Farming Checklist: Financial Year End
As the end of the financial year approaches for most, consider these key actions for tax efficiency and compliance:
1. Review provisional tax payments
With milk prices skyrocketing in the 2024/2025 season, you may have experienced a significant increase in profitability this year, in turn meaning higher tax payments. If you would like certainty around your tax payments, we recommend a provisional tax review is completed prior to the final provisional tax instalment date (28 June). If profits are up, we can ensure there is a plan to meet the additional tax implications to avoid penalties or interest. If profits are down, you may be able to reduce your final provisional tax payment.
Beef and lamb prices have also been very high over the past year and as dry stock farmers you may have experienced an increase in profitability but possibly offset by the challenges in purchasing replacement stock. If you would like revisit your tax payments, we recommend a provisional tax review is completed prior to your final provisional tax instalment. If profits are up, we can ensure there is a plan to meet the additional tax implications to avoid penalties or interest. If profits are down, you may be able to reduce your final provisional tax payment.
2. Complete your livestock checklist
Complete your stocktake at year-end to ensure you have accurate numbers. How are you meant to know your numbers as at 31 May if you do the stock count in December!
Don't forget when selling stock, your funds will not be in the bank for around 14 days after you have sold them, so when thinking about your stock numbers at balance date time, ensure you are including stock sold within that period.
Note that we include a reconciliation, including natural increases and deaths and missing, at the bottom of our checklists, please try and fill this out as it helps us very much.
3. Check your fixed assets
Review your fixed asset schedule and identify any assets which are obsolete, broken down, have been retired from farm work, or have been disposed of during the year. If you have purchased any assets throughout the year, ensure you have invoices available (whether electronic or paper) to support the claim, including any finance documentation.
4. Gather documentation for home office expenses
Gather information to enable a home office claim (copies of rates notices, electricity, home loan statements etc). If you have moved during the year, consider what proportion of the house is utilised as a home office and note this information.
5. Balance sheet and loan balance verifications
For Business and Trust accounts we will require a copy of a bank statement or loan statement to confirm the balance as at year end. In addition, if you are aware of any bank covenants you have, particularly around when your year-end financials must be provided to the bank, please ensure we are aware of this date.
6. Review your record keeping
The IRD is very active with reviews and audits at the moment. Year end is a good time to ensure you have maintained proper documentation for all tax-deductible transactions. If you’re not already doing so, consider saving all invoices and receipts into Xero/Hubdoc docs for the new financial year. Need help? Just give us a call.
7. Start planning
Make a plan for the new financial year including a budget/cashflow forecast. If you would like assistance to ensure you start the next financial year positively, please let us know.
8. Thinking Forward
Think about what supplies/purchases you may need and consider purchasing them prior to balance date – the more you think ahead the more tax you may save by including in the current financial year. For example, think about stock food, animal health and repairs & maintenance.
For more tailored advice specific to your circumstances, please get in touch with us. We’re here to help you navigate year end smoothly!
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This article contains general information only and based on information available at the date of publication. You should obtain advice for your personal circumstances.