Tax Talk: Summer 2026

If you’re a shareholder in a company with accumulated earnings and expect your personal income to be lower in 2026 than in 2027, consider declaring a dividend before 31 March to take advantage of lower marginal tax rates. This will ensure it’s included in your 2026 income tax return.

New rules are coming which although not finalised, may make ESSs a better option by allowing employees to delay recognising income until they can actually realise the value of their shares.

These rules will be “opt-in”, so you may be better off delaying implementing an ESS until 1 April 2026, as you can still choose the old rules (taxation on vesting) if you prefer.

If you operate through a standard company and have personal tax losses, switching to a tax-transparent entity in 2027 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 2026.

If you anticipate a tax loss in 2027, using a tax-transparent structure may allow the loss to be offset against other taxable income (e.g., salary or wages).

If you’re thinking of winding up a company, completing this process before year end can save you another year’s admin of accounts and tax returns.

To do this, two main things need to happen – directors and shareholders need to sign resolutions, and company assets need to be sold/distributed. Close down bank accounts and distribute any residual funds to leave a clean balance sheet and ensure no income is received after 31 March – you can then make your 2026 tax return the final one for the company.

To claim a deduction in the 2026 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.

Commercial buildings are now depreciated at 0%, although notably, because they are still technically depreciable property (albeit at 0%), they are eligible for the Investment Boost 20% deduction.

Interest on residential rentals is now fully deductible.

To claim a tax deduction for bad debts in 2026, 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.

Minimum employee and employer contributions rise from 3% to 3.5% from 1 April 2026. While this change applies after balance date, payroll systems and remuneration discussions should be updated before 31 March 2026.

Also don’t forget about the increase of the ACC earners’ levy from 1.67% to 1.75%.

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.

If you know you are going to need to register for GST in the next year, perhaps in relation to a visitor accommodation activity or business that is growing its annual revenues above $60,000, it could be worth registering for GST before 31 March.

This can allow you to claim GST on assets that cost $10,000 or more and which are being used to generate income. These adjustments may only be made in the March GST return, so an early registration can help cashflow. However, please seek advice before registering as it can have some unintended consequences.