Getting your tax sorted before the Christmas break

Practical advice from Joshua Huang, Business Advisory Manager at Gilligan Sheppard.

December is a busy month for everyone. Between wrapping up projects, organising the office Christmas party, and trying to squeeze in some time with family, it can be easy to let a few important tax dates slip through the cracks. Joshua Huang, who leads our accounting services team, sat down to share some practical advice on what business owners should be thinking about before they head off for their summer break.

The question we get asked most—provisional tax

At this time of year, the most common question Joshua hears from clients is about provisional tax. If you are running a business, provisional tax is essentially a prepayment towards your income tax for the current year. The Inland Revenue Department (IRD) works it out based on your previous year’s profit, then adds a small percentage on top.

“If your remaining income tax from the previous year is more than $5,000, you have an obligation to pay provisional tax for the following year,” Joshua explains. “The IRD assumes your income will grow by about 5% compared to the year before, and they calculate your payments from there.”

This system is designed to spread your tax payments throughout the year rather than landing you with one large bill at the end. However, it can catch people out if their business has had a particularly good or particularly tough year.

Key dates to mark in your calendar

Before you close the office doors for the holidays, there are a few important deadlines to keep in mind.

1. Your November PAYE is due by 20 December, which falls right when most businesses are winding down for Christmas. If your business closes on the 21st or 23rd, you will want to have this sorted well before then.
2. Then there is GST. If you file two-monthly returns, your October and November GST is due by 15 January 2026. And that same date is also when your second instalment of provisional tax for the 2026 year falls due. The 15th of January is typically the first day many people are back at work, so if you have not prepared ahead of time, you could be scrambling.

Get your October and November GST returns done before you leave. Set up the payments in your online banking so they go through automatically. And make sure you have enough funds set aside for that January provisional tax payment.

Sorting out your team’s holiday pay

If you have employees, December brings its own set of considerations. Most businesses close for two or three weeks over the summer, which means you need to work out whether your staff have enough annual leave to cover that time. If they do not, you will need to discuss the options with them, whether that is leave without pay or leave in advance.

“There are a lot of things that need sorting,” Joshua says. “Everyone wants to have enough cash on hand during the Christmas break, and that includes your employees. Get the payroll sorted early so there are no surprises.”

What to do if cash flow is tight

Summer can be a challenging time for cash flow. You are paying out holiday wages, but revenue might slow down while everyone is on break. If you are worried about meeting your tax obligations, there are a few options worth considering.

1. If you have a good relationship with your bank, a short-term credit facility could help bridge the gap.
2. Alternatively, you can talk to the IRD directly about setting up an instalment arrangement.

The key is to get in touch before you miss a payment, not after. “If you can only afford $500 a month, the IRD will work with you,” Joshua explains. “They have become much more accessible through the MyIR online system. You can send them a message and set up an arrangement without even needing to call.”

That said, Joshua recommends talking to your accountant before you approach the IRD. “You want to make sure you are setting up a plan you can actually afford. We know what questions the IRD will ask, and we can help you put your best foot forward.”

The MyIR system has come a long way

Ten or fifteen years ago, the only way to deal with the IRD was to call or message and wait. These days, the MyIR online portal can handle most things. You can check your account, see what payments are coming up, ask questions, apply for a new tax account, transfer the tax payment to another entity, and set up instalment arrangements all from your computer or phone.

It is a genuine improvement that makes staying on top of your tax obligations much easier, especially if you prefer to handle things in your own time rather than waiting on hold.

Tax pooling: a useful tool for managing payments

One option Joshua often recommends to clients, particularly medium-sized and larger businesses, is tax pooling through providers like Tax Traders. Here is how it works: if you miss a provisional tax payment, the IRD will charge you late payment penalties and use-of-money interest. The penalties are not deductible for tax purposes, so you get nothing back.

With a tax pooling provider, you can effectively ‘buy back’ the missed payment to the original due date. The interest they charge is typically lower than what the IRD would charge, and all of it is tax-deductible.

You can also make deposits to a tax pool in advance. If it turns out you overpaid because your income was lower than expected, you can either use those funds for next year or sell them to other taxpayers and earn some interest. It provides flexibility that paying the IRD directly simply cannot match.

There are deadlines and rules around tax pooling, so it is worth having a conversation with your accountant to see if it makes sense for your situation.

When to bring in professional help

Many business owners start out handling their own books and tax returns. That works fine when things are small and straightforward. But as your business grows, trying to control everything yourself becomes harder and harder.

“If your business is really growing, you cannot control everything,” Joshua says. “Find a good bookkeeper who can provide accurate reports, so you can make the right decisions. And if you find someone really good, try to keep them. Give them a sense of ownership in the business. It is really hard to find the right person, and losing them to a competitor for a few thousand dollars more can cost you far more in the long run.”

The same goes for your relationship with your accountant. Too often, Joshua sees business owners try to sort things out with the IRD themselves, only to make the situation worse.

“Talk to your accountant first,” he advises. “We know what questions the IRD will ask. We can give them targeted answers without accidentally raising other issues. Once you have said something to the IRD, you cannot take it back.”

Cash is king

If there is one piece of advice Joshua wants every business owner to take away, it is this: keep a close eye on your cash flow.

“A lot of businesses fail because they run out of cash,” he says. “It is not always because they are doing badly. Sometimes they are growing too fast and cannot keep up with the payments they need to make.”

Joshua recently completed the accounts for a client in the wholesaling business. Their sales had increased compared to the previous year, and their profit had grown significantly. Sounds like good news, right? But their debtors had increased significantly. Customers were taking longer to pay, which meant the business had gone from a positive cash position to relying heavily on their overdraft facility.

“You need to watch those figures,” Joshua says. “Good businesspeople look at monthly reports and keep an eye on their debtors and creditors. If you let things drift, you can end up paying a lot of unnecessary interest, or worse.”

He has seen it happen in the construction industry, where businesses take on more and more work without getting paid for the jobs they have already finished. The owner ends up injecting their own money to cover wages and subcontractors. If the main contractor goes into liquidation, the bank gets paid first, and everyone else is left fighting over what remains.

“Have a policy in place to secure your cash position,” Joshua advises. “And try not to let your personal property get too tangled up with the business. If things go wrong, you could lose everything.”

Your summer homework

Before you head off for the break, take an hour to check your business cash flow position. Do a quick forecast for the year ahead. Make sure your December obligations are sorted, and that you have funds set aside for January.

And if anything looks concerning, give us a call before Christmas. We would much rather help you plan ahead than pick up the pieces in the new year.