As we approach the end of another tax year, now's a good time to review and reflect on the year that's been, while also planning for the year ahead.
We've outlined below some valuable end-of-year tax tips to help you close out the 2024 financial year and set yourself up for a successful 2025. Additionally, we have included our annual checklist and authorisation as well as some updates on key tax changes you need to be aware of from 1 April 2024.
The operating budget has been set at $3.2 billion per year, marking the lowest operating allowance since the 2017 Budget. This year's theme centres on restrictive spending to achieve a surplus by 2027/2028.
It's clear that, in their first term, the government is prioritising the establishment of a steady foundation over immediate economic growth. This cautious approach aims to create a financial buffer against future uncertainties. Additionally, it's encouraging to see that the government has largely delivered on its election promises, enhancing the credibility of a more professionally managed administration.
In this issue:
END OF YEAR TAX TIPS
Debtors/Bad Debts
Review your debtors and determine if any are unlikely to be recovered and should be written off. For the unrecoverable income to not be taxable, it must be physically written off your ledger prior to 31 March 2024.
Log Book
Make sure you are keeping a log book or record of vehicle expenses if you use a personal car for business use. Please include this when compiling your EOY information.
Fixed Assets
Do you have any assets that are no longer in use or are surplus? Now’s the perfect time to review your fixed asset schedule, and write off or sell your obsolete assets. Please contact us if you would like a copy of your asset schedule.
Donations
Should you wish to make any charitable donations, try to do so before 31 March. This allows us to claim a tax deduction of 33% of your total donations. Please remember to keep your receipts.
Stock Take
As a reminder, if you hold stock of more than $10,000, a stock take will be required at 31 March 2024. When completing the stock take please provide us with the GST exclusive figure.
Pre-pay expenses
Think about any upcoming business expenses you may have, such as a re-stock of office supplies or new equipment. Depending on their value, if purchased prior to 31 March we can claim these costs now to help minimise your tax bill.
Home Office
If you work from home, a portion of your home expenses can be claimed as a business expense. If this is the case for you, please provide us with your annual household running costs (such as mortgage/rent, rates, power, R&M and phone/internet) and the percentage of area in your home used for work.
ANNUAL CHECKLIST AND AUTHORISATION
Please click here for a checklist to assist you in assembling the records and documents necessary for the preparation of a full and correct set of Financial Statements, Taxation, Statistical and Statutory Returns for the year ending 31 March 2024.
Once you have completed the checklist for each entity, please insert your entity’s name where indicated, assemble the necessary records and documents, then either contact us or forward them to our office.
Due to the Privacy Act we are required to have written authority to access your information each year. Can you please read the authorisation section, insert your entities’ names and IRD numbers, sign where indicated, and return with the above information.
Please feel free to give us a call if you have any questions in regard to the above.
TAX UPDATES FOR THE 2024/25 YEAR
Looking ahead to the new financial year, we've outlined below a number of important tax changes you need to be aware of:
Trust Tax Rate
The bill to introduce a new 39% trust tax rate is now before the select committee following the release of IRD's Departmental Report. The report outlined a number of exemptions to the proposed rate change in an effort to avoid many trusts from being over-taxed. These recommended exemptions included:
Trusts with income of $10,000 or less would continue to be taxed at the current 33% rate
Tax on estates would remain at 33% for the year of death and the following three income years
Disabled beneficiary trusts remain at the 33% rate
While all of us were hoping for the larger de-minimis threshold of $100,000, it's good to finally have clarity around what the changes will be and how it will impact trusts moving forward.
We have reviewed our trust clients and identified those who will be impacted by the rate change. If we have not yet been in touch, please expect to hear from us shortly with our recommendation based on your personal situation.
Residential Interest Deductibility
The phase back of interest deductibility for residential investment properties has now been confirmed. From 1 April 2024, interest will be 80% deductible and then 100% from 1 April 2025 onwards. While we were initially anticipating the phasing back in to take effect from the 2024 financial year at 60% deductibility, this is unfortunately not the case. Therefore we will only be able to claim 50% of residential rental interest in your 2024 tax returns for those who have owned the property prior to 27 March 2021.
PAYE
The minimum wage will increase by $0.45 on 1 April 2024, from $22.70 to $23.15. If you have any employees earning less than $23.15 an hour, please ensure you increase their wages to remain compliant.
The annual Student Loan repayment threshold for the 2025 financial year is $24,128 or $464 per week. Please ensure your payroll systems are updated to comply with the new rate.
The ACC earners' levy rate will also increase from 1 April 2024 to $1.60 per $100 (1.60%). As with the above, please ensure your payroll systems are updated to account for the new rate.
If you have any questions or concerns regarding how the above might affect you, please don't hesitate to reach out.
GOAL SETTING
As we embark on the new financial year, it is essential to take stock of the accomplishments and challenges of the past year. Reflecting on our successes and lessons learned guide us in setting ambitious yet achievable goals for the year ahead.
Whether it is expanding your market reach, enhancing product innovation, improving operational efficiency or fostering stronger customer relationships, now is the time to outline clear objectives that align with your vision.
We are expecting this to be a tough year economically, so it is essential to approach the year with clarity and confidence to make the decisions that count and we are here to help.
So please get in touch if you need some guidance in developing your goals for the new financial year.
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