End of tax year decisions that matter

By Andrea Scatchard, Susan Wynne & Amy Sexton
 

With 31 March approaching for standard balance date taxpayers, year-end remains a time where small errors can create disproportionate headaches and tax costs. So it’s time for our yearly ‘year-end’ reminders.

Year end tax issues

Bad debts – are your debtors likely to pay?

Bad debts must be fully written off in your accounting system before year-end to be deductible. 

Imputation credit accounts – do you know the balance?

For companies a debit balance at 31 March triggers penalties, regardless of your actual financial balance date. This balance needs to be carefully monitored if there have been imputed dividends paid out, tax refunds received or tax pooling deposits swapped to later dates, or a loss in shareholder continuity.

Depreciation – are you using the right rates? What about Investment Boost?

Check your fixed asset register to ensure the correct Inland Revenue tax deprecation rates are being used. New assets should also be depreciated from the beginning of the month of acquisition, rather than from the date of purchase. Pooled assets can be depreciated from the start of the year of acquisition. If you are writing off assets, make sure they are disposed of by year-end.

If you have had any depreciable assets become available for use on or after 22 May 2025 have you thought about Investment Boost? And remember the ability to claim tax deprecation on commercial and industrial buildings was removed effective 1 April 2024 for 31 March balance date taxpayers.  

Low-value assets – have you purchased any?

Most assets that cost less than $1,000 are considered “low-value assets” and can be immediately deducted, rather than depreciated. But, if multiple low-value assets are purchased at the same time from the same supplier, the combined cost must be less than $1,000 for the immediate deduction to apply.

Trading stock – have you done a stocktake?

A balance date stocktake is required, and obsolete or slow‑moving stock may be valued below cost where market selling value can be substantiated.

Tax losses – have there been any shareholder changes?

If you have tax losses as well as shareholder changes you need to be aware of both the shareholder and business continuity rules. A breach of these can result in your tax losses being forfeited and this is a particular compliance focus area for Inland Revenue in 2026. 

Shareholder loans – are changes coming?

Back in December 2025 Inland Revenue opened consultation on proposed changes to the taxing of shareholder loans. While the outcome of this consultation is not yet known, it is an opportune time to review any shareholder loan balances and put plans in place to ensure loan balances remain manageable and you are following the (current) correct tax treatment, including charging interest on loan balances at the prescribed rate (currently 5.77%).  

Other tax issues to consider

Fourth-quarter FBT returns

31 March is also the end of the FBT year, irrespective of financial balance date. Annual FBT returns and returns for the March quarter are due to be filed by 31 May 2026. For employers still defaulting to the 63.93% standard rate this is an opportunity to consider using the various alternate rate options available to reduce FBT payable.

Kilometre (mileage) calculations

If you reimburse staff for mileage, 1 April is the date when baseline odometer readings should be taken which will help determine which kilometre reimbursement rate applies.

GST mixed-use taxable and non-taxable supplies

If you are GST registered and have assets that are used to make both GST taxable and GST exempt or non-taxable supplies, you may need to make an annual change of use adjustment in the GST return period that includes your balance date.

GST on non-deductible entertainment

While thinking about GST, it’s also a good time to make sure that you have made any required GST adjustments to account for the GST on any non-deductible entertainment expenses from the 2025 year. If you have missed this, you may be able to catch this up in your March GST return.

UOMI and tax pooling

With the Inland Revenue use of money interest rate currently at 8.97% on outstanding tax payments, tax pooling may offer a way to reduce the effective rate of interest. Tax pooling can also provide the flexibility to make your tax payments at times that suit your own cashflow patterns.

Tax on KiwiSaver contributions

If you have employees, you need to review the ESCT rates that apply to your employer KiwiSaver contributions as these may change on 1 April based on earnings levels over the last 2 years.

1 April also brings a number of changes to the KiwiSaver contribution rates as detailed in our February 2026 article.

Year-end is a busy time and is the time to lock in defensible tax outcomes before statutory cut-offs. So if you have any questions, take away the stress by talking to your usual Deloitte advisor.