New Zealand Tax Rates
New Zealand individual income tax rates are 39% beginning 1 April 2010.
Taxable Income (NZ$) Rate of tax
$0 - $17,500 12.5%
$17,501 - $40,000 21%
$40,001 - $75,000 33%
$75,001 and over 39%
Income tax is payable by New Zealand residents on their worldwide income. Nonresident individuals pay tax on New Zealand-sourced income only. An individual is resident in New Zealand if personally present for more than 183 days in any 12-month period or if the individual has a 'permanent place of abode' in New Zealand.
Individuals arriving to live in New Zealand on or after 1 April 2006 may qualify for a temporary tax exemption as a transitional resident on foreign income. All foreign-sourced income will be exempt, except for employment income connected with employment performed while in New Zealand and income from services. The exemption applies to the first 48 months (four years) following arrival in New Zealand. To qualify, an individual cannot have been tax resident in New Zealand during the previous ten years.
Income tax is payable on gross income less allowable deductions. Gross income includes employment income, business income, rents, interest and dividends. Certain donations, rebates, low income rebate, family support tax credits and child care credits are available.
Employment income (salary/wages) has tax payments deducted from each salary/wage payment.
Self-employed individuals and those receiving income with no tax deducted at source pay provisional tax in three instalments based on their previous year's taxable income, with a final payment within 11 months after balance date (or 13 months after balance date where the taxpayer is enrolled with a tax practitioner).
KIWISAVER
KiwiSaver is a workplace savings scheme designed to help New Zealanders save for their retirement. It is primarily aimed at employees but all New Zealand residents under the age of 65 may join a KiwiSaver scheme. All eligible employees starting a new job after 1 July 2007 will be automatically enrolled in a KiwiSaver scheme and must opt out if they do not want to be part of the scheme.
Employees contribute either 2%, 4% or 8% of their gross earnings. From 1 April 2009, employers are required to contribute to their employee's Kiwisaver account at the minimum of 2% of the employee's gross salary or wage.
ACCIDENT COMPENSATION LEVIES
All employees must pay an ACC earner's levy to cover the cost of non-work related injuries. Earner's levy is charged at a flat rate which may vary for each year. For the 2008/9 income year, the rate of ACC earner's levy is $1.40 per $100 for any earnings up to $102,922. For the 2009/10 income year, the rate is $1.70 per $100 for any earnings up to $106,473. For employees, the levies are collected by the employers and paid to the Inland Revenue Department as part of the PAYE payments.
Employers are liable to pay a residual claims levy. Self-employed persons pay a selfemployed work levy and the earner levy. The residual claims levy rate is determined by the type of activity carried on by the self-employed person.
Capital gains - There is no capital gains tax in New Zealand. However, certain gains arising from the disposal of personal property that are related to a person's business and property bought with the intention of resale will be taxable. Gains on the sale and transfer of land may be taxable in certain circumstances.
Deductions and allowances - Wage/salary earners are generally not permitted to claim deductions against employment income. Some rebates of tax may be claimed back (charitable gifts and childcare). For members of partnerships and sole traders not registered as companies (i.e. the selfemployed) the same deductions apply as for corporate tax, except that fringe benefit tax does not apply to benefits provided to the proprietor and the costs of providing the benefits are unlikely to be deductible. The accident insurance employee premium is tax deductible.
Other taxes on individuals:
Capital acquisitions tax - A gift duty is levied on the donor on gifted assets worth more than NZD 27,000 in a 12 month period and a gift statement must be filed once the value of gifted assets in any 12-month period reaches NZD 12,000. Parliament is currently reviewing whether or not to repeal the gift duty.
Capital duty - No
Stamp duty - No
Real property tax - No
Inheritance/estate tax - No
Net wealth/net worth tax - No
New Zealand Tax year - New Zealand tax year runs from 1 April to 31 March
New Zealand Corporate Taxation
New Zealand corporate tax rate is a flat 30%, which also applies to branches. Corporate tax rate is decreasing to 28% as from 2012 income year.
Income tax is payable by New Zealand resident companies on non-exempt income derived from all sources. Non-resident companies are required to pay tax on income sourced in New Zealand.
Resident companies are companies that are incorporated in New Zealand, or have their head office or centre of management in New Zealand, or control of the company is exercised by the directors in New Zealand.
The tax year usually runs from 1 April to 31 March, although different balance dates are available in certain circumstances. Tax is payable in three instalments (referred to as 'provisional tax') if a company's residual income tax (total tax less available credits) exceeds $2,500 per annum.
Provisional tax is payable in three instalments on 28 August, 15 January and 7 May for 31 March balance dates. For taxpayers with a non-standard balance date, provisional tax is generally payable on the 28th day of the fifth, ninth and 13th months of the income year following the month of balance date. Exceptions to this arise for those on July balance dates due to public holidays and where the taxpayer has commenced business during the income year. Income tax returns must be filed with the Inland Revenue Department within four months of balance date or by 31 March of the following year where the company is enrolled with a tax practitioner that has an extension of time arrangement.
