Date: 15th March 2021
Over the last year Covid-19 has changed many aspects of business – from how businesses interact with clients, to how and where staff work, to massive changes in supply and demand. And now Covid will affect how you do your end of year financial accounts for 31 March 2021.
Why? You will need to consider Covid business support and tax relief measures when ticking items off your end-of-year tax checklist. Here’s a handy list of things you may not be used to thinking about when you prep for end of tax year:
Keep accurate records of any subsidy you received and which staff member it was paid to, in case the Ministry of Social Development asks to review your records down the track.
If money is a bit tight as the financial year draws to a close, here are four tax measures focused on providing and enabling cashflow that you might like to consider:
Identify assets, valued up to $5000, bought before 17 March 2021. You’ll be able to claim an immediate deduction for these assets under the low-value asset write-off.
The threshold drops from $5,000 to $1,000 on 17 March 2021. The temporary $5,000 threshold was a concession as a result of the Covid-19 relief measures introduced, and from the 17 March 2021 the $1,000 threshold is an increase from the $500 amount that was previously in place prior to 2020.
It’s also a good time to ensure records are up to date on any commercial buildings as depreciation for tax purposes is available on commercial buildings for the year ended 31 March 2021.
Start-up companies are able to cash-out their tax losses arising from eligible research and development (R&D) expenditure, and avoid carrying the losses through to the next income year. The credit can only be for:
The rules around R&D expenditure are detailed and eligible R&D expenditure will require approval from Inland Revenue. So if you’re looking to claim under these rules, you will need to start looking at this sooner rather than later, and keeping records of such expenditure as it occurs.
If you’re one of the 75,000 Kiwis impacted by the new 39% tax rate, review your business and investment structure with us before 1 April 2021.
The marginal tax change, rushed through last December to help pay for the Covid-19 recovery, applies to all employment income over $180,000 a year. It includes extra pay earned in the course of employment, such as bonuses, back pay, redundancy, and retirement payments. It is timely to consider such payments in relation to the 2021 year, as well as reviewing dividend payments.
Make sure you have a good record of any reimbursements and allowances paid to employees for expenditures – generally and in account of new Covid-19 related Working from Home (WFM) tax changes. Remember:
Feel free to contact us if you have questions or need help with any of this.