Tax Talk: March 2025

If you’re a shareholder in a company with accumulated earnings and expect your personal income to be lower in 2025 than in 2026, consider declaring a dividend before 31 March to take advantage of lower marginal tax rates. This will ensure it’s included in your 2025 income tax return.

If you operate through a standard company and have personal tax losses, switching to a tax-transparent entity in 2026 may allow you to offset those losses against other income. For companies, this can be done via a Look-Through Company (LTC) election, which must be made before 1 April 2025.

If you anticipate a tax loss in 2026, using a tax-transparent structure may allow the loss to be offset against other taxable income (e.g., salary or wages).

To claim a deduction in the 2025 tax year, complete repairs and maintenance before 31 March. This applies to vehicles, buildings, plant, and machinery. Ensure the work qualifies as repairs and maintenance rather than a capital improvement, as the latter may not be fully tax-deductible.

Dispose of obsolete stock before year-end or write it down to its net realizable value. If your stock is under $10,000 and your turnover is below $1.3 million, stock movements do not need to be included for tax purposes.

Assets costing less than $1,000 (excluding GST) can be fully deducted in the year of purchase, provided they are used or available for use in the business at the time of purchase.

Tax depreciation on commercial buildings ends on 1 April 2024, impacting your 2025 tax payable. For residential rental properties, interest deductibility is limited to 80% in the 2025 tax year but will return to 100% from 1 April 2025.

To claim a tax deduction for bad debts in 2025, the debt must be:

• Written off before 31 March.
• Reasonably pursued for recovery (reminders, collections, or legal action).
• Documented in your accounts as uncollectible.

If GST was included, you may be able to adjust your GST return to claim a refund on the GST portion.

If you acquired and used a property or asset primarily for private use, you have until 31 March 2025 to repay the GST previously claimed. This ensures the asset isn’t subject to GST at market value on sale or a change in use to a non-GST activity (such as long-term rental).

If you’re planning to transfer equity investments subject to the Foreign Investment Fund (FIF) rules—whether to a partner, a trust, or another entity—consider doing so on 1 April. This timing may allow for a full tax year without income arising under the FIF rules.

As always, don’t hesitate to reach out if you’d like help to work through the implications of any of these changes.

Alex Cull, Tax Partner
[email protected]

Tax law is always changing.

If you’re reading this long after the published date, please get in touch to see if it’s still relevant.