Seven essential tax time housekeeping tips
Wednesday, May 23, 2012/
The end of the financial year is now just weeks away.
So it’s time to get your end of year tax planning checklist together to ensure that you achieve the best tax outcome possible.
Tax planning should be a year-round event, but there are always some last-minute items that need to be attended to.
Here’s a list of seven essential tax housekeeping items to start thinking about:
1. Trading stock
If you have any stock that is old, damaged or obsolete, then scrap it and write it off before June 30.
The written-off amount forms an immediate tax deduction. Also start to review your stock in terms of the appropriate valuation method.
While this is often cost price, it doesn’t have to be. You can value stock at the lower end of cost, replacement or net market value.
You may have stock that you don’t want to scrap but may be worth less than its cost price. The market value approach will give you the tax saving into this year.
2. Bad debts
Write them off before June 30 and take the tax deduction. They should be written off in your debtors’ ledger and recovery action should have ceased.
3. Depreciation and your asset register
Have a look at your asset register and write off any plant or equipment that has been scrapped: doing this will give you the tax benefit into the current year.