How to manage a late tax return

The end of the standard tax year is approaching, and it’s possible that some small business owners may need to file their tax return late.

We’ve collected some essential tax return information from the Inland Revenue Department (IRD) about making a late tax return, and asked a tax accountant for his perspective on non-standard filings.

Making a late tax return

First, consider familiarising yourself with the tax rates for businesses, as published by the IRD. Most companies are taxed at a rate of 28 per cent, while self–employed business owners – i.e. sole traders – are taxed at the individual tax rate.

The standard balance date is 31 March and the standard filing date is 7 July, but businesses in certain industries, such as the agricultural industry, may be able to file at a different time of year. You can view the IRD’s full calendar of tax dates here. The IRD says it may also accept a change in balance date for other industries when there’s a good reason to do so.

If you think you may need to submit an overdue tax return or if you’re having any trouble preparing your return, the IRD recommends you get in contact. The IRD may start a recovery process if it doesn’t hear from you.

Registering with a tax agent

If you’re going to miss the filing date of 7 July, Mike Pirovich, Director of Bare Bones Accounting, recommends registering with a tax agent.

“If you register with a tax agent, you essentially get a time extension,” says Mike. “Tax agents can’t file for all their clients straight away, so the IRD gives us a whole year. For example, for the tax year ending 31 March 2023, registering with a tax agent gives you until March 2024 to actually file the return.

“But if you’re not registered with a tax agent, you’ll have until 7 July 2023. So registering gives you a big advantage – it gives you more time to get your tax return done.”

Non-standard filings

“Tax agents have another tool in the toolbox to help small businesses manage their tax returns,” says Mike. “If we declare that one of our clients is having trouble getting their information together – and it must be for a valid reason – we can send the IRD a letter explaining the situation and secure an extension.”

It is possible, but not guaranteed, to change your balance date and therefore your filing date. To apply to change your balance date, you need to send the IRD a letter that outlines information including:

• Your full name and IRD number
• Your industry
• The balance date you want to use and why
• Actual or projected cash flow, stock patterns, customer demands or seasonal patterns that would make the proposed balance date better for your business

Mike says that although it is possible to do so, small businesses owners should consider whether a change in date will likely be allowed based on their circumstances.

“There must be an extremely strong reason why you should be able to change your balance date,” he says. “For most small businesses, there would not be a reason strong enough to do so.”

Financial expertise

At the end of the day, small business owners are in the business of making money, not wasting time, says Mike.

“Unless your business is a very small operation, you’re advised to use an accountant or tax agent,” he says. “Tax is a complicated thing. Some people can get their heads around it, but even if you do, you can quickly forget about it for the rest of the year. And then when the next tax time comes around, you’ve got to get your head around it again.

“You’re better off focusing on earning income than wasting all your time focusing on tax. When you deal with an accountant, you can get your return done more thoroughly and submit it more easily.”

Mike believes it’s never too late to start preparing a tax return.

“Plenty of clients come to me saying they haven’t filed a tax return in three years – and then we go in and clean it all up,” he says. “Tax agents go into battle for small business owners and help make sure they don’t pay more than they should. It all adds up.”

If you would like to understand these tips better or are unsure about how they might apply to you, reach out to a qualified tax adviser.