The Companies Office recorded 3,299 removals in July 2026 and 9,654 in the June quarter. Most of those are not dramatic failures — they are companies that stopped being used and were struck off or wound up.
A rule change announced in Budget 2026 makes that worth attention.
What changes
New rules will apply six months after a company has been liquidated or otherwise removed from the Companies Register, treating outstanding loans it previously made to shareholders as income.
The phrase that matters is “or otherwise removed”. This is not limited to deliberate liquidation. Companies are removed for administrative reasons constantly — principally failing to file an annual return.
Inland Revenue expects the measure to generate around $146 million over the forecast period.
The scenario to check
A great many New Zealand business owners have a dormant company somewhere — a former trading entity, a structure set up for a venture that did not proceed, a property company from a transaction that fell over.
If that company has an overdrawn shareholder current account — meaning the shareholder owes it money — and the company is allowed to lapse from the register, the new rules can bring that balance into income.
The owner may not remember the balance exists. It appears on a balance sheet that has not been looked at in years.
Why dormant companies accumulate
Incorporating in New Zealand takes about ten minutes and costs very little, which is a genuine advantage and produces a lot of entities. In July 2026 alone there were 5,517 new incorporations.
Many are never used, or used briefly. Winding one up properly requires a short-form removal process with declarations about the company’s position, or a solvent liquidation. Letting it lapse by not filing is easier, which is why so many go that way.
What to do
If you have companies you are no longer using:
- List them. Search the Companies Office register under your own name as a director. Most people find more than they expected.
- Get the last balance sheet for each, and look specifically at the shareholder current account.
- Where an account is overdrawn, decide how to deal with it — repay, declare a dividend, or take it as salary. Each has different consequences and the right answer depends on your marginal rate and the company’s imputation credits.
- Then remove the company properly rather than letting it be struck off, which also avoids the other consequences of removal.
Doing this deliberately, while you control the timing, is considerably better than having it happen to you.
The other reasons removal matters
Beyond the tax position, a company being struck off has consequences people do not anticipate:
- Assets vest in the Crown. Property, bank balances and other assets held by a removed company do not simply revert to shareholders. Recovering them requires restoring the company to the register.
- Contracts and leases in the company’s name are affected.
- It cannot sue or be sued while removed, which matters if there is a claim to pursue or defend.
- Restoration is possible but not free, and it complicates whatever you were trying to do.
The annual return
The obligation that causes most administrative removals. It is due each year in the month of incorporation, it is not a financial return, and it takes a few minutes.
It confirms directors, shareholders, registered office and address for service. Companies are removed for missing it, and the notice process gives opportunity to respond — but only if the address for service is current, which for a dormant company frequently is not.
Keeping a company alive that you might use
If you want to retain a shell for future use, the cost is the annual return and keeping the register current. That is modest, and it preserves the name and the entity.
Weigh that against the compliance obligations and, now, the shareholder loan position. A dormant company with a clean balance sheet is cheap to keep; one with an overdrawn account is a liability waiting for a trigger.
The Companies Office publishes removal and restoration processes and the free searchable register at companiesoffice.govt.nz. Inland Revenue publishes guidance on shareholder remuneration and distributions.
The measure described was announced in Budget 2026 and remains subject to legislation. Confirm the current position with Inland Revenue or your accountant. General information only, not tax advice.
