Tax strategy playbooks / software company founder
$100k–$500k/yr · 6 strategies
Early-stage software companies have access to some of the most powerful NZ tax tools: the R&D tax credit, R&D loss cash-out for pre-revenue companies, and — once profitable — the shareholder salary structure. Each one requires careful setup, but the numbers can be significant.
General information, not tax advice. Worked examples use fictional personas; figures are illustrative.
Nikau's Auckland software company put serious money into development, part of it genuinely experimental — new ground, not routine features.
His accountant separated core R&D (systematic work resolving real scientific or technological uncertainty) from business-as-usual development, and sought general approval before the deadline.
The credit is 15% of eligible spend, but only genuine core R&D counts. Claiming BAU work risks clawback, so the split mattered as much as the size.
Illustrative example — not a real customer. Figures are based on your numbers and rounded.
Activity must meet the core-R&D definition — seeking new knowledge, via a systematic approach, to resolve scientific or technological uncertainty. Business-as-usual software development does not qualify.
PayWren finds this automatically: connect your invoices and expenses and the tax engine flags this strategy when it applies to your numbers, on the Solo plan.
Nikau's company was pre-revenue and loss-making, with at least 20% of its wage bill going into R&D.
It registered with IRD before filing and cashed out losses against its eligible R&D spend, instead of carrying them forward.
That returned cash at 28 cents per dollar of eligible spend, traded against the future deduction those losses would have been.
Illustrative example — not a real customer. Figures are based on your numbers and rounded.
Only NZ-resident unlisted companies qualify (sole traders, partnerships and look-through companies are excluded). The company must be in a tax-loss position and spend at least 20% of total labour expenditure on R&D.
PayWren finds this automatically: connect your invoices and expenses and the tax engine flags this strategy when it applies to your numbers, on the Solo plan.
Nikau's company cleared well past the $180,000 top personal tax band, and he had to decide how much to take as salary versus leave in the company.
He set his salary at a commercially realistic market rate for the work he actually performs, and documented the genuine business reason (funding next year's hires) for the profit that stayed in the company.
The arrangement holds up because the salary reflects the role and the retained profit serves the business, not just tax deferral. An artificially low salary is the exact pattern IRD attacks under the anti-avoidance rule — Penny & Hooper turned on it.
Illustrative example — not a real customer. Figures are based on your numbers and rounded.
Salary must be a commercially realistic reward for the work actually performed; retaining profit must serve a genuine business purpose (not only tax deferral); any income split to an associate requires genuine share ownership.
PayWren finds this automatically: connect your invoices and expenses and the tax engine flags this strategy when it applies to your numbers, on the Solo plan.
Priya's first good year consulting, invoicing around $30k, left her owing more than $5,000 of residual income tax — which made her a provisional taxpayer the next year.
She paid the three standard-uplift instalments on time rather than gambling on her own estimates.
That kept her in the safe harbour, so no use-of-money interest on the year-end square-up. The instalments were never a shock because she'd set money aside monthly.
Illustrative example — not a real customer. Figures are based on your numbers and rounded.
PayWren finds this automatically: connect your invoices and expenses and the tax engine flags this strategy when it applies to your numbers, on the Solo plan.
Ruth builds Shopify stores from Dunedin for clients in Australia and the US, and had been adding 15% GST to every invoice.
She confirmed each client was a non-resident who was outside New Zealand while she did the work, with nobody in NZ receiving the service, then zero-rated those invoices.
The GST line came off her export invoices. The checks are the point: get residency wrong and you still owe the GST, plus interest.
Illustrative example — not a real customer. Figures are based on your numbers and rounded.
Services are zero-rated only if the recipient is a non-resident who is outside New Zealand at the time the service is performed. Services contracted by a non-resident but received by a third party in NZ are not zero-rated.
PayWren finds this automatically: connect your invoices and expenses and the tax engine flags this strategy when it applies to your numbers, on the Solo plan.
Tama wires new builds around Hamilton and bought new test gear after 22 May 2025, each item over $1,000 excl-GST.
His accountant applied the Investment Boost, an extra 20% deduction in year one on top of normal depreciation, and confirmed each asset was new and qualified before filing.
That brought a fifth of the asset cost forward as a year-one deduction instead of waiting on the depreciation schedule.
Illustrative example — not a real customer. Figures are based on your numbers and rounded.
PayWren finds this automatically: connect your invoices and expenses and the tax engine flags this strategy when it applies to your numbers, on the Solo plan.
Connect your invoices and expenses and the tax engine flags which of these strategies apply to your specific numbers, no manual review required.
All playbooks: tax-strategies