Business and Success Strategies, Inland Revenue, Newsletters, Taxation

End of Tax year

With the financial year-end fast approaching, now’s the time to get your finances in order. Acting early will save time, reduce stress, and ensure your business is set up for success in 2025.

In this blog, we cover five common end of financial year (EOFY) mistakes to avoid, recent tax changes that could impact your business, and our top tip for staying organised this tax season.

Five mistakes to avoid this End of Tax Year

The lead-up to the end of the financial year can feel like a whirlwind, but by avoiding these common hurdles, you can keep your tax season on track and make it your smoothest yet.

Mistake #1 – Neglecting your home office details

If you’re claiming home office expenses, accuracy is key. You might have started the year tracking everything diligently, but it’s easy to let those habits slide. Now’s the time to catch up — don’t leave it until the last minute. Gather your utility bills, rates, phone plans, and other relevant expenses, and plug them into your home office expense chart.

Mistake #2 – Forgetting asset invoices

Have you bought a new vehicle, tractor, or other equipment this year? Save those invoices! We need them to update your asset register and calculate accurate depreciation claims.

Mistake #3 – Skipping your odometer reading

Do you use a vehicle for work? Record your odometer reading on 31 March to track your total business and personal kilometres for the year. This is especially crucial if you’ve driven more than 14,000km, where the IRD’s Tier 2 rates apply.

Mistake #4 – Not flagging Xero/MYOB uploads with your accountant

If you upload invoices into Xero or MYOB, let us know. This simple step can streamline the process and potentially reduce your accounting fees.

Mistake #5 – Confusing deductible expenses

Food, drinks, travel — what’s deductible and what’s not? The rules vary depending on whether you’re self-employed, a shareholder, or trading as a company. Check Inland Revenue’s guide on entertainment expenses to avoid surprises.

Don’t forget provisional tax!

If you’re a provisional taxpayer — typically anyone who earns income where no tax is deducted at source, like sole traders or contractors — your final payment for the 2024 tax year is due on 7 May 2025, where we prepare your tax returns. For those who don’t have their tax returns prepared by their accountant, final payment was due on 7 February 2025. Unsure if this applies to you? Get in touch. We’ll clarify your obligations and help you stay on track.

Four tax changes to consider before 31 March

Get your head around New Zealand’s recent and upcoming tax changes, and make sure you’re up-to-date with tax obligations and payroll processes before filing your EOFY returns.

Change #1: Income tax thresholds

Effective from 31 July 2024, personal income tax thresholds changed. New composite rates to account for this change applied for the income year to 31 March 2025.

It’s a good idea to double check that your payroll systems have reflected this to ensure there are no surprises for your employees in terms of incorrect PAYE deducted. Note the new marginal tax rates from 1 April 2025 are:

Make sure your payroll systems reflect the new thresholds.

Change #2: Fringe Benefit Tax (FBT)

With the changes to income tax thresholds, FBT rates are also being updated, with adjustments taking effect from 1 April 2025. If you provide benefits like vehicles or loans to employees, review your FBT reporting processes and ensure you’re set up to account for the changes.

Change #3: Resident Withholding Tax (RWT)

RWT rates were also adjusted in line with the new personal tax thresholds as of 31 July 2024. If your business handles interest payments or other transactions requiring withholding tax, check that you are using the correct rates.

Change #4: Independent Earner Tax Credit (IETC)

If you’re a sole trader earning between $24,000 and $70,000, you may qualify for the IETC, which could lower your overall tax liability. Check your eligibility before filing your tax return.

Have questions about how these changes impact your business?
Get in touch—we’ll guide you through it.