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EOFY Tax Return Checklist For NZ Tradies

Make sure you're hitting all your key dates this End of Financial Year. Get the latest on tax benefits and entitlements you may be eligible for and other important tips for lodging your 2021/2022 tax return.

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Contents

Here goes another End of Financial Year

It’s time to get your ducks in a row for your 2021/2022 annual tax return. Tradies always have a mountain of expenses to claim but this year there are a few extras to be aware of including stimulus and support measures that you may be able to take advantage of to ease your tax bill. Don’t worry - with our checklist, tax time will be as easy and stress-free as possible.

01
Key dates to be aware of
01

Key dates to be aware of

While it’s important to keep your tax obligations in mind year-round, here are some important 2022 dates not to be missed:

7 February 2022. 2021 end-of-year income tax and FBT return due for people and organisations who don’t have a tax agent.

21 February 2022. Employer deductions payment due for January for small to medium employers.

28 February 2022. GST return and payment due. Provisional tax instalments due for people and organisations who use the ratio method.

21 March 2022. Employer deductions payment due for February for small to medium employers.

28 March 2022. GST return and payment due.

31 March 2022. Official last day of the Financial Year. 2021 income tax return due for clients of tax agents (with a valid extension of time)

1 April 2022. Start of the 2022/ 2023 Financial Year.

Click here to view the full tax year calendar from the Inland Revenue Department.

Before you get started...

Talk to your accountant. They’ll help you with specific advice, and ensure you’re taking advantage of any relief packages or deduction strategies that may cut down your tax bill. They’ll also help you avoid common tax mistakes.

02

Chase any outstanding invoices

Got clients who haven’t paid yet? Now’s the time to chase them up. Send out reminders for any outstanding invoices, double-check you’ve charged all your clients correctly, follow-up any unpaid and/or overdue invoices and make sure none have slipped through the cracks.

Tip

Declare your bad debts: If you’ve tried everything in your power to get a client to settle with no results, it might be time write them off as bad debt. Writing them off may mean you’re in for a tax deduction, which can be handy to help recoup some of the losses from the client. Prepare as much evidence as you can that your client didn’t pay. Think email correspondence, legal documentation, and more.

03

Compile your expenses

As a tradie, you rack up a ton of business expenses — and now it’s time to round them all up.

To claim on expenses, you need proof of purchase, so gather up your bank statements and vehicle logs, and start searching for any rogue receipts that fall under things you can claim. Look in your emails for receipts from purchases you’ve made for your business (like tools or materials), request any missing invoices from contractors, and dig out those petrol receipts from the glove box. All these little costs add up.

What can I claim?

  • Vehicles and associated running expenses
  • Travel
  • Work uniforms
  • Self-education courses or training
  • Work-related items like your phone or laptop (and phone bill)
  • Tools, equipment and supplies related to your job
  • Rent paid on business premises or home office expenses
  • Meal expenses in some situations
  • Union or association fees

Conditions exist for most claim categories, for example if you use your tools for personal use as well as for work then you can only claim the work portion for tax purposes. Learn more about claiming expenses here.

It’s also good practice to pay for anything that could be a claimable business expense through your business account, so you’ve got a solid paper (and electronic) trail. Evidence of business expenses must be kept for 7 years.

Toolbox Tip

If your receipts are in a shambles, look at downloading an app that lets you snap and save them while on the go, like Hubdoc by Xero or Dext.

04

Conduct a stocktake and make any final purchases

This means counting your stock on hand to make sure everything is in its place and where possible, that no tools or materials are unaccounted for from the past year. Once you’ve done this, it’s time to figure out what stock is still usable, and which stock you’d like to write-off or write-down.

Ideally, try to do this as soon as possible and purchase replacements (and any other last-minute purchases) before 31 March. This way, you can include them as an expense in the 2021/ 2022 financial year.