PARTNERSHIPS
General partnerships are not separate legal entities. This means that they have no existence separate from the individual partners that comprise them. Individual partners must return their share of the partnership income in their individual income tax returns. Limited partnership structures were introduced in 2008. Limited partnerships have both separate legal status and flow through tax treatment.
TRUST
Taxation of trusts is based on the tax residence of the settlor. In general terms, distributions to beneficiaries of resident trusts are taxed at beneficiaries' marginal tax rates, provided that distributions are made in the income year or within six months after the end of the income year. In contrast, distributions made to beneficiaries of foreign trusts are classified as "taxable distributions", which will be taxed at beneficiaries' marginal tax rates regardless of the distribution date. Trustee income is taxed at the flat rate of 33%. The trust regime does not apply to unit trusts. Unit trusts are deemed to be companies and are taxed accordingly.
CAPITAL GAINS TAX
There is no comprehensive capital gains tax in New Zealand. However, where a capital asset was bought for the clear purpose of resale, any profits or gains will be regarded as ordinary income.
BRANCH PROFITS TAX
There is no branch profits tax in New Zealand. New Zealand branches of foreign companies are taxed on New Zealand-sourced income only at the corporate tax rate.
FRINGE BENEFITS TAX (FBT)
FBT is payable by employers on benefits provided to employees. The rate is up to 61% of the taxable value of the benefit provided, effective from 1 April 2009. The FBT year runs from 1 April to 31 March. FBT is payable and returns must generally be filed by the 20th day of the month following the quarters ending 30 June, 30 September, 31 December and 31 March.
KIWISAVER
KiwiSaver is a workplace savings scheme designed to help New Zealanders save for their retirement. It is primarily aimed at employees but all New Zealand residents under the age of 65 may join a KiwiSaver scheme. All eligible employees starting a new job after 1 July 2007 will be automatically enrolled in a KiwiSaver scheme and must opt out if they do not want to be part of the scheme.
Employees contribute either 2%, 4% or 8% of their gross earnings. From 1 April 2009, employers are required to contribute to their employee's Kiwisaver account at the minimum of 2% of the employee's gross salary or wage.
OTHER TAXES
Gift duty may apply to transfers of property for less than market value, unless a specific gift duty exemption applies. Other taxes include customs and excise duty.
DETERMINATION OF TAXABLE INCOME
Taxable income is determined by ascertaining gross income less all allowable deductions. Generally, to be deductible, expenses and losses must relate directly to the derivation of gross income. Certain expenditure is specifically non-deductible and special rules apply in respect of the categories listed below.
DEPRECIATION
Depreciation rates are set by the Inland Revenue. Application can be made for a special rate.
Straight-line or diminishing-value depreciation methods can be used for each particular asset. Assets acquired on or after 19 May 2005 and which cost less than $500 can be expensed immediately.
RESEARCH AND DEVELOPMENT (R&D) TAX DEDUCTIONS
For the 2008/2009 tax year only, R&D tax credits are available at a rate of 15% subject to the expenditure meeting certain specified criteria.
Taxpayers are allowed to allocate certain R&D tax deductions to tax years arising after the year in which the related expenditure is incurred. This means that deductions will not be lost if there is a shareholding change between when the expenditure is incurred and when the deduction is recognised by the taxpayer.
STOCK/INVENTORY
Trading stock is generally valued in accordance with accounting principles. Livestock is valued under specified schemes. Shares must be valued at cost.
CAPITAL GAINS AND LOSSES
Capital gains and losses on disposal of assets are neither assessable nor deductible. The disposal of depreciable assets will involve tax adjustments where there is a loss on sale or depreciation recovered.
DIVIDENDS
Generally, dividends received by resident companies from other resident companies are taxable. Dividends will either have withholding tax at 33% or imputation credits attached up to the corporate tax rate of 30%.
While dividends received by resident companies from non-resident companies are exempt, there is a requirement (by the resident company) to deduct a foreign dividend withholding payment (FDWP). Where the shareholder has income interest in the non-resident company of 10% or more, the FDWP liability is reduced to the extent that foreign income tax has been paid on the income of the non-resident company.
Credit for overseas tax paid by a company is limited to 30% from 1 April 2008. For income years beginning on or after 1 July 2009, the FDWP rules have been repealed so most foreign dividends received by NZ companies will now be wholly exempt.
Tax on dividends received from entities with Portfolio Investor Entity (PIE) status are capped at 30% and are exempt income to the recipient if tax has been deducted at the correct rate. (Refer to comments below upon the rules for transitional residents which may also apply.)
INTEREST DEDUCTIONS
No interest deduction is allowed unless it is payable in deriving gross income or necessarily payable in carrying on a business for the purpose of deriving taxpayer's gross income. Companies (except for qualifying companies or non-resident companies (in limited circumstances)) are entitled to automatic interest deductions.
Thin capitalisation rules limit the interest deduction available to New Zealand entities controlled by a single non-resident. A deduction will be denied where (1) the New Zealand entity's debt/assets ratio exceeds the safe harbour percentage of 75% and (2) New Zealand group debt percentage exceeds 110% of the worldwide group debt percentage. Where these thresholds are breached, the interest deduction is limited to that which would have been available had total debt funding not exceeded 75%.
