Alphabetical checklist for tax-year end

TAXING
Last updated 14:06 31/03/2014

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OPINION: Today I consider the ABC of planning for the tax year end for businesses with a standard March 31 year-end.

A is for associated person transactions that could give rise to tax consequences

B is for bad debt deduction. Debts must be bad and physically written off before midnight on March 31.

C is for continuity of shareholding. A minimum shareholder continuity must be maintained to preserve losses and imputation credits.

D is for depreciable assets and donations. Do you have obsolete depreciable assets that should be written off? Has your business made a deductible donation?

E is for employee remuneration. Accrued holiday pay, bonuses and long service leave must be paid out within 63 days of year-end to be deductible in the current tax year.

F is for FBT. Have you returned all fringe benefits?

G is for GST. Have you correctly accounted for GST during the year?

H is for avoiding the headache of insufficient provisional tax payments and buying tax credits from a tax pooling organisation.

I is for inter-company charges. Is there adequate documentation? Have actual services or goods been supplied, or are the charges merely a device to shift income?

J is for a partner's joint and several liability for a general partnership's GST liabilities.

K is for keeping it simple, where possible.

L is for look through companies (LTCs). Owners of LTCs need to check that LTC status has been maintained.

M is for mixed-use assets and whether you need to apportion costs.

N is for not taking tax positions that gives rise to shortfall penalties.

O is for on line. A lot of communication and filing returns with IRD can be done on line.

P is for prepayments; not all of these are necessarily deductible in this tax year.

Q is for qualifying companies (QCs). Is your company still eligible to be a QC? Alternatively, do you want to revoke QC status with effect from the next tax year?

R is for IRD risk review of your business before deciding whether to commence a tax audit.

S is for overdrawn shareholder current accounts. How are you going to deal with this - year-end salary, FBT or paying interest?

T is for trading stock; there may be some scope for writing off obsolete or slow-moving stock.

U is for understanding your obligations under the various Revenue Acts.

V is for vehicle expenses. Have you kept a logbook?

W is for resident and non-resident withholding taxes. Should you have deducted and accounted to IRD for these?

X is for foreign exchange. Do you need to convert a loan or investment denominated in a foreign currency into New Zealand dollars?

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Y is for your remuneration; will you potentially fall foul of IRD's views on personal services remuneration?

Z is for get some zzzzz, there's a new tax year just ahead!

* Murray McClennan is director of Tax Central Limited, a specialist tax consulting firm. He can be contacted by emailing taxcentral@xtra.co.nz. The above comments are of a general nature only and are not a substitute for specific advice.

- The Southland Times

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