If you’re planning to cease trading at 31 March 2026, there are several important tax and administrative steps that must be completed before your company can be formally wound up and removed from the register.
Closing a company isn’t as simple as stopping trading. Both Inland Revenue and the Companies Office expect all obligations to be fully resolved before a company can be removed.
Here’s what you need to consider.
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1. Retained Earnings Must Be Cleared
If your company has retained earnings at balance date, those profits cannot remain in the company if you intend to cease.
Retained earnings must be formally dealt with, which typically means:
· Declaring a dividend to shareholders
It’s important to understand:
· A dividend creates taxable income in the hands of shareholders
· Company imputation credits can be attached to reduce the tax payable
· The company must still meet the solvency test at the time the dividend is declared
Even if cashflow is tight, retained earnings still need to be cleared. Failing to address this can delay or prevent your company from being successfully wound up.
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2. Final GST Return Obligations
Your final GST return must include:
· All income and expenses up to 31 March 2026
· Any previously unreturned GST adjustments
· GST adjustments for assets retained by shareholders
· Any private use adjustments
If business assets are distributed to shareholders on wind-up, this is treated as a taxable supply for GST purposes, and output tax must be returned on market value.
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3. All IRD Obligations Must Be Up to Date
Before a company can be removed from the register:
· All GST returns must be filed and paid
· PAYE (if applicable) must be fully paid
· Income tax must be filed, assessed, and paid
· Any outstanding tax debt must be cleared (including Small Business Cashflow Loans)
Outstanding IRD obligations will prevent the company from being removed from the register and can create ongoing issues for directors.
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4. Final Administrative Steps
Once all tax matters are resolved:
· Close company bank accounts (after all transactions are complete)
· Cancel registrations (GST, PAYE, FBT, if applicable)
· Ensure financial records are retained for at least 7 years
Only once everything is complete can the formal process of removing your company from the register begin.
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Plan Before 31 March
If you’re intending to cease at 31 March 2026, now is the time to plan.
Decisions around dividends, retained earnings, and GST need to be carefully mapped out. Addressing these before balance date ensures a clean, compliant exit and avoids unnecessary delays.
If you’re considering winding up your company this financial year, please contact us as soon as possible so we can guide you through the process.
