The end of the financial year is almost here and with some big changes kicking in on 1 April, there's a bit more to think about than usual. This guide walks you through what you need to do before 31 March and what changes from 1 April 2026.
Getting Ready for 31 March 2026
The next few weeks are your window to get things sorted before the books close on FY26. The more you do now, the smoother your tax return process will be, and you might find some extra deductions along the way.
1. Reconcile your bank accounts
Make sure your Xero records match your actual bank statements for the full year (1 April 2025 – 31 March 2026). Any differences need to be tracked down and explained. This is the foundation everything else is built on.
2. Do a stocktake (if you hold inventory)
If your business carries physical stock, you need to count it as at 31 March. Your closing stock value feeds directly into your profit calculation and therefore your tax bill. A higher closing stock = higher taxable income, so make sure it's accurate.
3. Chase outstanding debtors or write off bad debts
Review anyone who owes you money. If you've genuinely given up on collecting a debt, you may be able to write it off and claim a deduction for it this year. But the write-off needs to happen before 31 March, and you must have taken reasonable steps to recover the debt first.
4. Review your assets and claim the Investment Boost
If you bought any new business assets (machinery, equipment, commercial buildings, vehicles used for work) between 22 May 2025 and 31 March 2026, you may be eligible for the new 20% Investment Boost deduction. This is on top of normal depreciation and can significantly reduce your tax bill this year. More on this below - it's a big one.
5. Prepay expenses before 31 March
If you pay certain business expenses before 31 March (like insurance, subscriptions, or rent), you may be able to bring those deductions into the FY26 year. There are rules around this - generally it works best for amounts under $14,000 and for prepayments up to 6 months in advance. Talk to us if you're unsure.
6. Check your GST position
If you're GST-registered, make sure your March GST return is going to reflect the right position. Check that all invoices have been issued and that you've claimed GST on everything you're entitled to. Your March GST return will be due by 28 May 2026.
7. Gather your records and hold onto them for 7 years
IRD requires you to keep financial records for at least 7 years. This includes receipts, invoices, bank statements, payroll records, and anything else related to your business income and expenses.
What Changes From 1 April 2026
The new financial year brings several changes that kick in right away. If you have employees, these are non-negotiable - you need to have your payroll updated from your very first April pay run.
Minimum Wage
Minimum Wage Increases to $23.95 per hour
The adult minimum wage rises from $23.50 to $23.95 per hour - a 45 cent (roughly 2%) increase. This applies to all hours worked on or after 1 April 2026.
The starting-out and training wage (paid to some workers aged 16–19) remains at 80% of the adult rate, which means it increases to $19.16/hour.
If you employ staff you'll need to:
- Update your payroll system before your first April pay run
- Check any salaried staff to confirm their effective hourly rate still meets the minimum
- Review employment agreements if wages are stated in hourly terms
KiwiSaver
KiwiSaver Default Rate Rises to 3.5%
The default KiwiSaver contribution rate for both employees and employers increases from 3% to 3.5%. This is not optional, it applies automatically from your first pay run in April.
- For every $1,000 of gross wages, you'll now be contributing an extra $5 as an employer
- Staff contributing at the default 3% rate will also see their deductions increase to 3.5%
- Employees can apply to stay at 3% temporarily through myIR
- If any of your staff are on total remuneration packages, the higher KiwiSaver cost comes out of their package - make sure they're aware to avoid surprises in their pay
- The second step increase to 4% is planned for 1 April 2028.
KiwiSaver Now Mandatory for 16 & 17 Year Olds
From 1 April 2026, if you employ someone aged 16 or 17 who is enrolled in KiwiSaver, you must start making employer contributions for them at 3.5%. Previously, employer contributions were only mandatory for employees aged 18 and over.
Auto-enrolment still begins at age 18 - younger staff won't be automatically enrolled, but if they've already joined voluntarily, your contribution obligation now kicks in.
Government Contribution has Been Halved
Since 1 July 2025, the government's annual top-up (sometimes called the "member tax credit") dropped from a maximum of $521.43 per year to $260.72. The government now contributes 25 cents for every dollar an employee contributes, instead of 50 cents. This doesn't affect your payroll, but your employees may notice their KiwiSaver statements look different. Those earning over $180,000 per year no longer receive the government contribution at all.
Need a Hand Getting Ready?
Whether it's your end of year accounts, checking your Investment Boost eligibility, or getting your payroll sorted for April, we're here to help. Get in touch before 31 March and let's make sure FY27 starts on the right foot.