It’s almost 31 March and for most businesses this means the end of a tax year. March is your final chance to reduce your tax bill. Here are some tips that might help:
There are some expenses which can be overlooked at end of the year, like home office expenses, expenses paid from a personal account which are not entered into your accounting system during the year, etc. If you have an office at home, you can claim that as part of your business expenses. See our blog on home office for more information.
Any repairs you’ve been putting off? Do them before end of financial year
If you have been putting off repairs to your rental property or car or machinery, now is the time to do it. You will be able to bring these expenses in 2018 financial year and reduce some tax bills. Remember buying a car does not mean you can claim the whole amount as an expense. Car is classified as an asset and only a percentage of expenses is claimed each year, see fixed assets and depreciation below.
Tax credits for donations
If you have donated $5 or more, you can claim tax credit. Donations need to be made to approved done organisations, approved overseas aid funds. Also remember to claim school fees as it counts towards donation. You can’t claim for tuition, exam or tertiary educational institution fees or payroll giving donations you made through your salary and wages.
Write off invoices that are no longer recoverable
Go through your accounts receivables/ debtors (clients who owe you money) and write off any invoices which are no longer recoverable as it will come of your gross income and will help with less tax to pay. You can hold back some invoices and date them 1 April 2018 to bring the sales in 2019 financial year.
Enter all your accounts payables/creditors (people you owe money to)
If often happens that businesses don’t enter all of their invoices that are dated around the end of the year – a common reason is simply because they are not in to the habit of entering the invoices into their system as they come in. They have either set them as direct debit or repeating payments. If the invoices are dated 31 March 2018 or before and the payment is made on the 20 April 18 for example, you can get the benefit of claiming those expenses in 2018 financial year if you record that as your creditors. Examples are March bills like telephone, power bills, supplier invoices. Also, get business events booked before 31 March 2018 and get them to send you an invoice dated before or on 31 March 2018.
Stock take – remove old and missing products of your books
If you’re carrying stock you are required to do a stock take to record how much you have on hand as at the 31st March 2018. The figures should be at cost, excluding GST. If this is your first year and your stock is under $10,000 there is no requirement to include it in your financial reports, which means less tax to pay. Reducing your stock value means lower profits, so dump old or missing products so you don’t have to include them in your stock take.
Fixed assets and depreciation
If you are planning to buy an asset now, a full month’s depreciation can be claimed for any part month that an asset is owned and used. So, it may be worth buying replacement assets on or just before balance date to obtain one month’s depreciation deduction. Are you thinking of selling any assets? If you expect to make a loss on sale, consider selling prior to the balance date. If you expect to make a gain on sale, consider deferring the sale until after balance date.
Employee wages and leave
If you are planning to pay your staff or yourself a bonus, do that before 2 June and advise your accountant. They can bring that in your 2018 accounts. If you pay out any holiday pay to staff from 1 April 2018 to 2 June 2018, let your tax agent know as this can be claimed for in the financial year to 31 March 2018.
Working for families
If your profits had dipped right down from previous years you may be entitled to Working for Families. Check with your accountants.
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