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Mar 22

Tax Tips:Areas you can review before 31 March 2015

Posted by James Burn on Saturday, March 22, 2014

Tax Tips: Areas you can review before 31 March 2015 updated

1. Consider pre-paying business expenditure  

Some expenses can be prepaid in March and claimed as a tax deduction in the 2015 tax year, regardless of their amount. These include stationery, postage and courier charges, vehicle registration and road user charges, rates, newspaper subscriptions, and even accounting fees!   Other expenses have limits on the extent to which they can be claimed if prepaid. These include rent, consumables (materials used in the manufacture of a product or service), insurance premiums, professional or trade subscriptions, travel, and advertising. The rules around prepayments can be quite complex, so if you’re planning this type of expenditure, please contact me.

2. Stock (excluding livestock) must be valued at the lower of cost or market value. General adjustments for obsolete stock are not acceptable to Inland Revenue.  It’s important to perform a physical stock take at 31 March 2015 and actually dispose of any obsolete lines or alternatively write down to market value after deduction of selling costs (net realisable value).  Clients with an annual sales of less than $1.3m may value their closing stock at the opening stock value, but only where closing stock is less than $10,000.

3.   Write off any bad debts from your debtors balance (people who owe you money)
To claim a deduction for a bad debt you need to physically write the debt off in your debtors record  before 31 March 2015. There should also be evidence that you have taken reasonable steps to recover the debt prior to writing it off.

4.   Employee expenses
Any amounts owing to employees at year end (such as holiday pay, bonuses, long service leave, redundancy payments) can be claimed for tax purposes in the 2015 tax year as long as they are paid within 63 days of 31 March 2015.

5.    Review your  Fixed Asset Schedule
The book value of assets can be written off for tax purposes if the asset is no longer in use by the business, the business has no intention of using that asset in the future and the cost of disposing that asset is expected to be greater than the proceeds from its sale. Actually, it’s simpler than that. Scan your asset schedule from last year’s accounts and you’ll probably notice assets that no longer exist (for example the mobile phone that you dropped on your driveway and drove over it), or simply don’t work