With the 2025 tax season fast approaching, businesses across New Zealand should be preparing for the changes and opportunities that come with it. Effective tax planning is about more than just filing returns; it’s about proactively managing your business’s finances to minimise tax liabilities, maximise deductions and ensure compliance with the latest regulations. At Bellingham Wallace, we understand the complexities of tax planning, especially with ongoing adjustments to tax rules and deductions available to businesses.
In this article, we’ll discuss key tax planning strategies for 2025 that can help your business prepare, optimise tax outcome, and avoid unnecessary liabilities.
Stay Updated on Changes in Tax Regulations for 2025
One of the most important steps in tax planning is staying up to date with new tax laws and regulations. The government frequently updates tax policies and understanding these changes is crucial for effective planning. For the 2025 tax year, several new regulations and adjustments are set to impact businesses. Keep abreast of these changes through our regular LinkedIn updates or our website.
What’s changing in 2025?
One of the most notable updates is the government’s renewed focus on compliance and enforcement. In recent years, Inland Revenue has increased its scrutiny of tax compliance, particularly in areas such as GST, fringe benefit tax (FBT) and the correct reporting of deductions. As part of its initiative to close the tax gap, Inland Revenue will be introducing tighter regulations on tax deductions and ensuring that businesses are correctly categorising their expenses. The number of companies being put into liquidation by Inland Revenue is at an all-time high, largely due to unserviceable tax debt or repeated non- compliance.
Incentives aimed at encouraging investment in research and development (R&D) are available. This is part of New Zealand's broader push to boost innovation and productivity within the SME sector. For businesses involved in R&D activities, this presents a valuable opportunity to claim tax credits and reduce overall tax liabilities.
Key Regulation Updates:
- Tighter scrutiny on deductions: Businesses must ensure they are properly categorising expenses to avoid penalties.
- R&D tax credits: Encourage more businesses to claim benefits from eligible R&D activities.
- GST compliance: Continued focus on accurate GST filing and payment.
Action Steps for SMEs:
- Review any changes to tax regulations with your accountant or tax advisor.
- Make sure you’re fully compliant with updated reporting requirements, especially around deductions.
- Explore eligibility for R&D tax credits and other industry-specific incentives.
Maximise Deductions by Knowing What You Can Claim
Understanding which expenses, you can deduct is essential for reducing your overall tax liability. Many businesses overlook or underestimate the deductions they’re entitled to, which can lead to higher taxes than necessary.
Key Deductible Expenses for SMEs:
- Operating Expenses: These are the day-to-day costs of running your business, including office supplies, utilities, rent and salaries. Ensure that you’re claiming all your legitimate operating expenses.
- Vehicle and Travel Costs: Business-related travel and vehicle expenses can be claimed, but it’s important to differentiate between personal and business use. Keeping a detailed log of business travel and maintaining receipts will ensure that you can maximise deductions for these costs.
- Home Office Deductions: With many businesses continuing to operate remotely or adopt hybrid work models, home office deductions have become more relevant. If part of your home is used for business purposes, you can claim a portion of your household expenses, including rent, power and internet costs.
- Entertainment and Meals: The rules around entertainment and meal deductions can be complex, with some expenses being fully deductible while others are only partially deductible. Meals provided during staff meetings or for team-building events may qualify for deductions, but the key is keeping clear records to support these claims.
- Depreciation of Assets: If your business has invested in new equipment, technology or property, you may be eligible to claim depreciation on these assets. Depreciation allows you to spread the cost of large capital purchases over several years, reducing your taxable income each year.
Action Steps for businesses:
- Keep accurate, detailed records of all business-related expenses.
- Work with your accountant to identify any potential deductions that may be overlooked.
- Review your asset depreciation schedule to ensure you’re claiming full deductions.
Minimise Tax Liabilities Through Strategic Timing of income and expenses
One of the most effective strategies involves timing your income and expenses. By correctly reflecting when you recognise income and incur expenses, you can reduce your taxable income for the current year, potentially lowering your overall tax liability.
Example Scenarios:
- Income: If you have flexibility in recognising revenue from contracts, you may want to consider the accounting and tax rules in detail. This is particularly useful when anticipating higher tax rates or surcharges.
- Expenses: If you’re planning to invest in new equipment, supplies or marketing campaigns, you may want to make these purchases before the end of the tax year to reduce your taxable income for 2025.
Action Steps for businesses:
- Review income forecasts and cash flow projections to determine if income deferral is an option.
- Evaluate upcoming business expenses to determine if accelerating costs into 2025is viable.
- Work closely with your advisor to create a customised plan based on your specific business situation.
Effective Tax Management
Effective tax management goes beyond simply reacting to tax regulations, it requires a proactive approach. By engaging in regular discussions with your tax advisor, you can ensure that your business is not only compliant but also optimising every opportunity to legitimately reduce tax liabilities and maximise deductions.
How Bellingham Wallace Can Help: At Bellingham Wallace, we specialise in providing tailored tax planning services to businesses across New Zealand. Our team of dedicated tax experts work closely with business owners to identify areas where they can improve compliance, maximise deductions and strategically manage their tax obligations.
We encourage businesses to review their financial health at least quarterly, not just during tax season. This approach helps to identify any potential issues before they become costly problems and ensures that tax strategies are aligned with business goals.
Key Tax Management Services We Provide:
- Quarterly tax reviews: Regular reviews to ensure your business is staying on track with compliance and taking full advantage of available tax benefits.
- Customised tax strategy: We work with businesses to develop tailored tax plans that consider both short and long-term objectives, including ensuring the most effective structures in place to achieve the objectives.
- Compliance management: Our team helps businesses stay up to date with the latest tax regulations and ensures timely filing of returns to avoid penalties.
Action Steps for businesses:
- Ensure your advisor proactively schedules regular meetings with you, to review your tax strategy. If this is not happening, talk to us, we love engaging with our clients.
- Use quarterly reviews to identify potential areas for improvement and adjustments.
- Consider a proactive, year-round approach to tax management to stay ahead of regulatory changes.
Prepare Early and Maximise Your Tax Benefits
Effective tax management is an ongoing process, not something that should be left to the last minute. By staying informed about changes in tax regulations, maximising your deductions and working proactively with an advisor, you can significantly optimise your tax position and set your business up for success.
At Bellingham Wallace, we’re dedicated to helping New Zealand businesses navigate the complexities of tax. Whether it’s maximising deductions, ensuring compliance or developing a long-term tax strategy, we’re here to provide expert advice tailored to your business needs.
Get in touch with us today to start preparing for the 2025 tax season. Let us help you minimise liabilities, maximise deductions and achieve your financial goals.
Author - Serjit Singh
