Year-End Tax Planning for NZ Business Owners: What to Do Before 31 March
The NZ tax year ends on 31 March. If you're not thinking about it before then, you're already too late to do anything useful.
Year-end tax planning isn't about finding loopholes — it's about making sure you've captured everything you're entitled to and made sensible decisions about timing before the window closes.
Review your profit position
The first step is knowing where you stand. Before year end, review your year-to-date profit and compare it to last year. This tells you:
- Whether your provisional tax payments are likely to be sufficient
- Whether there are timing decisions worth making before 31 March
- Whether your current structure is still appropriate for your income level
If your profit is significantly higher than last year, you may want to consider bringing forward deductible expenses or deferring income where possible. If it's lower, you may want to review your provisional tax position to avoid overpaying.
Consider the timing of income and expenses
Within legal limits, you have some control over when income and expenses fall in a tax year.
Expenses: If you have planned business purchases — equipment, software, professional development — consider whether it makes sense to make them before 31 March rather than after. The deduction falls in the year the expense is incurred.
Income: If you're on an invoice basis for income tax (not GST), income is generally recognised when it's earned, not when it's received. But if you're on a cash basis, deferring invoicing until after 31 March defers the income to the next tax year.
These decisions need to be made for genuine business reasons — not purely for tax purposes — but timing is a legitimate consideration.
Check whether asset purchases make sense
The $1,000 low-value asset threshold means assets under that value can be written off immediately rather than depreciated. If you're planning to buy equipment that falls under this threshold, buying before year end gives you the deduction this year.
For larger assets, the depreciation deduction is spread over the asset's useful life — but the first year's depreciation is still worth having.
Review your provisional tax position
If your income has been higher than expected this year, your provisional tax payments (based on last year's income) may be insufficient. Underpaying provisional tax means use-of-money interest from the date the payment was due.
Before year end, review your actual income against your provisional tax payments and consider whether a voluntary payment makes sense to reduce the interest exposure.
Make sure all deductible expenses are captured
Year end is the time to make sure nothing has slipped through. Common items to check:
- Home office costs for the year
- Vehicle logbook and mileage records
- Professional subscriptions and memberships
- Any business expenses paid personally that haven't been reimbursed or recorded
Receipts and records need to be in order — IRD requires you to keep them for seven years.
Consider whether your structure is still right
If your business has grown significantly, or your personal circumstances have changed, year end is a good time to review whether your current structure (sole trader, company, trust) is still the most appropriate.
Restructuring mid-year is possible but more complex. Reviewing before year end gives you time to plan any changes for the new tax year.
The value of acting before the deadline
All of these decisions need to be made before 31 March. After that, the year is closed and the options are gone.
At Eastmure & Associates, year-end planning is part of what we do for every client — not a scramble in April, but a structured review in February and March while there's still time to act.
Book a free 30-minute call to talk through your year-end position.
