End of year tax tips

As 31 March approaches, it is worth taking a moment to review your business’s financial position and ensure everything is in order before the end of the tax year. A little planning at this stage can make a meaningful difference—helping you claim legitimate deductions, avoid unnecessary tax costs, and start the new financial year with clean records.

Below are several practical areas New Zealand business owners may wish to review before balance date.

Review and write off unrecoverable debts

If your business has invoices that are unlikely to be paid, consider whether they should be written off before 31 March. For tax purposes, bad debts are only deductible if they are formally written off in the accounting records before the financial statements are finalised.

This generally means removing the debt from both the accounts receivable ledger and the general ledger. Simply identifying a debt as doubtful is not enough—the write-off must be recorded in the accounts.

Consider charitable donations

Donations made to approved charities before the end of the tax year may provide a tax benefit.

Companies can generally claim a deduction for qualifying donations, while individuals may be entitled to a donation tax credit. In both cases, you will need to retain the donation receipt issued by the charity.

For individuals, the donation tax credit can usually be claimed shortly after the end of the tax year once income details have been finalised.

Check dividends and imputation credits

If your company intends to pay dividends, it is important to review the balance of the imputation credit account (ICA).

Ending the year with a debit balance can result in penalty tax, so careful management of imputation credits is important when planning dividend distributions. Where dividends are being considered, it may be worth reviewing the ICA position before the financial year closes.

Review shareholder current accounts

Overdrawn shareholder current accounts can give rise to tax implications, particularly if they remain unpaid for extended periods.

Before year end, it may be sensible to review any shareholder balances and consider whether they should be repaid, cleared through salary or dividends, or charged interest where appropriate.

Check elections relating to your business structure

Certain tax elections are time-sensitive and often revolve around the balance date. These may include decisions about business structures or group arrangements, such as look-through company elections or joining a tax consolidated group.

If structural changes are being considered, the end of the tax year is a good time to confirm whether any elections need to be made.

Review trading stock

Balance date is also an opportunity to review inventory. If you hold stock that is obsolete, damaged, or unlikely to be sold, it may be appropriate to write it down or dispose of it.

Where stock is scrapped or written off before year end, this may allow a deduction to be recognised for tax purposes.

Utilise tax losses within a group

If your business operates within a group structure, tax losses in one company may be able to be offset against taxable profits in another.

This can be achieved through mechanisms such as loss offset elections or subvention payments, provided the relevant ownership and timing requirements are met. Because these arrangements often require documentation and elections, it is best to consider them before 31 March.

Taking a proactive approach

Spending a little time reviewing these areas before balance date can help ensure your business is in a strong position heading into the new financial year.

A year-end check can help identify deductions you are entitled to claim, ensure compliance with Inland Revenue rules, and reduce the risk of unexpected tax issues later on.

If you are unsure whether any of these items apply to your business, it may be worth discussing them with us before the end of the financial year.

Disclaimer: This post is a general discussion and does not constitute specific advice. Any concepts or ideas raised in this post should be discussed with your accountant and/or solicitor to ensure that all relevant matters are considered.

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Why use a CA?

By Tom Irwin • March 8, 2026

Why Use a Chartered Accountant in New Zealand? Managing tax and financial obligations can become complicated, particularly for business owners, investors, and professionals with multiple income sources. While accounting software is helpful for recording transactions, it cannot replace professional advice or judgement. Working with a Chartered Accountant in New Zealand provides access to a qualified professional who operates within a recognised regulatory and ethical framework. Below are some of the key benefits. Recognised Professional Qualification Chartered Accountants are members of Chartered Accountants Australia and New Zealand (CA ANZ), th e professional body responsible for training and regulating Chartered Accountants in New Zealand and Australia. To become a Chartered Accountant, individuals must complete a relevant university degree, undertake a structured professional programme, and gain several years of practical experience. They must also complete ongoing professional development each year to maintain their membership and keep up to date with changes in tax law and accounting standards. A Strong Code of Ethics Chartered Accountants must follow a strict professio nal Code of Ethics. This requ ires them to act with integrity, objectivity, professional competence, confidentiality, and appropriate professional behaviour. These are enforceable professional standards. If a complaint is made about a Chartered Accountant, it can be investigated through a formal disciplinary process. Professional Indemnity Insurance Chartered Accountants in public practice are required to main tain Professional Indemnity Insurance. This insurance provides protection if professional advice results in financial loss due to an error or negligence. While mistakes are not common, having insurance in place provides an additional level of protection for clients. Inland Revenue Tax Agent Status Most Chartered Accountants are also registered tax agents with the Inland Revenue. Clients linked to a recognised tax agent may be eligible for Inlan d Revenue’s Extension of Time (EOT) concession. This usually allows additional time to file income tax returns beyond the standard deadline, provided certain criteria are met. Advice Beyond Compliance A Chartered Accountant does more than prepare financial statements and tax returns. They can also help with business structures, tax planning, cashflow management, and financial decision-making. They often work alongside banks, lawyers, and financial advisors to help ensure financial matters are handled correctly. Final Thoughts Using a Chartered Accountant provides access to professional expertise, ethical standards, and accountability. For many individuals and businesses, this helps ensure their tax affairs are managed correctly and that financial decisions are made with confidence. Disclaimer: This post is a general discussion and does not constitute specific advice. Any concepts or ideas raised in this post should be discussed with your accountant and/or solicitor to ensure that all relevant matters are considered.

