31 March tax is almost here. If you’re a business owner or rental property owner, now is the time to act.
31 March marks the end of the financial year in New Zealand. What you do before this date directly affects how smooth (or painful) tax time will be.
If you use an accountant or tax agent, 31 March is also the filing deadline for the prior year’s returns (for example, 31 March 2025 returns must be filed by 31 March 2026). If you haven’t finished the steps needed to get that work done, it’s time to knuckle down. Delays increase the risk of penalties.
This 31 March tax survival guide sets out what to do now to save time later and get yourself properly prepared for the end of the financial year.
Start preparing your records
Making sure you have all these things now can save a lot of backtracking later…
Loans/Interest
- Save all bank and lender statements showing interest earned or paid for the year.
- This includes mortgages, business loans, overdrafts, and credit cards.
Debtors (money owed to you)
- List all unpaid invoices as at 31 March.
- Review the list and write off any bad debts.
- Written-off bad debts don’t count as taxable income.
Creditors (money you owe)
- List suppliers with invoices dated 31 March or earlier that you’ll pay in April.
- These still count as expenses this financial year.
Stock
- If your stock on-hand exceeds $10,000, complete a stocktake at 31 March.
- Record stock at cost, excluding GST.
Lock in deductions and avoid common mistakes
Should you spend up before 31 March?
People often ask us if it’s a good idea to spend money to save tax. The idea is that by creating additional expenses, the business can claim the cost in the business income tax return to offset taxable income. This does work, but it depends on a few factors.
Firstly, is the purchase something actually required? Just spending money to reduce tax may not be a great idea and potentially wasteful. The profit could be kept and tax paid which is often better than buying unnecessary things.
There’s also common myth that if you buy an asset before the end of the financial year, it will save you lots of tax. Unfortunately, buying assets such as vehicles and equipment (over $1000) doesn’t immediately reduce your tax. You can claim depreciation on these items, but this happens over a number of years.
If there are suitable purchases to make then do so before the financial year ends (31 March for most businesses), so any claims can be made sooner rather than later.
The key thing to understand is that when a business buys something it doesn’t “get back” the full purchase price via its tax return. The most it will save you is 39% and may be much less depending on income. The next thing to be clear on is income tax is only paid on profit, if there’s no profit, there’s no income tax to pay.
But if you’re using your overdraft facility to make the purchase, then it could compromise your cashflow. The key is don’t run yourself short of funds (especially the money you’ve put aside for tax bills) thinking you’re saving tax!
Reduce risk with the right support by outsourcing your accounting and tax returns
Ensure your tax compliance is accurate and you don’t pay more tax than you need to by aligning yourself with a small business or rental property expert (like us). At Kiwitax, we work with business owners and rental property investors who want EOFY handled properly, without last-minute panic.
You can reduce your tax bill by using an accountant to look after your end of year accounting. Firstly, because this is a deductible expense, but you’ll also get access to the combined wisdom of accountants to help with advice on further tax minimisation strategies. That means more money in your pocket, rather than the IRD’s, and you can focus on doing what you’re good at!
Also, by being linked to an accountant or tax agent you will gain an extension of time to file your return with IRD.
It takes just two minutes to request a quote from Kiwitax.
Review your accounting systems
Is it time to look at a new/easier way of keeping track of your income and expenses?
Cloud based options such as Xero or MYOB Essentials are a game changer when it comes to managing your business finances and allows for better forward planning. Here at Kiwitax, we don’t take a ‘one size fits all’ approach to helping you choose the right cloud accounting software option. Check out this article for some helpful tips when choosing which software to adopt in your business: Xero or MYOB
We offer a set-up and starting-out tutorial for both MYOB and Xero to help get you on the right track!
Review your structure
Businesses:
Many businesses start as sole traders, even when a partner helps with tasks like scheduling, general admin, invoicing, or GST filing.
In some cases, moving to a company structure, adding a partner as a shareholder or paying a reasonable salary for admin work can reduce total tax paid. This depends on income levels and personal tax rates.
For example, the average salary for a part-time administrator (20hrs p/week @ $27p/hr) is approximately $28,000 per year. By allocating a sum like this to your partner, the personal tax you and your partner pay can be reduced significantly in certain situations.
31 March is often a clean point to change structure. It avoids overlapping records and extra accounts (which means higher accounting fees).
Rental Property owners:
Many property investors consider ownership structure changes for many reasons. Some of the key triggers can be:
- Short term accommodation activity exceeding 60k requiring GST registration
- Lending restructuring for better mortgage interest destructibility
- To keep business activity separate from investment property activity
Changing ownership structures will require caution, particularly with Brightline Implications and Interest deductibility.
Get the right expert advice and make sure you have a good understanding of the implications before making any decisions.
Learn more:
Want to breeze through tax time with expert advice and IRD compliance support? Let’s talk!
About Kiwitax – Award winning business improvement, tax and accounting service
Here’s the thing. As a business, rental property owner or start-up, you get a kick out of having your own gig. But chances are dealing with your tax and accounting leaves you cold. Good news! We love it, so hand it over to Kiwitax and we’ll look after it all for you.
Whether you deal with us online, by phone or drop into our Napier office, you’ll find a friendly, professional hardworking team ready to work with you, however you keep track of your financial information and from wherever you do business. And all for a fixed price. It takes just two minutes to get a quote.
Plus if you’re at a loss to know how to improve aspects of your business – from growth planning to cashflow management, even tax debt and so much more – we’re all over that too. Our Business Improvement advisors can help you make a plan and put it into action.
If you liked this article and want to make improvements in your business and achieve your goals, lets chat!