bookkeeping chores and each business will differ in complexity depending on transaction volume. Generally all businesses should follow these steps.
• Sort your mail into action piles (such as bills to pay and orders to fill - if applicable).
• Process any new customer orders, record all sales transactions, and mail out any new accounts receivable invoices (if applicable).
• Gather the day's cash and checks, make up a deposit slip, and bank (if applicable) .
• Pay any invoices that are due or for which you can get an early payment discount.
• Record any withdrawal and deposit transactions in the electronic cashbook.
• File records in a suitable filing system
• Reconcile bank statements to electronic cashbook.
Two-Monthly, Tri-Yearly or Six-Monthly Tasks
These tasks are GST, PAYE or income tax related. Once the weekly and monthly tasks are adhered to, the rest will follow in an orderly fashion.
Please contact us for advice on how to start this process now.
Before 31 March
Bad Debts
Review your debtor’s ledger. In order to claim a deduction for bad debts, the debts you believe will not be collected MUST be written off in your debtors ledger prior to 31 March.
Repairs & Maintenance
You may want to consider undertaking any necessary repairs & maintenance on assets prior to the end of the financial year, but please talk to us to ascertain if a full deduction for taxation is applicable.
Asset Purchases
Consider the purchase of needed low-value assets prior to 31 March. All assets costing under $500 (ex GST) may be claimed as an expense in the year of purchase. Once again, please talk to us to ascertain if a full deduction for taxation is applicable, as there certain rules relating to assets under $500.
Review Last Year's Fixed Asset Register
The book value of assets can be written off for taxation purposes if the asset is no longer in use by the business and the business has no intention of using the assets in the future.
Pre-paying Certain Expenses
Some expenses can be prepaid in March and claimed as a tax deduction in the year to 31 March, regardless of the amount. These include stationery, postage and courier charges, vehicle registration, rates, and subscriptions for papers or journals. Other expenses have limits, including rent, consumables, insurance premiums, travel & accommodation, advertising, periodic charges and other services. The rules surrounding prepayments are complex so if you are planning this type of expenditure, please talk to us.
New Tax Year Planning Checklist
Are you dreading supplying information to us so we can complete your 2015 affairs? If so, why not make a New Tax Year's Resolution to make life simpler in the coming year.
Step 1
If you haven't already, talk to us about a suitable electronic cashbook such as Xero (pricing from $20 per month).
Step 2
Start to develop your regular accounting procedures by separating your tasks by expected frequency: weekly, monthly, two-monthly, tri-yearly, six-monthly or yearly. General accounting chores will fall into each category, and tax-related tasks typically come up no more than monthly.
Weekly & Monthly Tasks
These tasks are bookkeeping chores and each business will differ in complexity depending on transaction volume. Generally all businesses should follow these steps.
• Sort your mail into action piles (such as bills to pay and orders to fill - if applicable).
• Process any new customer orders, record all sales transactions, and mail out any new accounts receivable invoices (if applicable).
• Gather the day's cash and checks, make up a deposit slip, and bank (if applicable) .
• Pay any invoices that are due or for which you can get an early payment discount.
• Record any withdrawal and deposit transactions in the electronic cashbook.
• File records in a suitable filing system
• Reconcile bank statements to electronic cashbook.
Two-Monthly, Tri-Yearly or Six-Monthly Tasks
These tasks are GST, PAYE or income tax related. Once the weekly and monthly tasks are adhered to, the rest will follow in an orderly fashion.
Please contact us for advice on how to start this process now.
John Heaslip
Business Advisory Director
© 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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