Pre 2026 Year-end Tax Call-Outs

With the end of the 2026 financial year fast approaching, now is the ideal time to ensure everything tax-related is in order before year end. In this article, we cover a few key items to review before 31 March, along with several important points businesses should keep in mind as we head into the 2027 financial year.

Each financial year brings new opportunities for growth and success. Taking the time to ensure the previous year end is handled correctly and with care creates a strong foundation as we move into the new financial year. While getting your returns filed accurately is important, paying attention to the finer details and taking a proactive approach to the year ahead is what truly sets successful businesses apart.

Bad Debts

To claim a deduction, a debt needs to be genuinely “bad” and written off in your accounts before 31 March. Taking care of this now ensures your deductions are correctly claimed for the 2026 income year and gives you a clearer picture of your true financial position. Remember, writing-off a debt does not mean you cannot keep chasing it, but it does mean you can claim a tax deduction.

Imputation Credit Account

It’s a good idea to take a moment to review your Imputation Credit Account (ICA). If your ICA ends the year in debit, the company could face a 10 % penalty for distributing more credits than tax paid. Checking your balance before 31 March, especially if dividends have been paid, can help prevent surprises and keep your year-end reporting running smoothly.
If your ICA balance is currently in debit, consider paying your 7 May provisional tax instalment early (before 31 March) to clear the debit balance in your ICA and prevent incurring the 10% penalty.

Tax Losses

Tax losses incurred by a company may be offset against profits in another company within the same group, helping to reduce the overall tax bill. In order for companies to offset losses between each other, the  companies must have at least 66% common shareholding for the period the losses being transferred were incurred.

Any loss offset elections and/or subvention payments between companies for the 2025 income year must be completed by 31 March 2026 in order to be effective.

However, before filing your returns with the loss offsets, we would recommend that you ensure the requirements for offsetting losses are met to prevent unnecessary costs from having to unwind loss offsets. For example, for companies that are not 100% commonly owned, you should check if 66% shareholder commonality has been maintained and not just assume "it’s OK because it was done last year".

Shareholder Current Accounts

Overdrawn balances can sometimes catch businesses off guard if they aren’t reviewed. You may need to repay them through salary, dividends, or other arrangements, and interest might also need to be applied. Taking a moment now to check these accounts can help manage any potential tax issues and avoid unexpected surprises from Inland Revenue.

Thin Capitalisation

For foreign owned/controlled companies, it’s not too late to look at your thin capitalisation position to ensure your debt percentage is within the safe harbour to ensure full interest deductions. If your calculations based on latest balance sheet figures are showing you are over or close to exceeding the safe harbour threshold (60% for many companies), consider whether there are any options available to lower your debt percentage or keep it below the safe harbour. These can include, repayment of debt, deferring the payment of dividends until after yearend (to keep cash in the balance sheet), asset revaluation, new equity injection to give you a few options.

Fringe Benefit Tax

As the financial year comes to a close, Fringe Benefit Tax can easily catch businesses by surprise. Year-end wash-up calculations often reveal overlooked benefits or small errors, and items like company vehicles, low-interest loans, and other employee perks can quickly add up. Reviewing these before 31 March helps avoid unexpected costs and allows you to more accurately accrue for the expected FBT cost. As this is the final FBT quarter of the year, most employers will need to file and pay their return for the period ending 31 March by 31 May 2026.

Inland Revenue has also been increasing its broader compliance activity, and we have seen a particular focus on FBT recently, so now is a good time to take a proactive look.

KiwiSaver Changes

As many of you may know, KiwiSaver contribution rates are set to increase from 1 April 2026, with the minimum rate rising to 3.5 percent for both employees and employers, and then to 4 percent from 1 April 2028.

It’s a good idea to get ahead of these changes. If you run payroll in-house, check that your systems and calculation templates are updated for the first rate increase coming up on 1 April. If payroll is outsourced, have a quick chat with your provider to make sure everything is ready.

Crypto-Asset Reporting

From 1 April 2026, anyone in New Zealand who exchanges crypto-assets on behalf of clients will need to start keeping track of all client and transaction information. This also applies if you’re using a foreign exchange with New Zealand clients, so the IRD will have a much clearer picture of crypto activity. The first report isn’t due until 30 June 2027 but now is a great time to get your systems and records in order so you’re not rushing at the last minute.

We Are Here To Help

As we step into a new financial year, it’s a great opportunity to set the tone for how you want to run your business moving forward. A good theme to carry into the year is simply being proactive. When you stay on the front foot, small issues can be spotted early and dealt with before they grow into bigger problems.

It is also worth keeping in mind that Inland Revenue has received increased funding to step up its tax collection activities. In practical terms, this means they are asking more questions and taking a closer look at the finer details. Making sure your tax affairs are tidy, accurate, and well documented will go a long way toward keeping things smooth if IRD ever comes knocking.

At Andersen New Zealand, we are here to help you work through business decisions, untangle tax headaches, and make sure everything is in good shape well before it becomes a problem.

Sometimes a quick chat is all it takes to bring clarity and peace of mind.