If you’ve ever compared notes with a fellow business owner and wondered why they’re receiving a much larger tax refund than you, you’re not alone. It’s a common scenario we see every year: two businesses with similar revenue, but vastly different tax outcomes.
So, what’s the difference?
Proactive tax planning and advisory support.
Let’s break down what that actually means and how it could save your business thousands.
1. They Don’t Leave Tax to the Last Minute
Successful businesses treat tax like an ongoing part of strategy, not a year-end scramble. They review their numbers regularly, meet with their accountant quarterly (not just annually), and adjust their business structure and expenses with intention.
Waiting until the balance date to think about tax is like trying to win a rugby game in the last five minutes; it rarely works.
What they do instead:
- Forecast income and tax obligations early
- Track deductible expenses throughout the year
- Monitor cash flow for smart timing of purchases or investments
- Use accounting software to stay updated in real time
2. They Claim Every Eligible Deduction, Strategically
From vehicle use and home office costs to depreciation and professional services, bigger refunds often come down to claiming everything they’re legally entitled to.
It’s not just about spending more, it’s about spending smarter.
Common missed deductions we see:
- Provisional tax overpayments from the previous year
- Asset purchases that could have been depreciated or written off
- Business travel, meals, and client entertainment
- Software subscriptions, marketing costs, and training
A proactive advisor helps you identify deductions in real time, not just document what you remember at year-end.
3. They Maintain Clear Separation Between Personal and Business Finances
One of the most common pitfalls for small business owners is blending personal and business expenses. This can lead to missed deductions, disallowed claims, and complications during IRD reviews.
Businesses that receive higher refunds maintain:
- A separate business bank account and credit card
- Clear documentation for all business transactions
- Avoidance of using personal funds for business purchases (and vice versa) without proper accounting
Not only does this ensure cleaner records, but it also allows for more confident and accurate expense claims, particularly for entertainment, travel, and asset purchases.
4. They Leverage Timing to Their Advantage
Tax is not just about what you earn, it’s when you earn it and when you incur costs.
By planning ahead, smart businesses can:
- Prepay expenses before 31 March to bring deductions forward
- Apply income recognition to the next tax year when appropriate
- Plan asset purchases for optimal depreciation
Timing is a critical piece of the tax puzzle, but it only works if you plan ahead.
5. They Have an Accountant Who Advises, Not Just Files
This is often the biggest differentiator.
A basic tax preparer will file your return based on what you give them.
A proactive accountant will ask questions, identify gaps, and look for opportunities to improve the outcome.
- Run tax forecasts
- Build strategies tailored to your business
- Plan asset purchases, restructure entities, and review compliance risks
- Offer insights on where you’re losing money or missing opportunities
6. They Understand GST Adjustments and Opportunities
GST errors are a common source of both overpayment and underpayment. Businesses that receive better tax outcomes manage GST proactively by:
- Adjusting for private use of goods or services
- Applying GST correctly to mixed-use assets (e.g. vehicles, home office equipment)
- Reviewing bad debts and adjusting output tax where eligible
Businesses can also file voluntary disclosures with IRD for past GST corrections, which may help reduce penalties and secure refunds from earlier periods.
7. They Prepare for and Use Losses Strategically
Businesses that incur losses during tough years, such as during economic downturns or in their early stages, can carry those forward to offset future profits. But these losses must be tracked, preserved, and applied carefully.
High-performing businesses:
- Maintain continuity of shareholding to preserve tax losses
- Work with their advisor to apply prior year losses to reduce the current year tax
- Use loss offset elections (in group structures) where appropriate
Loss utilisation is a critical part of long-term tax strategy. It doesn’t just reduce tax liability, it can result in significant cash flow savings when refunds are triggered through loss carry-forwards or group offsets.
Bigger Refunds Come From Better Planning
The difference in tax outcomes is rarely accidental. It comes down to how deliberately a business approaches its financial decisions and whether tax is treated as a strategic lever rather than an afterthought.
When tax planning is integrated into the broader business strategy, it opens up opportunities to strengthen cash flow, improve compliance, and build long-term resilience. With the right advisor beside you, tax becomes less about reporting and more about foresight.
The content in this blog is intended to provide general insights and should not be regarded as professional advice. Each business situation is unique, and we recommend consulting with a professional for specific guidance. At Black Arrow Business Studio, we specialise in accounting and consulting services designed to support your business’s growth and success. Feel free to contact us for expert advice and customised solutions.
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