With just a few days of the financial year left, it's a good time to make sure your financial affairs are in order. Below is a check list of items all businesses should take a look at:
1. Contracts. Have you invoiced retentions that are not due and payable for another year? If they are payable in the current year they need to be declared as income but if not, the income will be deferred to a subsequent year.
2. Credit notes. Credit notes issued to customers after 31 March may be applied to the previous year, potentially reducing the current year's taxable income.
3. Debtors. Have you taken reasonable steps to recover bad debts? If so, and you write them off before 31 March, you may be able to claim a deduction.
4. Discounts for prompt payment. If you maintain a discount reserve, it is deductible. In the first year a deduction for the actual discount percentage is allowed. In subsequent years, the amount is calculated as a percentage. Different rules apply if credit extended to customers exceeds 93 days.
5. Dividends and imputation credits. Consider reviewing planned dividend payments. The imputation credit account must not have a debit balance at 31 March otherwise penalties may arise.
6. Employee expenses. Amounts owing for holiday pay, bonuses, redundancy payments, long service leave etc. can be claimed, if you have committed to them at year end and they're paid within 63 days.
7. Expenses. Can you pre-pay any expenses before 31 March? You may be able to claim for them.
8. Fixed assets. Do you have any that you are no longer using or don't intend to use in future? If so, the book value may be able to be written off.
9. Loss offset elections and subvention payments. Talk to us if you think the company will make a loss.
10. Planned maintenance and repairs. If any significant maintenance or repairs are due, bring this forward to get an early tax deduction.
11. Stock. Dispose of obsolete trading stock by 31 March or write it down to net realisable value (lesser of cost or market value). If the stock is worth less than $10,000 and your turnover is less than $1.3m for the year, you won't need to include your stock movement for tax purposes.
If you have any questions or need assistance with any of these items, please feel free to contact us.