New Zealand Tax Facts

Tax affects everyone – whether you are a passive investor or a business starting up, emerging, established, expanding or mature. Our tax specialists have the knowledge and experience to provide you with practical, tailored solutions fit for purpose wherever you are in your business lifecycle.

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Tax facts

Income Tax Rates

Individuals

Income

Rate
0 - 14,000 10.5%
14,001 - 48,000 17.5%
48,001 - 70,000 30%
Over 70,000 33%

 

Companies

  Rate
Companies (including branches or permanent establishments of non-resident companies & unit trusts)​ 28%

 

Trusts

 

Rate

Trustees 33%
Beneficiary income (excluding minor beneficiaries) Individual rates (see above)
Minor beneficiaries (under age 16) with beneficiary income over $1,000 per trust 33%
Distributions from non-complying trusts 45%

 

Flow-through entities

Limited partnerships (LP) & look-through companies (LTC)) >Partner’s or owner’s rates (see above
  Rate
Employer Superannuation Contribution Tax (ESCT)

ESCT is deductible from employer contributions to superannuation schemes, including employer contributions to KiwiSaver.

 

Income plus Superannuation Contributions

Rate

0 - 16,800 10.5%
16,801 - 57,600

17.5%

57,601 - 84,000 30%
Over 84,000 33%
KiwiSaver Contributions
  Rate
Employee contribution 3, 4, 6, 8 or 10%
Employer contribution 3%

Member tax credit

50c for each $1 contributed by a member, to a maximum of $521.43

Goods & Services Tax (GST)

GST is charged at the rate of 15% on all taxable supplies made in New Zealand. To find the GST component of a GST inclusive amount, multiply by 3, then divide by 23. Non-resident businesses can be refunded GST paid on New Zealand purchases, in some cases.

Student Loans

The repayment threshold has increased to $20,000, with the repayment rate at 12%. Repayment holidays are one year in length for borrowers who go overseas and apply for one. Losses cannot be used against income to reduce a liability for student loan repayments.

Fringe Benefit Tax (FBT) Rates

Quarters 1 to 3

Quarter 4

49.25% (single rate) 49.25% (single rate) or the alternate rate calculation (see below)
43% (alternate rate)

alternate rate calculation (see below)

 The alternate rate calculation applies the following rates.

 

Income plus Fringe Benefits

Rate

0 - 12,530 11.73%
12,531 - 40,580 21.21%
40,581 - 55,980 42.86%
Over 55,980 49.25%
Depreciation

Straight line or diminishing value can be applied on an asset by asset basis. Depreciation rates vary depending on estimated useful life. Assets costing $500 or less (subject to certain criteria) are deductible in the year acquired. The relevant thresholds for immediate deduction are:

Purchase Date

Deductibility Threshold

19 May 2005 to 16 March 2020 $500
17 March 2020 to 16 March 2021 $5,000
17 March 2021 and after $1,000

Buildings

Residential buildings are not depreciable. Commercial and industrial buildings are depreciable from April 2020.

Fit-Outs

Commercial fit-outs are depreciable. Residential fit-outs are nondepreciable, but chattels can be depreciated.

Research & Development Tax Credit

A tax credit of 15% is available on specified research and development spending from 2019/20 which is refundable in some circumstances.

ACC Rates

The earners’ account levy is $1.39 per $100 of earnings (GST inclusive) for the 2020/21 income year and the minimum and maximum liable earnings are as follows:

 

 

Minimum

Maximum

Employees $1 $130,911
Self-employed people $36,816 $130,911
Donations

Companies

Allowed a deduction for approved charitable donations up to their taxable income.

Individuals

Cash refund for one-third of donations of $5 or more to approved charitable organisations (provided the value of gifts made do not exceed their taxable income).

