It pays to balance your accounts regularly.
On your balance date each year, do a physical stocktake of all your stock. Consider any that have been leased, too, and make sure that lines up with your records.
If you think you might sell a number of livestock, talk to your accountant about whether it's worth doing so after your balance date. That means the income from the stock sold will be deferred to the next tax year.
If you're planning any big purchases, you might want to get them in before your balance date so that you can claim them as a tax deduction.
You should make sure you account for all the costs of maintaining your land, including fertiliser, irrigation, draining, soil management, weed removal and pest control.
Sometimes these everyday expenses fall by the wayside but good records will help you claim the right tax deduction.
Most people like to assume they'll never have an accident, but farming is one of the riskiest occupations in New Zealand.
If you're a self-employed farmer, it's worth checking out ACC CoverPlus Extra.
This allows you to negotiate a set level of income cover you would like to receive in the case of a payout, and pay levies accordingly.
It avoids the common problem of getting a payout based on a particularly bad year's earnings.
Income can vary a lot and it could be a problem to be restricted to 80 per cent of last year's earnings if it was a bad year. Conversely, if you managed to earn a lot more than you normally need, CoverPlus Extra is a way to negotiate cover down to the level you would actually require to cover your expenses - and reduce your levies accordingly.
If you have a family, it could be time to check you're getting all the help you're entitled to. You might be eligible for Working For Families tax credits.
If your income has dropped, you could ask for a re-assessment - you might find you can get more than you thought.
There's an old saying: Just because you're a good builder, it doesn't mean you run a good building business. The same goes for farmers.
You might love being out on the farm but that doesn't mean running the operation comes easily to you.
There are lots of software applications and other resources available that will help you keep on top of your accounts and records. Balance your accounts regularly, code your receipts as you go and process your expense claims as often as you can.
Xero, Figured and iAgri are just some of the accounting software packages that offer tailored rural options. They offer things such as immediate feedback on the result of recent business decisions and allow your accountant access to your information whenever it is needed.
If you are feeling out of your depth, ask a professional to help you - there are many business advisers available who can talk through the options to streamline your operations and someone such as a bookkeeper could be able to keep your paperwork tidy.
If you haven't thought about using the income equalisation scheme, it's worth discussing with your accountant. It allows you to even out fluctuations in your income by spreading it from year-to-year.
The money is paid into a special account and earns interest at 3 per cent per annum on amounts left on deposit for more than 12 months. The interest paid becomes part of the deposit for tax purposes. The deposit is held for a maximum period of five years.
Deposits are tax deductible in the year for which they are made. And withdrawals (including interest) are generally assessable in the year the application for withdrawal was made.
Inland Revenue has already acknowledged the effect of the recent dairy downturn on farmers, and suggests some might want to tap into their income equalisation fund.
Farmers who are materially affected can make individual application for late deposits and can also apply for early withdrawals in their 2015/2016 or 2016/2017 tax years if they are suffering financial hardship.
Applications need to be made in writing and take about 20 days to be processed.
- Jeremy Tauri is an associate at Plus Chartered Accountants