The New Zealand tax year ends on March 31, marking an important time for sole traders, business owners and property investors to review their financial records and meet their tax obligations. Being organised at tax time reduces stress, lowers costs, and makes tax filing easier. In this article, we’ll share practical tips to help you manage your taxes more efficiently, whether you work with a tax agent or handle them yourself.

Sole Traders: What you need to know

• As a sole trader, your business income is included in your personal income tax. The amount you pay depends on New Zealand's personal tax brackets.
• At tax time, your taxable income is calculated by subtracting allowable business expenses from your total profit, so claiming expenses can reduce the tax you owe.
• It's important to track your income and expenses using accounting software, an online spreadsheet, or even a handwritten ledger.
• Be sure to review what business expenses can and can’t be claimed and claim all valid deductions.
• If you're new to self-employment, you can either pay tax in a lump sum after filing your first return or use AIM (Accounting Income Method) to make smaller payments throughout the year based on your business's accounting profit.
• As a sole trader, you automatically receive ACC personal injury cover. The cost varies depending on your job type and earnings, with your first ACC invoice arriving after your first year in business. From there, you’ll be invoiced annually, typically in July or August.
• If your annual earnings exceed $60,000, you'll need to register for and pay GST.

Business Owners: What you need to know

• As a business owner, your tax bill is based on your net profit. Valid business expenses can help reduce this bill.
• Many of your operational costs can be claimed, including some household expenses if you work from home.
• Good record-keeping is essential; hold onto records for at least seven years, as Inland Revenue may request them in case of an audit.
• If your tax bill exceeds $5,000, you may need to pay provisional tax in instalments throughout the year, helping to spread the cost.
• If you run a business, you’ll need to:
  • File a company tax return (IR4)
  • Pay corporate tax at 28% on your profits
  • Handle PAYE for employees
  • Manage your Shareholder Current Account
  • Account for Fringe Benefit Tax (FBT) on employee perks, such as company cars 

Rental Property Owners: What you need to know

• Rental property owners need to report rental income and pay tax on it.
• Be aware of GST obligations if renting out short-term accommodation and understand rental property deductions.
• Keep detailed records of rental income and expenses.
• You can claim expenses like rates, insurance, property management fees, and maintenance.
• From 1 April 2025, you can claim 100% of interest deductions on loans for investment properties, up from the current 80%.
• Be mindful of the Bright-Line Test, which may require you to pay tax on any profit made from selling a property within a specified timeframe. Check the IRD website for the latest details.
• While depreciation can't be claimed on buildings, it can be claimed on assets like appliances and furniture. 

General Tips for All

• Consider working with a registered tax agent to meet deadlines and potentially improve your tax situation.
• Using a tax agent may also qualify you for a filing extension, often until March 31 of the following year.
• Set aside money each month in an interest-bearing account to cover taxes and levies.
• If you collect GST, ensure you file a GST return and pay what you owe.
• Stay on top of important due dates for tax payments. Payment deadlines may come a few weeks or months after filing your return.
• Avoid late tax filings to prevent penalties.
• If needed, explore accounting software options to streamline your record-keeping process.
• A tax agent or accountant can offer valuable support, helping you navigate tax requirements efficiently.

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