The fiscal year for individuals and businesses runs from 1 April to March 31 every year. When the end of the standard tax year begins to approach, you may recognise a need to file your tax return at a later date than is normally allowed.

There is often a lot of confusion and complexity when it comes to tax returns. While it may be possible to make a late tax submission, it’s important that you familarisie yourself with both managing your tax reporting process and managing the situation through late lodgments. 

How to manage a late tax return

1. Recognise your tax obligations

The Inland Revenue Department (IRD) outlines the tax rates for businesses and organisations. This rate applies to all income, however individual sole traders and the self-employed are taxed at the same rate as individuals. 

For the majority of companies, the tax rate is 28 per cent. This percentage is applied to income generated during the tax financial year.

2. Know your tax filing date

The standard date for businesses to file their taxes is 7 July each year. There are certain industries which, based on the inherent fluctuations and cycles of the industry such as agriculture, have different filing dates and deadlines. 

Fortunately, the IRD maintains a full calendar of dates for different industries, businesses and organisations on their website.

3. Contact the IRD if you anticipate a late filing

If you are concerned or identify that your business may need to submit their taxes later than the prescribed filing date, the first thing you need to do is contact the IRD itself. 

When you do, they can begin making the necessary arrangements as soon as possible. If you fail to contact them, they may contact you only once the recovery process is already in full swing.

4. Contact a registered tax agent

Once you have established contact with the IRD, you should contact a registered, professional tax agent. Why? They are able to provide time extensions for clients due to their inability to service all clients at the exact same time.

Generally, they may have up to 12 months to file your business’s return. Without registration with a recognised agent, you will be expected to meet the 7 July deadline. 

What happens next with a late tax return?

Tax agent support

With an experienced tax agent by your side, you’ll be in a stronger position to gather the requisite information and assemble a case for the IRD outlining the validity behind the reason for your late submission. 

Your tax agent will help guide you through this process and ensure all of your tax-related ducks are in order.

Balance date change

In some instances, businesses can have their balance date changed. This then means that their filing date will be delayed accordingly. 

To apply for such dispensation, you and your tax agent will need to provide information related to you, your business, the proposed balance date with a justification, as well as various information such as projected cash flow, stock levels, aggregate customer data, and other industry information. 

The IRD will review your application and consider approving or denying the request based on various criteria weighted against the circumstances of your business. In most cases, the IRD is likely to decide against an extension or delay as they require very persuasive and strong reasoning to do so. 

Are there penalties for a late tax submission?

The IRD does issue penalties, in the form of fines, to businesses who do not pay tax by the due date or file their tax return. While you will be notified by Inland Revenue prior to being issued the penalty, you are more likely to be successful in your application for date extensions if you proactively contact the IRD first.

Remember, that records of past good behaviour on the part of businesses and proactive disclosures by a business can result in the IRD reducing the penalties by anything from 50% to 100%. 

Should you pay for financial expertise?

As a small or medium sized business owner, you’re likely faced with many different challenges and competing priorities in the day to day operation of your business.

Wasting time, energy and effort avoiding or rushing to tax deadlines can put a strain on your organisation. Seeking expert financial advice, whether in the form of a tax agent, or trade finance or invoice from a lender such as ScotPac, is well worth the investment. 

Tax can be complicated and maintaining cash flow whilst meeting tax requirements can be tricky. The better prepared you are and the better you leverage the expertise of others, the stronger a financial position you’ll be in. 

Of course, despite deadline and balance dates it’s never too late to begin preparing your next tax return. Whether you’ve missed the 7 July cutoff or haven’t filed a tax return in a number of years, make sure to seek professional advice sooner rather than later. 

Contact ScotPac for working capital solutions

If you’re facing an unexpected or larger-than-anticipated tax bill, make sure you contact our team of lending specialists at ScotPac New Zealand today. 

Our team is big enough to trust but small enough to care and our breadth and depth of financial solutions gives us the ability to customise our proposals for the needs of your business.

Whether you’re looking for trade finance to boost growth or need access to working capital fast through invoice finance, ScotPac is the largest non-bank lender throughout New Zealand and Australia.

Contact us today to find out more.