Accountant

YEAR END
31 MARCH 2022

 

The following is a list of must-do items in preparation of year end 31 March 2022, make sure you work through a year-end process to maximise your tax deductions and minimise your tax bill.

 

Assets 

  • Assets purchased for less than $1,000 can be expensed

  • Depreciation can be claimed from the first day of the month of purchase
    Ensure assets traded in are disposed of and the replacement asset is depreciated and recorded at its full cost

  • Depreciate residential rental property chattels purchased during the year

  • Depreciation can be claimed on commercial property, provided it has been claimed previously or the property was newly acquired in the 2022 year

  • Review your fixed asset register from your 2021 financials– ensure assets sold, stolen, scrapped or destroyed are noted on the asset register and provide this list to us.

  • If an asset sale is expected to result in depreciation recovery, consider deferring the sale until after 31 March 2022

  • Review repairs and maintenance codes to ensure all assets are moved to the asset account where appropriate


Trading Stock 

  • Value closing stock at market selling value if this is lower than cost

  • Carry out a stocktake at 31 March to ensure an accurate closing stock figure

  • Write-off any obsolete stock

  • If trading stock is less than $10,000 and turnover is less than $1.3m, you can use the opening stock value as the closing stock figure (even if this is nil)


Accruals and Provisions 

  • These are not deductible in the current year unless you are definitively committed to the expense at year-end and the amount can be reliably estimated

  • Keep a record of employment provisions paid out between 1 April and 2 June as that portion of the provision is deductible in the 31 March financial year, this includes holiday pay and bonuses


Repairs and Maintenance 

  • A one-year warranty purchased with a fixed asset can be deducted as an expense rather than capitalised, provided the cost of the warranty can be separately identified

  • Review fixed asset registers to ensure genuine R&M has been expensed and not capitalised to fixed assets


Bad Debts 

  • The debt must be physically written off the debtors’ ledger by 31 March to be deductible

  • Retain documentation to support the debts as not recoverable

  • Claim the GST adjustment of any bad debt adjustment if you are on invoice basis


Donations 

  • Cash donations paid to donee organisations or registered Charities are deductible up to the level of net income.  If the business is in a tax loss position, consider the owner making the donation and claiming the donation rebate.


Cut Off 

  • Follow year-end cut off procedures to ensure sales, stock, expenses, etc, are accounted for in the correct year


Income Tax 

  • The third instalment of 2022 provisional tax is due 7 May 2022 based on actual results to 31 March, therefore it is important to have your records in order to determine this if you are not paying based on standard uplift. Remember, the tax rate for individual’s income over $180,000 is now 39%.

  • If you have not yet filed your 2021 income tax return, please be aware there is now an extension of time to lodge until 31 May 2022.  If we haven’t been in touch with your 2021 results we are certainly working towards getting them finalised in time and as soon as possible.


GST 

  • Ensure you have made any GST adjustments required from the preparation of 31 March 2021 financial statements


System Considerations 

  • Ensure bank reconciliations are completed to financial year end and that all bank and loan balances in the accounting system match the bank statements that will be provided to your accountant

  • Confirm the balances of outstanding creditors and debtors are accurate

  • Where possible, lock your system at the year end to ensure no changes can be made once the final position has been determined

 

Attending to these matters now will help us to ensure you maximise your tax deductions for 31 March 2022 and ultimately lower your tax bill.