Begin with final, reconciled annual accounts
Company tax workpapers should start from the final accounting profit before tax. Confirm that year-end journals are posted and the financial statements agree to the final trial balance. Inland Revenue lists the tax rate for most companies as 28%, but the taxable income calculation is not simply accounting profit multiplied by that rate. Accounting and tax treatments can differ, and prior-year losses, credits and payments also affect the final position.
Save a copy of the final trial balance and link every tax adjustment to a ledger account or supporting schedule. Avoid entering one unexplained “tax adjustment” total. The reviewer should be able to trace the movement from accounting profit to taxable income.
Prepare permanent and current tax files
The permanent file can contain incorporation details, ownership, balance date, tax registrations, shareholder information, loan agreements, elections and recurring tax positions. The current file should contain the annual accounts, trial balance, general ledger, tax reconciliation, depreciation schedule, imputation information, provisional tax, withholding tax and specific transaction reviews.
Update the permanent file for changes in shareholders, business activities, group relationships, financing, property, overseas operations or elections. A stale permanent file can cause the preparer to apply outdated assumptions.
Identify accounting-to-tax adjustments
Review depreciation, entertainment, penalties, private expenses, provisions, bad debts, legal fees, donations, shareholder remuneration, interest, asset disposals and capital costs. Confirm whether income or expenses have different timing for tax. Track non-deductible items separately in the ledger where practical, but verify the treatment annually.
For material or unusual transactions, prepare a fact summary and attach contracts or invoices. The remote preparer should not make unsupported technical conclusions; the New Zealand adviser should determine the final tax position and document the basis.
Reconcile tax payments, losses and imputation balances
Reconcile provisional tax and other income tax payments to myIR and the ledger. Confirm the tax type and period. Roll forward tax losses and credits using filed returns and Inland Revenue records. For companies paying dividends, maintain the relevant imputation credit account information and obtain specialist review where required.
Calculate current tax only after the taxable income and available credits are confirmed. Reconcile the tax expense, tax payable and payments. Differences between accounting tax and tax return balances should be explained rather than cleared automatically.
Complete a reviewer-ready tax pack
Provide the tax reconciliation, supporting schedules, official account balances, proposed return data and a query list. Highlight changes from the prior year and any deadline-sensitive matters. Confirm who is responsible for advice, client approval, filing and payment instructions.
After filing, save the return, assessment or confirmation, final tax calculation and payment schedule. Post final tax journals and update provisional tax forecasts for the next year. A clean tax file should support both the current return and the next year’s planning.
Before relying on the completed file, compare the current-year output with prior periods, retain the official reports and source records used, and record every unresolved matter for the New Zealand accountant or tax adviser. This final review creates a clear audit trail, supports consistent treatment and makes the next bookkeeping, GST or annual accounts cycle faster and easier to review.
Use a final completion memorandum
A concise completion memorandum helps the senior reviewer understand the file without reopening every schedule. It should list the reporting period, entity details, important transactions, unusual tax treatments, unresolved questions, elections or assumptions, and the location of key evidence. Record who prepared and reviewed each major workpaper and confirm that approved adjustments were posted to the final ledger. This creates a reliable audit trail and makes the next annual accounts and income tax cycle easier to plan.