The end of the 2022 financial year for most businesses is fast approaching. So we thought it was appropriate to get you thinking about what needs to be tidied up in your business before year end.
There are several things business’s need to think about prior to 31 March to ensure the information we receive is accurate and current as well as making the most of allowable deductions.
- Bank Reconciliation – if you are using an accounting program make sure the bank balance and the balance in the program agree. If not – why not? If you are unsure where to look or how to do this please get in touch sooner rather than later.
- Bad Debts check – are there any debtors that are on your receivables list that are not going to pay? As long as you have attempted to get payment and you can prove it – then it may be written off in your debtors ledger before the end of the financial year.
- Repairs and Maintenance – do you have anything that needs repairing? If so doing them prior to the end of your financial year will mean you can get a tax deduction this year.
- Asset purchases – consider the purchase of needed low-value assets prior to 31 March. All assets costing under $1,000 (ex GST ) may be claimed as an expense in the year of purchase.
- Asset disposals/write off – review last years asset schedule and if there are any assets that are no longer in use by the business and the business has no intention of using the assets in the future – let us know and we can write them off when we do the financial statements.
- Stock – review your stock to see if there are any obsolete items that need to be written off. Of course a stock take will then need to be done at 31 March if you have more than $10,000 in stock.
- Pre-paying certain expenses – some expenses can be prepaid in March and claimed as a tax deduction in the year to 31 March, regardless of the amount. These include stationery, postage and courier charges, vehicle registration, rates, and subscriptions. Other expenses have limits, including ren, consumables, insurance premiums, travel & accommodation, advertising, and other services. As the rules can be quite complex talk to us if you are planning this type of expenditure.
Information we require at year end to prepare your financial statements
- Bank statements – all if you are not using a computerised system or a manual cashbook. If you are then we only need the last one(s) to the end of your financial year to verify the bank balances.
- Loan statements and hire purchase agreements if any new ones taken out during the year. Closing loan statements to show the balance at balance date.
- List of debtors (people who owe you money) and amounts at balance date (if not on a computerised system)
- List of creditors (people you owe money to), the type of expenses and the amounts at balance date.(if not on a computerised system)
- Stock take – retailers a total amount of stock on hand. Farmers a list of the number and the type of livestock on hand
- Income received in advance – if you have received deposits for work not yet carried out as this may not be taxable income in this financial year
- Home office expenses – if you have an office set up at home we can claim a % of all your home costs including mortgage interest or rent, power, rates, repairs & maintenance.
Excise Tax Refunds – could you be due a refund?
In your business, do you use any Petrol powered equipment in any of following situations:
- To get around the land you work on (farm, orchard or forestry? I.e. ATV, ute, motorbike, tractor)
- To work the land: i.e. chainsaws, lawnmowers, weedeaters, hydraladas, dingoes
- To operate your business: i.e. generators, forklifts, pumps, compressors,
- On the water: must be a MSA registered vessel or jetboat.
One of our clients, NZ Petrol Refunds Limited (based in Kerikeri) offers a specialised service that you may be interested in.
If you are a business, and you use petrol in plant and equipment (off the road) then NZ Petrol Refunds Limited may be able to help you claim back your excise tax, which can be up to 87.4c/L.
Excise tax refunds do not form a part of your businesses compliance so we do not do them. We would therefore recommend using NZ Petrol Refunds as the process of dealing with the NZTA to claim a refund can be difficult and time consuming.
With the rising fuel costs there has never been a better time to get set up!
Check out their website to find out more information
New financial support for businesses affected by Omicron
Businesses struggling with revenue during the Omicron outbreak can apply for new targeted funding, as announced by the government on Monday 21st February.
Applications for the first payment open on February 28, with payments starting from March 1.
There will be 3 payments in total, available on a fortnightly basis. The new scheme is based on the understanding that the Omicron outbreak will pass over about 6 weeks. This scheme may be extended.
Each COVID Support Payment will be $4000 per business plus $400 per full-time employee, capped at 50 FTEs or $24,000. This is the same rate as the most recent Transition Payment.
