Newsletter  - December 2025

Welcome to our November Newsletter

As the year comes to a close, we’d like to wish all our clients and your families a wonderful Christmas and a happy New Year. Thank you for your support throughout 2025. We hope you enjoy a well-earned break, safe travels if you’re heading away, and a relaxing holiday season. We look forward to working with you again in 2026.

Christmas Closure

Our office wil be closed from 5.00 pm -  Monday 22 December to 4 January.

We reopen on Monday 5 January.

Two recent updates from Inland Revenue highlight a tightening landscape around company loans and outstanding COVID-era support debts. IRD has released a consultation paper proposing new rules for loans made by companies to their shareholders. Under the proposal, any shareholder loan exceeding $50,000 and still unpaid 12 months after balance date would be treated as a taxable dividend. The intent is to bring greater transparency to shareholder drawings and ensure consistent tax treatment. Submissions on the proposal are open until 5 February 2026.

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At the same time, new reporting shows the scale of overdue Small Business Cashflow (Loan) Scheme (SBCS) debt following the pandemic. According to the NZ Herald, more than 20,000 small businesses have fallen behind on repayments, with loan defaults reaching $447 million. These figures underline the importance of early engagement with IRD where repayment difficulties arise and the need for businesses to stay on top of cashflow planning as support measures unwind.

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Taken together, these developments signal a stronger compliance focus from IRD in the year ahead. Business owners and shareholders may wish to review their loan arrangements, repayment plans, and tax positions to ensure they remain well-prepared.

If you have questions about how these changes could affect your business, we are here to help.

Understanding Imputation Credits in New Zealand

When New Zealand companies pay dividends, they can also attach imputation credits. These credits represent the income tax the company has already paid to Inland Revenue. The purpose is simple: to ensure shareholders are not taxed twice on the same profit.

Here’s how it works: a company pays tax on its profits at 28%. When it pays out a dividend, it can pass on those tax credits to shareholders. Shareholders then include the gross dividend (cash received plus imputation credit) in their tax return, and the imputation credit reduces the amount of tax they need to pay. Depending on the shareholder’s tax rate, this may mean paying a little extra or receiving a refund.

For investors, imputation credits help ensure dividends are taxed fairly and transparently. For companies, it’s important to maintain a positive Imputation Credit Account (ICA) so credits can be attached correctly.

If you’d like help understanding how imputation credits affect your personal or business tax position, feel free to contact our team.