For many New Zealand businesses, 31 March is more than the end of the financial year. It is also the point at which a number of tax planning opportunities close.
When we talk about tax planning in NZ, we’re not talking about aggressive schemes or finding ways around the tax rules. We mean reviewing your business before the balance date, making sure legitimate deductions are recognised in the correct year, checking that assets and stock are treated correctly, and identifying anything that could affect your final tax position.
Doing this before 31 March gives us far more options than trying to fix everything after the financial year has already closed.
Quick answer
If your business has a 31 March balance date, we recommend reviewing your accounts and tax position before the financial year ends rather than waiting until your tax return is prepared.
Our 31 March tax checklist would normally include:
- estimating the year’s taxable profit
- bringing bookkeeping and reconciliations up to date
- reviewing debtors for genuinely bad debts
- completing or planning the year-end stocktake
- checking fixed asset purchases and disposals
- considering whether eligible new assets qualify for Investment Boost
- separating repairs and maintenance from capital improvements
- checking employee remuneration and year-end accruals
- reviewing provisional tax against expected taxable income
- making sure supporting records are complete.
New Zealand’s standard tax year runs from 1 April to 31 March. Businesses generally pay income tax on their taxable profit, which means income less deductible expenses, subject to the detailed tax rules that apply to each item.
The important point is that year-end tax planning should happen before 31 March whenever the tax treatment depends on something being purchased, used, written off, paid or properly recorded within that income year.
What this means for a New Zealand business
Good tax planning is not simply about reducing the amount of tax shown on the next return.
We look at three questions.
First, is the business paying the correct amount of tax?
Missing legitimate deductions can mean paying more tax than necessary. Claiming expenses that do not meet the rules creates the opposite problem and may result in adjustments, interest or penalties later.
Second, is taxable income being recognised in the correct period?
Items such as trading stock, bad debts, depreciation, employee remuneration and some prepaid expenses have specific timing rules. Moving money through the bank account on 30 March does not automatically create a deduction.
Third, does the business have enough cash available for upcoming tax obligations?
For companies, the income tax rate is currently 28%. Sole traders are taxed using the applicable individual income tax rates.
That makes forecasting particularly important. A growing business can have an excellent year commercially and still face cashflow pressure if the resulting tax liability has not been planned for.
How it works step by step
1. Estimate taxable profit before year end
We start with up-to-date management accounts and estimate where revenue, expenses and taxable profit are likely to finish at 31 March.
We then compare that estimate with the previous year and with the figures being used for provisional tax.
This can quickly reveal whether the business is heading towards a substantially larger or smaller tax liability than expected.
For a March balance-date taxpayer using the standard or estimation provisional tax option, payments are generally due on 28 August, 15 January and 7 May. Under the standard method, provisional tax is generally calculated using an uplift from prior residual income tax.
If profitability has changed significantly, we would rather identify that before balance date than when the annual accounts are completed months later.
For more detail, see our guide to Provisional Tax in New Zealand: A Practical Guide for Business Owners.
2. Get the accounting records up to date
Before making tax decisions, we want confidence in the numbers.
That means reconciling:
- business bank accounts
- credit cards
- loans
- accounts receivable
- accounts payable
- payroll accounts
- GST accounts
- shareholder current accounts where relevant.
IRD requires businesses to keep records of sales, purchases, assets, liabilities and other tax information. These records generally need to be retained for at least seven tax years.
Poor records make good tax planning almost impossible.
3. Review outstanding debtors
Year end is a good time for us to review accounts receivable and identify invoices that may genuinely be irrecoverable.
A business cannot simply decide that an overdue invoice is inconvenient and claim a tax deduction. Under the Income Tax Act 2007, the bad debt rules generally require a qualifying bad debt to be written off as bad in the relevant income year, along with satisfying any other requirements applying to that debt.
This means the debtor review should happen before 31 March if a deduction may be relevant to that financial year.
We would document why the debt is considered bad and retain evidence of collection attempts and the write-off.
4. Review trading stock
If your business carries inventory, your closing stock position can directly affect taxable income.
IRD requires businesses with trading stock to value it at the end of each income year. Common valuation approaches include cost, discounted selling price, replacement price and, where the requirements are met, market selling value.
We would identify:
- obsolete stock
- damaged stock
- slow-moving products
- stock no longer saleable at normal prices
- incorrect stock quantities.
There is also a low-value stock concession in certain circumstances. IRD currently states that a business may use its opening stock value as its closing value where annual sales are below $1.3 million and a reasonable estimate of closing stock is below $10,000.
We would confirm eligibility before relying on that concession.
5. Review assets and Investment Boost
Asset purchases are an increasingly important part of year-end tax planning.
Since 22 May 2025, eligible businesses can claim Investment Boost, which provides a deduction equal to 20% of the cost of qualifying new assets, followed by normal depreciation on the remaining 80%.
To qualify, a depreciable asset generally needs to be new or new to New Zealand and first available for business use on or after 22 May 2025. Second-hand assets sourced within New Zealand and residential rental buildings are among the exclusions.
For example, suppose a company purchases a qualifying $20,000 asset and it becomes available for business use during the income year.
The Investment Boost deduction would be:
$20,000 × 20% = $4,000
At a 28% company tax rate, that $4,000 deduction would reduce current-year company income tax by $1,120, all else being equal, before taking normal depreciation into account.