For income years beginning on or after 1 July 2009 there will be interest allocation rules applicable to NZ residents investing in controlled foreign companies.
LOSSES
Broadly, a company can carry forward net losses indefinitely provided a continuity of ownership (49% of minimum voting, dividend and capital rights) is maintained from the beginning of the year of the net loss, to the end of the year of carry forward.
INVESTMENT ALLOWANCES
There are no investment allowances in New Zealand.
FOREIGN SOURCED INCOME
CONTROLLED FOREIGN COMPANIES
New Zealand operates a controlled foreign company (CFC) regime to ensure that foreign-sourced income is included in the New Zealand resident's tax return, unless the CFC is resident in one of eight "grey list" countries comprising Australia, Canada, Germany, Japan, Norway, the United Kingdom, the United States and Spain.
For income years beginning on or after 1 July 2009, the grey list and conduit exemptions have been repealed. Controlled foreign companies with less than 5% attributable income (eg passive income such as rent, royalties, dividends and interest) or Controlled foreign companies that are Australian resident and subject to Australian Tax are not required to calculate CFC attributed income.
A foreign company will be regarded as a controlled foreign company where five or fewer New Zealand residents hold at least a 50% interest or have 'de facto' control.
FOREIGN INVESTMENT FUNDS
The Foreign Investment Fund regime complements the CFC regime and seeks to tax New Zealand residents on an accrual basis where the resident holds a noncontrolling interest in a foreign entity.
FOREIGN TAX RELIEF
Credits are available for the lesser of the foreign tax paid or the New Zealand tax payable on the foreign income.
CORPORATE GROUPS
Where there is a 66% (or greater) common ownership, revenue losses can be transferred by New Zealand resident companies by way of subvention payments (where a profit company makes a payment to a loss company up to the amount of that loss) or direct offset. Dividends between companies with 100% common ownership (a wholly owned group) can be exempt.
Where there is 100% common ownership, consolidated tax returns can be lodged, and revenue and capital items transferred within the group.
QUALIFYING COMPANY
A Qualifying Company regime exists whereby small closely held companies (five or fewer shareholders) which meet certain criteria may pass losses directly to shareholders. Capital dividends may also be paid effectively tax-free.
RELATED PARTY TRANSACTIONS
New Zealand has comprehensive transfer pricing and thin capitalisation rules to counter arrangements that seek to reduce the taxable income of New Zealand entities by shifting profits to related entities not resident in New Zealand.
WITHHOLDING TAXES
Withholding tax must be deducted from dividends to the extent that they are not imputed. The maximum rate is 33%. Withholding tax is also deducted from interest with limited exemptions.
Dividends, interest and royalties payments made to non-residents are subject to non-resident withholding tax (NRWT). The NRWT rate depends on whether the non-resident is a taxpayer of a country which has a double tax agreement with New Zealand. Refer to Section K below. Non-resident withholding tax can effectively be eliminated in relation to dividends that are fully imputed for taxpayers on a 15% NRWT rate. Fully imputed non-portfolio dividends (interests of more than 10%) will have a zero rate of NRWT.
Withholding tax is also deductible from payments made to non-resident contractors with exemptions available in certain circumstances.
Where interest is paid to non-associated parties, a 2% levy can apply on election instead of non-resident withholding tax (NRWT).
new zealand gst (Goods and Services Tax)
The standard rate of Goods and Services Tax (GST) in New Zealand is 15%.
Exports, international passenger transport and certain international services are zero-rated. Certain financial and insurance services, residential rents and the sale of a building used for residential letting for at least 5 years before sale are exempt from GST.
Goods and Services Tax (GST) is a broad-based tax applied to the total value of goods and services, whether intermediate or final, including imported goods and, in some cases, imported services.
GST is added to the price of taxable goods and services at a rate of 15%. Taxable goods and services are:
- Goods include all types of personal and real property, except money.
- Services covers everything other than goods or money, eg TV repairs, doctor's services and gardening services.
- Taxable goods and services are part of the business or taxable activity. This means you supply or receive taxable goods and services for a consideration (money, compensation, reward) but not necessarily for profit. We refer to taxable goods and services as "taxable supplies".
Taxable goods and services don't include:
- goods and services supplied by businesses that aren't registered for GST, and
- exempt supplies such as:
. letting or renting a dwelling for use as a private home
. interest you receive
. donated goods and services sold by a non-profit body, and
. certain financial services.
GST Registration - Registration is compulsory for businesses whose annual turnover exceeds NZD 60,000.
GST Filing and payment - GST returns must be filed monthly, bimonthly or every 6 months by each registered person, depending on the annual value of the supplies made. GST returns are generally due for filing on the 28th of the month following the end of the taxable period.
More about New Zealand Tax Rates
39%
30%
15%
New Zealand
Income Tax Rate
New Zealand
Corporate Tax Rate
New Zealand
Sales Tax / GST Rate
Last Update: Nov 2010
(This page may show previous year's tax rates. Always check last update time)
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