Investment boost

By Tom Irwin • March 8, 2026

Investment Boost: A New Incentive for New Zealand Businesses The Government has recently introduced a measure known as Investment Boost, designed to encourage New Zealand businesses to invest in productive assets. The aim is to support economic growth by improving cashflow for businesses that are upgrading equipment, technology, or other business assets. What is Investment Boost? Investment Boost allows businesses to claim an immediate tax deduction equal to 20% of the cost of eligible new assets in the year they are purchased and first used. The remaining 80% of the asset’s cost is then depreciated as usual under the standard Inland Revenue depreciation rules. In effect, this accelerates part of the tax deduction that would otherwise be spread over several years. What assets qualify? The rules generally apply to new depreciable assets used in a New Zealand business. Examples may include: Machinery and equipment Commercial vehicles Technology and IT equipment Tools and manufacturing assets Some commercial building improvements Assets that are already excluded from depreciation (such as most residential buildings) will generally not qualify. Why this matters for businesses For many businesses, purchasing new equipment can be a significant cashflow decision. By allowing a portion of the cost to be deducted immediately, Investment Boost may: Reduce taxable income in the year the asset is purchased Improve short-term cashflow Make investment in productivity-enhancing assets more attractive While the total depreciation available over the life of the asset does not change, the timing of the deduction improves. Planning considerations If you are considering purchasing business equipment or upgrading technology, it may be worth reviewing the timing of those purchases. Bringing forward investment into a year where Investment Boost applies could provide a useful tax advantage. As always, the specific outcome will depend on the nature of the asset, the structure of your business, and your expected income for the year. Need advice? If you are planning to invest in new business assets and would like to understand how Investment Boost might apply to your situation, feel free to get in touch. We can help review the potential tax impact and ensure the deduction is applied correctly.

Do I pay tax if I take money out of my business bank account?

By Tom Irwin • August 10, 2022

The short answer is no. This is a very common question we get asked and the source of regular confusion. You pay income tax on the taxable profit your trading entity makes, be it as a sole trader or a Company or Trust. If you take money out of your business account for private purposes it is referred to as drawings. If you put money into your business account from a personal bank account it is called funds introduced or capital introduced. All of these transactions- all the ins and outs - make up your current account. If you take out more money that you put in, your current account will be overdrawn, in which case you “owe” the business money. Often when a business is starting out, or if the business is struggling for cash, the owner(s) will put some of its personal money into the business. This is essentially a loan, commonly referred to as a shareholder advance if it is a company. When the entity pays this back to the owner it is just paying back the loan/advance. Generally, as long as the current account is not overdrawn, there are not any income tax issues associated with that transaction. If the trading entity is a company and the shareholder has an overdrawn current account, they are liable for interest on the overdrawn current account, otherwise this could be considered a deemed dividend. This is starting to get a bit more complicated. Essentially, if current accounts are being overdrawn, it means you are taking out more money than you have put in, so you are potentially taking out working capital that should be used for GST or paying creditors. Another common issue for companies that are doing well is that the shareholders keep drawing cash in lieu of a dividend and then retrospectively a dividend has to be declared to ensure the current account is not overdrawn at the end of the financial year. This is ok, but it pays to talk to your accountant in advance if you plan to take large amounts of cash out of the business for private use, over and above your salary. Remember - you get taxed on your profit, not your drawings. It is possible to draw more than you earn, but if this is the case you are probably taking working capital out of the business. Disclaimer: This post is a general discussion and does not constitute specific advice. Any concepts or ideas raised in this post should be discussed with your accountant and/or solicitor to ensure that all relevant matters are considered.