Who is Eligible?
Eligible Businesses must show a 40 percent drop in 7 consecutive days within the 6 weeks prior to the shift to Phase 2 of the Omicron response on February 15, compared to 7 days after that date.
Announcement made by the Government on 25 February
The Government is providing additional certainty for businesses struggling with the Omicron outbreak that they will be able to access the new targeted COVID Support Payment (CSP).
“We are aware that there are a number of businesses which had a very quiet January/early February this year and believe that they will not be eligible under the criteria of the CSP, particularly those in the hospitality sector,” Grant Robertson said.
“We have been working with business to understand this situation, and as we have at other times during the pandemic we have responded by making changes to ensure we support viable but vulnerable businesses to get through this difficult situation.
“There will now be two time periods against which you can compare your current revenue to be eligible for the payment. The original period announced on Monday (5 January 2022 to 15 February 2022) and an alternative option of 5 January 2021 to 15 February 2021. The alternative option covers a period when all of New Zealand was at Alert Level 1.
“Businesses have told us that this additional option will provide greater certainty and cashflow,” Grant Robertson said.
“The comparator period is the same approach as used for the Resurgence Support Payment taken up by thousands of businesses last year. A business is eligible if they can show a 40 percent or greater drop in a seven day period since 16 February this year compared against a typical seven day period in one of the timeframes above.
Inland Revenue will make the necessary changes to its system to allow applications by businesses under this additional revenue comparison period,” David Parker said.
“This is expected to be completed and available for use from 14 March. Businesses will be able to use this option to apply for each of the three payments.”
Businesses can still apply for the CSP using the original criteria announced on Monday (22 February) with applications for the first payment open on February 28, with payments starting from March 1.
“The first payment will be open for application for at least six weeks, so even if a business is not eligible right now, they may find they become eligible during this six week period,” Grant Robertson said.
The payment remains the same, with eligible businesses receiving $4000 per business plus $400 per full-time employee, capped at 50 FTEs or $24,000, the same rate as the most recent Transition Payment.
It will be available on a fortnightly basis for six weeks, meaning three payments in total, each of which needs to be applied for separately. This reflects the international experience that the peak of the Omicron outbreak should pass after about six weeks.
“We will continue to closely monitor the situation and have the option to extend the payment if this is necessary,” Grant Robertson said.
Talk to us if you are unsure how to check that your business will meet the new criteria.
Changes to the Small Business Cashflow Scheme
Changes have been made to the Small Business Cashflow Loans Scheme to increase the amount of funding available to eligible businesses through the introduction of a ‘top up’ loan.
The top up loan will allow those firms that have already accessed a loan to draw down an additional $10,000 with a new repayment period of 5 years and the first 2 years being interest free.
Cabinet has also agreed to remove the first 2 years of accrued base interest from all borrowers who have, or will, take out a loan under the scheme. This change will mean interest will only start accruing at the beginning of year 3.
If your business was hit by a revenue decrease due to COVID-19 and the associated lockdowns you can apply for the Small Business Cashflow Scheme for a loan – the terms are excellent, it’s backed by the Government and many businesses will be eligible.
Applications are open until 31 December 2023.
The loan size is also contingent on business size The most a firm can borrow is $100,000, plus the new $10,000 top-up.
Is your business eligible?
To be eligible for the loan, your business must:
- Your business must have 50 or fewer full-time-equivalent employees (FTEs)
- Have been operating for at least 6 months
- Have experienced a revenue drop of at least 30% over a two-week period
- Be viable – we can help you produce evidence of this.
You can use the loan on any core operating costs, including rent, insurance, utilities, rates and supplier payments.
You can read more details about eligibility here on the Inland Revenue website.
We can apply on your behalf
Get in touch and we can apply for this loan on your behalf, providing evidence to Inland Revenue of your business’s viability and eligibility.
This is a good opportunity to get low-cost funding to support your business’s recovery and growth in 2022 and beyond.