It’s time to tidy up your accounts ready the end of the tax year. You need to consider the following points:
Write off bad debts before year end. It is not permitted to backdate a claim for a bad debt write-off performed after balance date. Leave a trail of evidence of when you performed the write-off. If your business is very small and you control your debtors by keeping a file of copies of unpaid invoices, write on the copy “written off on ….. (date)” and add your signature.
At the end of the last day of the financial year, those who use a kilometre rate to claim for car running expenses need to get an odometer reading. Put a reminder in a place where you will not miss it.
Small assets costing $1000 or less can be treated as expenses. If you buy more than one at the same time and they have the same depreciation rate, you need to add the amounts together for the purposes of the threshold.
Bigger income earners – those who pay $60,000 or more tax per year – should consider whether their incomes have risen significantly. If this is the case, they could save themselves Use of Money Interest, charged at 7 percent, by increasing their third instalment of provisional tax (7 May 2022 for March balance dates). You will hit the $60,000 threshold at $204,820 of income, assuming no income is taxed at source.
If you need to keep a vehicle logbook, remember you are required to take a fresh three-months sample every three years. If the proportion of your business use has risen, you could do a fresh logbook earlier.
Clients with a 31 March balance date should start organising their stock for stock-taking. All stock will need to be valued. If a line won’t sell, you are entitled to value it at market value so long as you can show how you arrived at market value. It might be better to get rid of it in advance of balance date.
Any maintenance carried out and incurred before balance date will normally be an expense so long as it does not add value to an asset, but rather brings it back up to standard.