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Restructuring or closing your business?

Businesses close every day, for all sorts of reasons. If you’re selling or winding up all or part of your business there are some things you need to do.  

When you stop or sell a business or let go of business assets, you need to make an adjustment in your end-of-year tax return to account for the gain or loss. You also need to make sure you’re on top of your business tax obligations like GST, employer taxes, income tax and depreciation recovery.

Closing your business

If your business officially stops trading you’ll need to file your final returns for all registered tax types. When that’s done, you need to let Inland Revenue know by completing a Business cessation (IR315) form (external link) . If you need help working out how to settle your final GST, employer taxes and income tax, call Inland Revenue on 0800 377 774.  

If your company is stopping its taxable activities but not winding up altogether, you’ll need to fill out Inland Revenue’s Non-active company declaration (IR433) (external link) . If your application is accepted, you won’t need to file tax returns until you reactivate the company. To become non-active, you must stop your GST and employer registrations.

If your business has been irreparably damaged and can’t operate, Inland Revenue treats any insurance payments you receive as if the property was sold.

If you get more than the adjusted tax value (book value) from insurance in your income tax return, you’ll need to include as income whichever is lowest:  

  • the difference between the insurance payment and the adjusted tax value, or
  • the total amount of depreciation you’ve claimed for that asset.

If you stop earning through your business or your annual turnover drops below $60,000, you may need to cancel your GST registration. But if you’ve built GST into your sale prices you need to stay GST registered, even if your turnover drops below $60,000. 

Changing your business structure

Thinking about changing the structure of your business this year? The beginning of a new tax year is a logical time to do it. You’ll need to let Inland Revenue know when you make any changes, so they have your current trading name, IRD and bank account numbers.

Changing your business can be as exciting as starting up – taking care with the formalities will make sure nothing slows you down.

More information

If you’re closing, changing, or still thinking about what to do with your business, there’s a whole section to help you on the Inland Revenue website (external link) .

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