As we countdown towards the end of the financial year, here are some some tax planning opportunities to help you optimise deductions. These steps need to be completed and actioned before 31 March for it to take effect.  

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Cashflow and Year-End Tax Planning Tips‍

1. Debtors and Bad Debts

Review your outstanding debtors list.  Write off any debt that you have been chasing for a reasonable amount of time but without success.

Remember if you don’t write them off before 31 March, you will be paying tax on it even though you may never recover the payment.

Ensure you keep a record of the time and measures you put into collecting the debt, before writing off the debt, should there be an IRD review/audit.

Just because you have written off the debt, it does not stop you from pursuing the debtor or referring them to debt collection agency. You will only pay tax when the debt is collected.

2. Repairs and Maintenance

Finish any repair works that you have been putting off.

If the repairs work is completed before 31 March, you will be able to accrue and claim these expenses in FY2024, allowing you to delay payment till April 20th.

NOTE: For property investors, you can only claim repairs that have been paid for before 31 March.

3. Obsolete Fixed Assets

Review the fixed assets schedule in your FY2023 financial statements.

Identify, remove, and write off all obsolete, non-functional assets or any assets that have were disposed in the year.

4. Low Value Fixed Assets

Remember the $1,000 (GST inclusive) cost threshold. NOTE: if you are GST registered, then the threshold will be GST exclusive.

Subject to some provisos, you will be able to claim the item as an expense if it is below this threshold.

Please provide us with the asset details so that we can help you to evaluate against the conditions.

NOTE: if you purchased assets that cost over this threshold, please provide us with the asset details or invoices so that we can select the correct depreciation rate for the item.

5. Stock & Work In Progress

Trading stock on hand must be calculated based on its cost as of 31 March. Therefore, ensure you have completed a physical stocktake.

Write off and physically dispose any obsolete stock before 31 March.

Costs incurred for work that has not been completed or billed as of 31 March must be recorded as Work In Progress. Please write off any costs you believe are unrecoverable.

6. Pre-payments

If you are in a strong cashflow position, you can consider pre-paying some expenses before 31 March.

This following list of expenses will provide what you can claim when these expenses are paid for in advance.

Accounting Fees

Postage & Courier

Rates

Road User Charges

Printing & Stationery

Subscriptions to newspapers, professional journals

(No $ limit. No limit to number of months paid in advance).

Advertising - $14,000 limit. Maximum of 6 months payable in advance.

Insurance Premiums - Total annual premium cannot exceed $12,000. Maximum of 12 months payable in advance.

Rent for Land & Buildings - $26,000 limit. Maximum of 6 months payable in advance.

Service or Maintenance Contracts - Total annual amount cannot exceed $23,000. Maximum of 3 months payable in advance.

Trade Professional Association Subscriptions - Total annual subscription cannot exceed $6,000. Maximum of 12 months payable in advance.

Telephone - No $ limit. Maximum of 2 months payable in advance.

Travel - $14,000 limit. To be used within 6 months after balance date.

7. Staff Bonuses and Holiday Provisions

Staff bonuses that are determined before year end and paid within 63 days of year end (i.e. before 2 June) are deductible.

Holiday pay and long service leave owed and paid out within 63 days of year end are also deductible.

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8. Making Private Donations to approved charities

You can claim up to 33% of the donation as a charitable rebate provided you derived taxable income equals or bigger than the donated sum.

Consider bring forward and paying donations before 31 March so that you can claim the rebate in FY2024 income year.