05

Gather and organise your financial records

The main reports you’ll need to generate at EOFY are a profit & loss statement (P&L) and a balance sheet. Your P&L shows your total income and expenses for the year, which you’ll need to calculate how much income tax to pay. Meanwhile, your balance sheet should include your assets and liabilities, which are used to calculate your net assets.

If you’re using Fergus, you can access these through your Business Activity report.

Get 50% off your first 6 months on Fergus! To claim this offer, and get sorted for the new financial year, simply sign up to Fergus and select a plan before the end of your 14-day Free Trial (and before March 31st)!

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06

Check your eligibility for tax relief measures

With multiple lockdowns and restrictions over the past year, the Government introduced measures to help business doing it tough during COVID-19. Some of these measures, like the Resurgence Support Payment, are not tax deductible, however some measures are so it’s worth doing your homework on these and checking with your accountant on what else may be applicable for your situation.

Temporary loss carry-back scheme

Designed to give temporary cashflow support to businesses that incurred, or expect to incur, a loss in the 2020 or 2021 tax year. The temporary loss carry-back scheme allows small businesses that have made taxable losses to claim a refundable tax offset. Check out your eligibility here or speak to your accountant to learn more.

More time to pay your tax

Some businesses may struggle to meet their tax obligations in full and on time this year. If you’re in this boat, the government have brought in measures to help. Contact Inland Revenue to discuss setting up an instalment arrangement (where you can repay an agreed amount over a period of time) and any leniency on interest and penalties they may be able to provide. Learn more here.

07

Buy and write-off depreciating assets

Did you know?

Most of your assets like computers or tools will wear and tear over time. Depreciation is a way of calculating the loss in value of your assets over time, which can be claimed as a tax deduction. It’s similar to claiming expenses for assets you buy, except you only claim the amount that it depreciates each year.

For tax purposes, you must depreciate assets that:

  1. Are owned by you or your business and are available for business use;
  2. Cost more than $1000;
  3. Have an expected life of more than 12 months.

Changes to the instant asset write-off threshold

Last financial year the low value asset write-off threshold temporarily increased to $5000 as a way to encourage spending and boost the economy.

For the 2021/ 2022 Financial Year End, this threshold drops to $1,000. While significantly less than last year, it is double the previous $500 limit that had been in place since 2005.

To take advantages of this, just make sure you use your asset at least once before 31 March 2022, or have it installed and ready for use by this date (provided you bought it after March 17th 2021).

08

Finalise your payroll

If you’ve got employees and/or apprentices working for you, you’ll want to review their salary and wage information and ensure you are up-to-date with both minimum wages and your legal requirements as an employer.

Toolbox Tip

Now's a good time to check that you are meeting your Kiwisaver/Superannuation requirements and contributing the correct amounts.

09

Other tips to reduce your tax bill

01

Put time aside at the end of March to pay all your last-minute bills. You can also pre-pay as many bills for the next 12 months as possible before 31 March, as prepayments are tax-deductible in the year you paid for them.

02

Double and triple-check that your figures are up to scratch. While it is possible to fix some tax mistakes, you’ll end up paying for it one way or another. [If you realise you’ve made a mistake](https://www.business.govt.nz/tax-and-accounting/tax-time-tips/how-to-fix-tax-mistakes/) or underpaid on tax, contact Inland Revenue straight away to work out the best way to get it sorted.

03

Get organised and stick to the deadlines. You’ll incur penalty fees for missing deadlines, which can quickly add up.

04

Claim tools (and anything over $1000) as an asset rather than an expense. This allows you to benefit from the write-offs for depreciating assets, and also helps if you’re planning to apply for financing in the future.

Work smarter, not harder

If the end of financial year is doing your head in, or you’re losing yourself in the paper trail, consider investigating cloud-based tools like accounting or job management software (with the right financial reports) that will make life that much easier come tax time next year.

Note: This article is a guide only and does not represent official financial advice. We recommend that you speak with your accountant, bookkeeper or financial adviser before filing your returns.

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