General

Making tax time easier Te whakangāwari i te wā o te tāke

In association with
Tax time doesn’t have to be stressful. Learn how to prepare for it, how to keep track of your records, and what systems to use to avoid surprises.

Plan and prepare

  1. Step01

    Plan ahead

    To avoid the surprise of a big bill, put money aside for taxes and levies. 

    You should:

    • set up a separate, interest-earning account for tax and ACC payments, and put a portion of each payment you receive into it
    • make sure you withdraw these funds in time to make any due payments.
  2. Step02

    Get help when you need it

    You may want one-off advice to get you up to speed, or ongoing help from an expert.

    You should:

    • think about what you actually need
    • talk to providers of accounting software and see how software could help you
    • consider getting help at key times if you decide you don't want the ongoing cost
    • do some research before appointing anyone, and think about your needs and the type of advice you're after – a chartered accountant, or a qualified bookkeeper or tax agent, can help you. Their fees, experience and expertise on offer will vary.
  3. Step03

    Get your records in order

    You must:

    • keep all expense receipts and invoices you receive
    • keep copies of all invoices you send out
    • keep records of any other types of income or expenses, like dividends or rental income
    • try to pay for anything that could be a claimable business expense through your business account, so you've got a paper and electronic trail
    • keep all records for seven years, either electronically or in paper form.

    Set up a filing system that works for you, so you can easily find your records. Everything's filed electronically in one place as you go, and it's tallied up automatically for you at tax time. With accounting software you can file your GST, manage your provisional tax using the Accounting Income Method (AIM), and manage your payday filing.

    Record keepingInland Revenue
  4. Step04

    Use the right systems

    Choose a system that suits your business to help make all your tax obligations run smoothly. 

    You should:

    • talk to others and try a few systems to decide what's best for you and your business
    • consider getting expert help to get started.

    Some accounting systems offer a service for businesses to file GST and payday filing returns directly to Inland Revenue. GST, payroll, and other taxes can also be paid online using Inland Revenue’s myIR service.

    myIRInland Revenue

Guide to making tax time easier

Your first year in business is not tax-free. You can:

  • pay it in a lump sum after filing your first return, or
  • use AIM and pay small amounts during the year when your business makes an accounting profit.

Do this when you’re first starting out:

  • Attend a free Inland Revenue seminar.
  • Register for online services at myIR.
  • Understand business tax basics with Inland Revenue’s Smart Business guide (IR320).
  • Keep good records – it’s a legal duty and helps you see the financial health of your business.
  • Consider using expert advice to get set up correctly.
  • Tell Inland Revenue if another person looks after your tax tasks, like a tax agent. They’ll need access to your myIR for filing.
  • Think about getting accounting software. It could manage your GST, provisional tax and payday filing for you.

I am starting a new business - Inland Revenue

The GST you charge is not your money, so don’t keep it. You’re collecting it for the Government.

Do the following:

  • Check if you need to register.
  • Once registered, start charging GST.
  • Code receipts and invoices as you go to show what they’re for.
  • Put money aside in a high-interest account until it’s time to pay GST – the interest earned might help pay your ACC levy.
  • Deregister when you need to – this will save you having to file nil returns.

Learn more about GST

Don’t forget to pay income tax. The payment date may be a few months after you file a tax return.

Do the following:

  • To help cover your tax bill, regularly put money aside – some experts suggest at least 20% of income.
  • Consider hiring a tax agent to help you save time and money.
  • Always file your tax return by the due date to avoid penalties.
  • Tell Inland Revenue early if you think you might have problems paying – they might help you come to some arrangement.

Learn more about income tax and provisional tax

Don’t file PAYE late. Penalties may be more than your PAYE deductions.

Do the following:

  • Register as an employer online with Inland Revenue.
  • File an employment information form every time you pay your employees. If you’re filing online, you’ll complete this within two working days of the pay day.

There are two forms you need to file each month:

  • IR345: Employer deductions – you must file this, even if you make no deductions
  • IR348: Employer Monthly Schedule – you must only file this for the months you pay employees.