That does not mean we recommend purchasing equipment simply to obtain a tax deduction. Spending $20,000 unnecessarily to save a fraction of that amount in tax rarely makes commercial sense.
The asset should make sense for the business first. The tax treatment comes second.
IRD also currently allows qualifying low-value assets costing less than $1,000 to be claimed as an immediate deduction rather than depreciated over time, subject to the relevant rules.
Calculations, records or decisions involved
Before 31 March, we would normally prepare or review:
| Area | What we want to see |
| Estimated taxable profit | Year-to-date profit plus forecast to 31 March |
| Debtors | Aged receivables and evidence supporting bad debt decisions |
| Stock | Stocktake quantities and valuation calculations |
| Assets | Fixed asset register, invoices and disposal information |
| Investment Boost | Purchase date, cost and evidence showing when the asset became available for use |
| Expenses | Invoices, receipts and evidence of business purpose |
| Payroll | Accrued wages, bonuses, holiday pay and employer obligations |
| Provisional tax | Payments made compared with expected residual income tax |
| GST | Reconciliations and any year-end adjustments |
Employee remuneration deserves particular care. New Zealand’s tax legislation contains timing rules for employment income that remains unpaid after the end of an income year, including the commonly known 63-day rule.
We would also review entertainment expenses carefully. Some business entertainment expenditure is fully deductible, while many common entertainment costs are only 50% deductible.
Common mistakes and risks
One of the biggest mistakes we see in tax planning in NZ is assuming that spending money automatically reduces tax.
It does not.
The expense must satisfy the relevant deductibility and timing rules.
Other common problems include:
- buying unnecessary equipment purely for a deduction
- forgetting to write off genuine bad debts before year end
- failing to complete an accurate stocktake
- claiming capital improvements as repairs
- treating private expenditure as a business expense
- overlooking asset disposals
- failing to adjust partially deductible entertainment expenses
- assuming every prepaid expense can immediately be deducted
- ignoring provisional tax until payment is due
- making decisions based on outdated tax thresholds.
We also avoid last-minute transactions that have no genuine commercial purpose other than trying to manufacture a tax result.
The goal should be to reduce business tax legally by applying the rules correctly, not by creating artificial transactions.
Practical checklist
Before 31 March, we recommend working through this checklist:
- Bring bookkeeping up to date.
- Reconcile all bank and credit card accounts.
- Review year-to-date profit and forecast the final result.
- Compare expected taxable income with provisional tax paid.
- Review overdue debtors and document genuine bad debts.
- Complete a stocktake or confirm whether a concession applies.
- Identify obsolete or damaged stock.
- Update the fixed asset register.
- Record assets sold, scrapped or taken out of the business.
- Check whether new assets qualify for Investment Boost.
- Review repairs, maintenance and capital improvements.
- Check entertainment and mixed private/business expenditure.
- Review payroll and employee remuneration accruals.
- Make sure major invoices and supporting documents are available.
- Forecast upcoming tax payments and make sure cash is available.
Once the year has closed, our Tax Return Checklist for New Zealand Small Businesses can help you prepare the information needed for your annual accounts and tax return.
When to speak with an accountant or business adviser
We recommend getting advice before 31 March if your business has had a significant change during the year.
That might include:
- unusually strong or weak profitability
- major equipment or property purchases
- significant unpaid customer accounts
- large amounts of stock
- a business restructure
- shareholder changes
- large bonuses or employee entitlements
- asset sales
- major capital expenditure
- unexpected cashflow pressure
- uncertainty about provisional tax.
The earlier we can review these issues, the more opportunity there is to make an informed decision before the financial year closes.
Tax planning should also work alongside commercial planning. We do not want a client making a poor business decision because it creates a tax deduction.
If you would like us to review your expected year-end position, our Tax Return Services cover annual compliance as well as the planning required to make sure your tax position is understood before your return is filed.
You can also contact Humphries Associates to discuss your business before 31 March.
Frequently asked questions
What is the short answer for a New Zealand business?
If you have a 31 March balance date, review your estimated profit, expenses, debtors, stock, assets, payroll and provisional tax before the financial year closes. Some tax decisions depend on action or documentation being completed within the relevant income year.
What records or information will I need?
We normally want up-to-date accounting records, bank reconciliations, an aged debtors and creditors report, stock information, fixed asset records, payroll details, invoices for major purchases, loan information and details of provisional tax already paid. IRD generally requires tax records to be retained for at least seven tax years.
What are the most common mistakes?
The most common mistakes are leaving planning until after 31 March, assuming all expenditure is immediately deductible, failing to review bad debts or stock, incorrectly treating capital expenditure as an operating expense, and buying something solely to obtain a tax deduction.
When should I get professional advice?
We would get advice before year end whenever there is a material transaction, a substantial change in profitability, uncertainty about a deduction, major capital expenditure or concern that provisional tax may no longer reflect the business’s expected taxable income.
Tax rules apply differently depending on the taxpayer, transaction and business structure, so general guidance should not be treated as advice for an individual situation.
This guide reflects New Zealand tax information checked as at 3 September 2026. It provides general information only. The treatment of an expense, asset, transaction or business structure can depend on your individual circumstances.