Tax season is almost here, and preparation is key to ensuring financial health for businesses and individuals alike. With the 2025-2026 tax year approaching, now is the perfect time to take stock of your financial position and plan strategically to stay ahead of your obligations. To make this process seamless, we’ve compiled a 12-point checklist tailored to help you optimize your end-of-year tax preparation.
1. Review Contract Payments
Have you invoiced retentions that are not due until next year? These payments may count as taxable income if they are payable in the 2024-2025 tax year. Confirm which payments require attention to keep your records accurate.
2. Employee Expenses & Holiday Pay
Have you committed to bonuses, holiday pay, or other employee payments by year-end? Payments made within 63 days of the balance date might qualify for tax deduction. Also, double-check that holiday pay has been calculated correctly to save yourself the trouble of corrections later.
3. Credit Notes
Credit notes issued to customers after balance date could be applied to this tax year. Doing so may reduce your taxable income.
4. Prepay Expenses
Consider paying for items like stationery, postage, and courier charges before March 31. This strategy allows you to claim deductions sooner, easing your tax burden.
5. Write Off Bad Debts
Review your debtors list for bad debts. Have you documented the steps to recover the amounts? Bad debts written off before March 31 could be deductible.
6. Write Off Unused Assets
If there are fixed assets you’re no longer using, you may be able to write them off. This will adjust your financials and potentially reduce your taxable income.
7. Tax Losses
Are you expecting a loss this year or have you had prior losses? Talk to your accountant about loss carryforwards, offset elections, or subvention payments. These can be valuable tools for managing your financial situation effectively.
8. Prompt Payment Discounts
Offered discounts for early payments during the year? Keeping a reserve for these discounts might be deductible. Ensure you have clear records to back up this deduction.
9. Plan Repairs and Maintenance
Conduct any outstanding repairs or maintenance tasks before March 31 to maximize deductions. Don’t overlook areas like software development or updates that may also qualify.
10. Dividends and Imputation Credits
Review dividend payments and imputation credit accounts to ensure no year-end debits. Negative balances could result in penalties. Be sure to monitor deemed dividends, such as overdrawn shareholder accounts.
11. Obsolete Stock Management
Dispose of obsolete inventory by year-end or adjust its value to its net realizable value for deductions. If your stock value is less than $10,000 and annual turnover is under $1.3 million, you may not need to track stock movements for tax.
12. Key Updates for Buildings
If you own commercial buildings, remember that tax depreciation deductions will no longer be available from April 1, 2024. Plan for how this will affect your 2025 taxes. For residential property loans earning taxable income, the deductible interest increases from 80% to 100% after April 1, 2025.
Stay Prepared and Confident
Proactive tax planning doesn’t have to be overwhelming. A little preparation goes a long way in reducing stress and setting you up for financial success. Use this checklist to streamline your year-end review, and don’t hesitate to contact us if you need tailored advice.
At CMK, we help you get the most from your finances and ensure you remain ahead. Contact us today to discuss how we can assist you in making tax season as smooth as possible.