New Zealand
Financial Year – 1 April – 31 March
Currency – New Zealand dollar (NZD)
Corporate Tax Summary
Residence – Companies resident in New Zealand pay tax on their worldwide income. Persons and companies not resident in New Zealand are subject only to tax on any income they derive in New Zealand. For tax purposes a company is resident in New Zealand if any of the following apply:
- It is incorporated in New Zealand
- It has its head office in New Zealand
- It has its centre of management in New Zealand
- The control of the company by its directors is exercised in New Zealand
Basis of Taxation – New Zealand resident companies pay tax on global income, regardless of source but generally receive a credit for foreign taxes paid on any non-NZ income. If a non-NZ resident company earns income in New Zealand, it will be subject to tax only on the NZ-sourced income. New Zealand has no Capital Gains Tax. It is possible that a Double Tax Agreement may apply, as NZ has concluded may such agreements with trading partners.
| Reference | ||
| Corporate Income Tax Rate (%) | 28% | |
| Branch Tax Rate (%) | 28% | |
| Withholding Tax Rate: | ||
| Dividends – Franked | Up to 5% depending on the top marginal tax rate of the recipient | New Zealand also operates a full dividend imputation system. This means that tax paid by resident companies creates imputation credits. These credits can be attached to dividends paid by that company. Where a dividend is fully imputed, it will be tax-free where the dividend is paid to a New Zealand resident. This imputation tax credit may not be available to offset any domestic tax in the country of residence. |
| Dividends – Unfranked | up to 33% – depending on the top marginal tax rate of the recipient | |
| Dividends – Conduit Foreign Income | 30% of the gross amount of dividend payments, except for a number of special types of dividends including fully imputed dividends | |
| Interest | 15% | |
| Royalties from Intellectual Property | 15% | |
| Fund Payments from Managed Investment Trusts | 28% if it has PIE status | |
| Branch Remittance Tax | ||
| Net Operating Losses (Years) | ||
| Carry Back | Generally not, but special COVID 19 provisions permit some carry back | |
| Carry Forward | Indefinitely subject to shareholder continuity |
Individual Tax Summary
Residence – Individuals are generally regarded as resident in New Zealand for income tax purposes if they have a permanent place of abode in New Zealand, or are present in New Zealand for more than 183 days within a 12-month period. The matter of tax residency is an important factor in seeking to do business in New Zealand and we recommend that advice be sought in this regard.
Basis of Taxation – For NZ residents, income tax is imposed on worldwide income. Non-resident individuals, on the other hand, are taxed only on income derived from New Zealand and their tax liability may be reduced by the provisions of an applicable double tax agreement.
Filing Status – Most individuals do not have to file an income tax return annually if their income is all taxed at source. Others are obliged to file an annual IR3 form including all assessable income.
The tax year ends on 31 March and all returns must be filed by 7 July, unless they are on a tax agency list or have otherwise arranged an extension of the time for filing. Such extensions are generally given until 31 March of the succeeding year.
Personal Income Tax Rates
| Taxable Income | Tax Payable – Residents | Tax Payable – Non Residents |
| Up to NZD 14,000 | 10.5% | 33% |
| NZD 14,000-48,000 | 17.5% | 33% |
| NZD 48,000-70,000 | 30% | 33% |
| Over NZD 70,000 | 33% | 33% |
The newly elected Labour government has indicated they are likely to increase the maximum marginal rate to 39% for income above NZD180,000.
Goods and Services Tax (GST)
| Rate | 15% |
| Taxable Transactions | GST is an indirect tax on most goods and services. Usually GST is charged at a flat rate of 15%. However, in some limited situations, for example, when goods are exported or services are supplied to a non-resident outside New Zealand or a business is sold as a going concern, GST is charged at the rate of 0%. Financial services and rental paid for private accommodation are two of the major exemptions from GST. |
| Registration | Although GST Registration is not mandatory until “supplies” exceed NZD 60,000 in any twelve month period (or if there are reasonable grounds for believing that supplies will exceed NZD 60,000 in the following twelve months), most companies will want to register for GST immediately because of the cost of financing the GST while not registered. Businesses may voluntarily register for GST before they are required to do so, and there may be different timing and factual situations where this is advantageous. |
| Filing and Payment | Businesses with annual turnover less than NZD 250,000 may, on application, file returns six-monthly, businesses with annual turnover between NZD 250,000 and NZD 24,000,000 must file two-monthly returns, and businesses with annual turnovers of more than NZD 24,000,000 must file monthly returns. |
Other Taxes Payable
| Tax | Reference |
| Payroll Tax | Employers deduct income tax on a pay as you earn (“PAYE”) basis from wage and salary payments to employees and pay the deductions to the Inland Revenue directly. This deduction is made on account of the employee and at the end of the tax year any necessary adjustments can be made. |
| Stamp Duty | None |
| Land Tax | None |
Fringe Benefit Tax – Employers who provide non-cash benefits to employees while they are at work must pay fringe benefit tax. This includes interest-free loans, company vehicles and discounted goods. The fringe benefit tax rate is 55% (annual filer) or 49.25% (quarterly filer) of the taxable value of the benefit, although an election may be available to pay fringe benefit tax at attributed rates of as low as 43%. This is a tax-deductible expense for employers.
Superannuation schemes that have been registered under the Superannuation Schemes Act 1989 are usually taxed at 30 – 33% on the income of the scheme. However, benefit payments to employees are exempt.
Last updated: 17.11.2020