Plan before problems appear: A case for tax planning

The end of the financial year arrives like clockwork every 31 March. Yet somehow, it still catches business owners off guard.

Receipts that should have been filed months ago surface from desk drawers. Bank statements need reconciling. And somewhere in the chaos, there’s a nagging question: ‘What’s my tax bill going to look like?’

---

Tax planning means making informed decisions throughout the year that protect cashflow, reduce unnecessary costs, and set your business up for what comes next. The difference between businesses that plan and those that don’t shows up in thousands of dollars in avoidable interest, missed investment opportunities, or the peace of mind that comes from being prepared.

But by the time you’re rushing to meet the deadline, you’ve already missed the real opportunity.

Tax compliance gets you through the door, tax planning gets you ahead

Most business owners understand tax compliance. It’s the minimum requirement: keeping accurate records, filing returns on time, and paying what you owe. Compliance answers the question, ‘What happened last year, and what do I owe because of it?’

Tax planning asks different questions: What decisions can I make now that will improve my position? How should I structure my business? When should I take dividends versus salary? What does my cashflow need to look like in three months? Six? A year?

Compliance is backward-looking. Planning is forward-thinking.

A family business with multiple shareholders wanted to restructure. Each shareholder had different goals and timelines for their share of the business. Some were looking at retirement, others at new investments, and others at different ventures entirely.

Without appropriate tax planning, they would have faced an additional liability of around $60,000. By planning ahead and applying the tax rules correctly, the family business managed its tax obligations effectively while maintaining full compliance. At the same time, each shareholder gained the flexibility to access their share of funds when it best supported their individual plans.

This approach was about understanding their goals, mapping their business timeline, and aligning their structure with what they wanted to achieve.

Not every story ends with a perfect outcome.

A client came in after their financial year had already closed. They wanted to take a dividend, but the deadline for filing their Resident Withholding Tax (RWT) had passed. The result? $40,000 in interest and penalties.

Considerable time was spent analysing the client’s position, reviewing credits across related entities, and working directly with the Inland Revenue Department (IRD) to ensure those credits were applied correctly and in accordance with the law.

As a result, the original $40,000 interest was reduced to $1,000 through IRD’s formal processes. This significantly reduced the impact on the client’s financial position and cashflow, while also reflecting the level of intensive compliance work and technical analysis required to resolve the matter. The cost of this work was still substantially lower than the original interest that arose because the dividend had not been planned in advance.

Earlier engagement would have removed the interest and penalty entirely and reduced the need for urgent intervention. Planning ahead does more than eliminate unnecessary interest and penalties—it also saves time, stress, and additional compliance fees.

One of the most common mistakes isn’t about numbers.
It’s about communication.

A client was working partly on wages and partly as a sole trader. Midway through the financial year, their income shifted. They started earning more through their sole trader work and less from wages. That meant their PAYE withholdings were no longer enough to cover their growing tax liability.

Because they were registered for GST every six months, the change wasn’t visible in time. By the end of the year, their tax bill was significantly higher than expected, and they owed interest on provisional underpayments.

The client had the cashflow to cover it. That wasn’t the issue. But they could have avoided the interest entirely if they’d simply mentioned their income structure had changed. Advisors provide provisional tax estimates and request business updates, but if clients don’t respond, adjustments cannot be made.

Tax planning only works if your advisor knows what’s happening in your business. Changes in income, new investments, shifts in structure—these aren’t minor details. They’re the inputs that determine whether you’re planning effectively or reacting too late.

Tax planning focus isn’t just on the current year.

Tax planning extends to the next 12 months, the next three years, and sometimes further if a major decision is on the horizon.

A client was considering purchasing an asset to start a new business. They wanted to understand whether it was a sound investment and, if so, what structure would serve them best. A five-year financial forecast was built, mapping income, expenses, provisional tax, shareholder salaries, FBT, GST, and losses brought forward. The analysis covered not just the business side but the tax implications at every stage.

“Goodness, this is beyond excellent! Much more analysis and information than I was expecting. The analysis is exactly what I was after, and the advice and information is top-notch. I feel very well looked after.” – N. Sanders

That client now runs their business with clarity about where they’re heading and how their structure supports their goals. They didn’t just get compliance. They got a roadmap.

When to start (and why it shouldn’t be March)

If your business is large, complex, or carries significant tax liabilities, provide your information and discuss it with your business advisor within three months of the end of the financial year. That gives time to plan provisional tax payments, review structure, and identify opportunities before they disappear.

If your business is smaller with straightforward tax obligations, aim for at least five months before your filing deadline. That buffer means follow-up questions can be asked, missing information requested, and deductions optimised without racing against the clock.

Timing isn’t just about deadlines. Keep your advisor informed throughout the year. If your income changes, mention it. If you’re considering a new investment, mention it. If your business structure shifts, mention it. The earlier they know, the more they can do.

Your business advisor: a true partner

Some business owners worry about the cost of professional advice. What they often don’t consider is the cost of operating without it.

Paying tax late can incur interest. Missing legitimate deductions can mean overpaying. Poor cashflow planning can create stress. Structural decisions made without considering tax implications can lock a business into years of inefficiency.

Businesses that treat their advisor as a partner are the ones that manage obligations effectively, make better-informed decisions, and set themselves up for growth. The value of a trusted advisor far outweighs the cost.

EOFY is not the finish line

Most business owners treat 31 March as the end of something. File the returns. Close the books. Move on.

But End Of Financial Year (EOFY) isn’t an ending. It’s a reset point. It’s the moment to assess what worked, what didn’t, and what needs to change. It’s the chance to align your tax strategy with your business goals, ensure your structure still fits your plans, and prepare for the year ahead.

The businesses that thrive plan in January, adjust in April, and stay ahead all year long, not scramble in March.

If you’re reading this and realising you’ve left things late, it’s not too late to start. But next year, start earlier. And the year after that, don’t wait until EOFY to think about tax at all.

---

At Gilligan Sheppard, we work with businesses to close the current financial year efficiently and plan the next one strategically. Whether you’re looking to reduce unplanned expenses, optimise your structure, or simply understand your options, we’ll guide you through every step. Contact us, and let’s make sure the next financial year is the one where you’re prepared, not just compliant.