The end of the tax year is in sight, are you ready?

By Susan Wynne, Andrea Scatchard & Amy Sexton

As 2025 continues to speed on by, another tax year (for standard 31 March balance dates) is quickly drawing to a close and there are some key tax issues for businesses to consider as you work through year-end returns.

Year end tax issues

Bad debts

Debtors not likely to pay? 

Unrecoverable debts can only be treated as deductible bad debts if they have been fully written off in your accounts before year-end.

Imputation credit account

What is the balance of your imputation credit account?

A company’s imputation credit account must have a nil or credit balance on 31 March, regardless of financial balance date. A debit balance on 31 March will result in penalties. It is a good idea to carefully monitor this, especially if:

• imputed dividends have been paid out;
• tax refunds have been received; or
• there has been a loss of shareholder continuity.

Depreciation

Have you checked your fixed asset register to ensure the correct Inland Revenue tax depreciation rates are being used?

New assets should 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.

The ability to claim tax depreciation on commercial and industrial buildings has been removed effective 1 April 2024 for 31 March balance date taxpayers. Check your fixed asset register and consider whether you need to update the depreciation rates of any relevant building assets. Businesses with significant building assets may need to consider the effect of increased taxable income on their final provisional tax payment.

Low-value assets

Purchased low-value assets during the year?

Most assets that cost less than $1,000 are considered “low-value assets” and can be immediately deducted, rather than depreciated. There is a catch however and multiple low-value assets purchased at the same time from the same supplier must have a combined cost of less than $1,000 to utilise the immediate deduction.

Trading stock

Have you done a stocktake?

A stocktake should be done at balance date and obsolete trading stock may be able to be valued at its market selling value (where this is lower than cost and you can substantiate the valuation).

Tax Losses

Do you have losses to carry forward?

Be aware of the shareholder continuity rules and business continuity rules if there have been shareholder changes during the year. A breach of both can result in your tax losses being forfeited.

Other tax issues to consider

Fourth-quarter FBT returns

31 March is also the end of the FBT year, regardless of your financial balance date for most employers. Annual FBT returns and returns for the March quarter are due to be filed by 31 May 2025. This is an opportunity to use the various alternate rate options available to reduce FBT payable from the standard 63.93% rate.

Mileage calculations

If you reimburse staff for mileage, 1 April is the date when baseline odometer readings should be taken. This reading will help determine which mileage reimbursement rate applies. For more on this see our June 2024 article.

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/non-taxable supplies, you may need to make an annual change of use adjustment in the GST return period that includes your balance date. There is also a transitional rule that expires on 31 March 2025 that may allow you to elect to opt certain assets out of the GST net, for more on this see our February 2025 article.

UOMI and tax pooling

With the Inland Revenue use of money interest rate currently at 10.88% 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. For more on UOMI and tax pooling see our February 2025 article.

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.

Personal tax rates & thresholds / FBT rates / ESCT rates

With Budget 2024 changing personal tax thresholds from 31 July 2024, the 2024/25 year was a “transitional year”, with composite rates in play. From 1 April 2025, the tax rates and thresholds move to the new rates.

You can read more about the consequential personal tax threshold changes in our June 2024 article. 

Also helpful is the Deloitte 2025-2026 Tax Calendar which includes, amongst other important tax information:

• Tax payment and filing dates
• Provisional tax and terminal tax dates
• Personal, ESCT and FBT tax rates and thresholds

Year-end is a busy time and navigating all of the tax rules and obligations can be a nuisance for people who understandably just want to focus on running their businesses. If you have questions or would like help managing your end-of-year tax affairs, reduce your stress and get in touch with your usual Deloitte advisor.