Year End Tax Planning Tips for SMEs
As the 31 March 2026 balance date approaches, now is a good time to review a few key areas that can help ensure smooth tax compliance — and potentially improve your tax outcome.
Below is a practical checklist of common year‑end considerations for SMEs. Not all items will apply to every business, but reviewing them early can reduce last‑minute stress and surprises.
1. Review Debtors and Write Off Bad Debts
If you have customers who are unlikely to pay, you may be able to claim a tax deduction for bad debts — but only if the correct steps are taken before year end.
Key points:
Identify debts that are genuinely irrecoverable
Ensure the debt is written off in your accounting system (i.e. Xero) before 31 March 2026
Retain evidence of collection efforts (e.g. statements, emails, notes)
If the original sale was subject to GST, you may be able to claim the GST back once the debt is written off
2. Complete a Year‑End Stocktake
For businesses holding inventory, completing a stocktake at 31 March 2026.
Important reminders:
Generally stock should be valued at lower of cost (GST‑exclusive) or net realisable value.
Obsolete stock should ideally be disposed of.
If turnover is less than $1.3m p.a. and closing stock is reasonably estimated to be $10,000 or less, then you can use the opening stock amount.
3. Capture All Expenses in the Correct Year
To claim deductions, expenses must generally be incurred by balance date.
Actions to take:
Enter supplier invoices dated 31 March 2026 or earlier into accounts payable at year end.
Accrue for known costs where invoices haven’t yet been received.
4. Fixed Assets and Depreciation Review
What we will need from you:
Invoices for any asset purchases over $1,000 (GST excl)
Confirm whether any assets were traded in, sold, scrapped, or no longer used during the year
5. Investment Boost, Asset Timing, and Prepaid Expenditure
If your business is planning to incur costs anyway, there may be opportunities to bring forward expenditure before 31 March 2026.
Asset purchases
Eligible new depreciable assets may qualify for a 20% investment boost, providing an additional upfront deduction on top of normal depreciation.
Key points:
The asset generally must be new and depreciable
It must be purchased and available for use before 31 March 2026
Cashflow impact should be carefully considered
Eligibility depends on the type of asset and your circumstances
Prepaid expenditure
Some expenses paid in advance before balance date may still be deductible in the 2026 year, depending on:
The amount of the prepayment
The period the expense relates to
Whether the expense meets Inland Revenue’s prepayment rules
Common examples include insurance, subscriptions, stationary or rent. Prepayment rules can be complex, so it’s best to flag these with us early.
6. Staff Holiday Pay & Bonuses
Holiday pay and staff bonuses have specific tax deduction timing rules.
Key points:
Accrued holiday pay and bonuses at 31 March 2026 are not automatically deductible
However you can claim a deduction in the 2026 financial year, for accrued holiday pay and bonuses paid within 63 days of balance date (being 2 June 2026). We will request this information in June 2026.
7. Keep Proper Accounting Records
Businesses are required to keep accounting records, invoices and supporting documentation for at least seven years.
Good record‑keeping supports compliance and makes dealing with Inland Revenue queries much easier.
Final Thoughts
Year‑end tax planning works best when done early. Reviewing these areas before 31 March allows time to address issues, manage cashflow, and avoid unnecessary complications once accounts are finalised.
If you would like to discuss further please contact us, we are happy to help.
Important Disclaimer
The information above is of a general nature only and does not take into account your specific circumstances. Tax rules can change and their application depends on individual business situations. Please contact us to discuss your specific circumstances and obtain tailored advice.