End-of-Year Tax Checklist: Ensure Cash Flow and Compliance

As you check off items on your end-of-year tax checklist, consider the following rules to keep your cash flowing and ensure compliance:

1. Weather and COVID-19 Relief: 

If recent weather events or ongoing COVID-19 impacts have affected your cash flow or ability to make tax payments and file returns, you may be eligible for relief from use of money interest and penalties. You can also explore instalment arrangements for payments due to the Inland Revenue.

2. Tax Losses as Assets: 

Review your tax losses and determine if you can carry them forward as assets in your accounts. This can be valuable if you plan to raise capital for your business in the future.

3. Small Business Cashflow (Loan) Scheme: 

The scheme has been extended until 31 December 2023, allowing businesses that have repaid their loans to re-borrow until the deadline.

4. Asset Expenditure Review: 

Set aside time to assess your asset expenditure. Identify any necessary assets valued up to $1,000 and consider purchasing them before the end of the tax year. Also, ensure your records are up to date for commercial buildings, as tax depreciation is available for such properties.

5. High-Income Earners: 

If you or your employees earn over $180,000 per year, consult with us to review Fringe Benefit Tax (FBT) implications and your business and investment structure. The 39% marginal tax rate applies to employment income exceeding $180,000, including additional pay such as bonuses, back pay, redundancy, and retirement payments. This is also an opportune time to review dividend payments.

6. Subsidy Record-Keeping: 

Maintain accurate records of any subsidies or payments received, specifying the staff members or business expenses to which they were applied. This ensures proper tax treatment and facilitates record reviews by the Ministry of Social Development if required.

7. R&D Loss Tax Credit: 

Start-up companies can cash out their tax losses arising from eligible research and development (R&D) expenditure, avoiding carrying the losses forward to the next income year. Eligibility criteria apply, and Inland Revenue approval is necessary. Ensure your records of R&D expenditure are up to date.

8. Staff Reimbursements and Allowances: 

Keep a comprehensive record of reimbursements and allowances provided to employees for expenditures. Note the following:

– Telecommunications devices and plans: Reimbursements up to $5 per week are tax-exempt. For amounts exceeding this threshold, the exempt portion varies based on usage.
– Work-from-home (WFH) payments: An additional $15 per week, per employee, can be treated as exempt income for other WFH expenditure.
– Tax-exempt payments for use of furniture or equipment for WFH: Reimburse the depreciation of the item, ensuring the payment is deductible to the employer. The low-value asset threshold of $1,000 applies.

Stay proactive and organized with your tax planning and obligations. Reach out to us today to discuss your specific needs and ensure a smooth transition into the new financial year.


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