Only deduct child support for an employee if Inland Revenue tells you to.

Tips and advice on PAYE

Register as an employer - Inland Revenue

  • Don’t forget to deregister for GST and as an employer if you close down your business.
  • If a major disaster happens, you must still file returns even if you can’t pay.
  • If your records are damaged, tell Inland Revenue as soon as possible.
  • To help your business survive, Inland Revenue may suggest payment options.
  • If you’re operating at a loss and are worried about being unable to pay, contact Inland Revenue.

What to do if you're operating at a loss

Selling, closing or stepping away

Accounting software

There are many different accounting software packages around.

They can help with things like:

  • invoicing
  • payroll and payday filing
  • provisional tax payment through AIM
  • tax management
  • record keeping
  • GST.

Do some research to find one that suits your needs. Consider a free trial or ask around for recommendations. Don't choose one based on cost alone – the right software, set up properly, can save you much more in time than it costs you in monthly fees.

If you don't feel confident using the package you choose, consider paying someone to help you get it set up and train you how to use it.

You can also use Inland Revenue’s myIR service to pay your GST and file your employment information online.

Manual systems

A manual spreadsheet may work well for your cashbooks and other record-keeping requirements. Inland Revenue has cashbook templates to help you get started.

Tax agents and accountants

Finding a good tax agent, bookkeeper or accountant can help reduce the stress and overhead of your accounting, tax and payroll obligations. They might save you enough money to cover the cost of what you pay them – some costs will also be tax deductible.

If you don't want the ongoing cost of a professional, consider using them just at key times, to help you get your systems set up or when doing your first return.

Payday filingInland RevenueRecord booksInland Revenue

Receipts and invoices

Whichever system you use, keep track of the money coming in and out of your business.

Do the following:

  • Code receipts as you go, so you know what each was for.
  • Balance your accounts regularly so you’re not faced with a big task at the end of each month.
  • Process expense claims regularly.
  • Send invoices promptly and follow up with a polite reminder if the due date has passed.

Set up a clear filing system with separate folders for:

  • each customer or client, including invoices sent, payments received and copies of any agreements or contracts
  • general expenses, such as rent, rates and bills for power, phone and internet
  • business development expenses.

Keep timesheets up to date if your business charges customers for time spent on a job or project. Keep sales data as you go if your business buys and sells products. 

Guide to business tax

Keep on track with your admin tasks as a sole trader.

Follow this checklist for sole traders to help you work through financial essential tasks, like tax.

Sole trader checklist

Paying taxes overseas

If you sell products or services overseas, you’re an exporter, and you may have to pay different taxes.

Pay tax in New Zealand instead of overseas as long as you can. Paying tax overseas can be complicated and cost you more. You may also have to report on your performance and meet other compliance requirements.

Whether you have to pay taxes overseas depends on things like arrangements between countries, and your business set-up. If you do business in the US, check the rules for the relevant state, as each state is different.

New Zealand has double taxation agreements with many countries, including Australia. A double taxation agreement means income is only taxed in one country. You don’t have to pay tax twice.
New Zealand prefers companies to pay their tax here.

Double tax arrangements - Inland Revenue

If you have staff and contractors in another country, you’re likely to have to pay taxes there, like employment tax, superannuation and fringe benefit tax.

If you’re a sole trader who’s in another country for more than a few months, you may have to pay tax in that country.

Zero-rated supplies - Inland Revenue

One tax that’s different when you export is GST. 

  • You don’t pay GST on exported goods or some exported services because exports are zero-rated supplies. But you still have to report the zero-rated GST in your GST return.
  • GST also works differently if your customer exports your goods within 28 days.
  • You don’t pay GST if your customer exports your goods within 28 days, even if your customer is in New Zealand. Other conditions also need to be met. You still have to report the zero-rated GST in your GST return.

GST and exported goods - Inland Revenue

You may also need to pay:

  • an import tax in the country you’re exporting to
  • an excise duty (this is a tax on alcohol, fuel and tobacco products).

Excise Custom-Controlled Area Licences - Customs

Learn more about

Guide to business tax