Motor Vehicles Kilometre Rate

Available options are:

  • The Inland Revenue kilometre rate for motor vehicles
  • Other published kilometre rates (e.g. AA rates)
  • Actual costs

Latest Inland Revenue kilometre rates (per kilometre) are:

Vehicle Type

First 14,000 kms

After 14,000 kms

Petrol or diesel 76 cents 26 cents
Petrol hybrid 76 cents 18 cents
Electric 76 cents 9 cents
Provisional & Terminal Tax Payment Dates

The number of times provisional tax is payable depends on the option used to calculate provisional tax and how many times GST (if registered) is paid. Examples of payment dates for the most common balance dates are below. If the due date is not a working day, then it moves to the next working day. Terminal tax dates shown apply to taxpayers linked to a tax agent.

 

31 March

30 June

31 Dec

  2020 2021 2020 2021 2020 2021
1st instalment 28 Aug 2019 28 Aug 2020 28 Nov 2019 28 Nov 2020 28 May 2020 28 May 2021
2nd instalment 15 Jan 2020 15 Jan 2021 28 Mar 2020 28 Mar 2021 28 Sep 2020 28 Sep 2021
3rd instalment 7 May 2020 7 May 2021 28 Jul 2020 28 Jul 2021 28 Jan 2021 28 Jan 2022
Terminal tax 7 Apr 2021 7 Apr 2022 7 Apr 2021 7 Apr 2022 15 Jan 2022 15 Jan 2023
Calculation of Provisional Tax

Taxpayer & Provisional Tax Year

Year of RIT Used

Standard Uplift

2020 2018 110% of RIT
2019 105% of RIT
2021 2019  110% of RIT
2020 105% of RIT

 

Provisional tax can also be calculated using the estimation option, the GST ratio method (subject to certain criteria being met) or the accounting income method (subject to certain criteria being met). The year used in calculating the uplift is the year of the most recent filed income tax return.

Use of Money Interest on Provisional Tax

Use of money interest on provisional tax will arise at times outlined below provided payment is made on time based on the standard uplift for the taxpayer and associates. Special rules apply in the first year of business. 

 

Standard Uplift

Estimate

  Actual RIT <$60,000 Actual RIT >$60,000  
1st instalment n/a n/a
2nd instalment n/a n/a
3rd instalment n/a
Use of Money Interest Rates

 

Prior to 28 August 2019

From 29 August 2019

Underpayments 8.22% 8.35%
Overpayments 1.02% 0.81%
Withholding Tax on Schedular Payments & Payments to Non Resident Contractors

 

Rate

Minimum rate for residents 10%
Minimum rate for non-residents 15%
Non-resident entertainers 20%
IRD number not supplied (Company) 20%
IRD number not supplied (Individual) 45%

Schedular payments are payments for specific activities such as directorships, labour hire firm contractors, actors and commission sellers.

Recipients are able to choose their rate on the filing of an IR330C provided it is greater than the minimum rates above. Default rates apply where a rate is not chosen.

Rates for non-residents can apply to non-resident contractors performing services of any kind. Exemptions are available in some situations.

Non Resident Withholding Tax (NRWT)

 

Interest

Dividends

Royalties

Default 0%, 15% 0%, 15% or 30% 15%
Australia 0%, 10% 0%, 5%, 15% 5%
Canada 0%, 10% 0%, 5%, 15% 10%
China 0%, 10% 0%, 15% 10%
France 0%, 10% 0%, 15% 10%
Germany 0%, 10% 0%, 15% 10%
Hong Kong 0%, 10% 0%, 5%, 15% 5%
Japan 0%, 10% 0%, 15% 5%
Singapore 0%, 10% 0%, 5%, 15% 5%
UK 0%, 10% 0%, 15% 10%
USA 0%, 10% 0%, 5%, 15% 5%

Where a double tax agreement exists, the default NRWT rates may be reduced. Above are examples of rates for some common treaty partners (also including reduced rates where New Zealand rules permit). New Zealand’s extensive treaty network means specific rates are dependent on individual circumstances (please seek professional advice).

Resident Withholding Tax (RWT)

Individual Income Bands

Rate
0 - 14,000 10.5%
14,001 - 48,000 17.5%
48,001 - 70,000 30%
Over 70,000 33%
Companies 28%
Trusts 17.5%, 30% or 33%
Default (IRD number supplied) 33%
IRD number not supplied 45%
Residential Land Withholding Tax (RLWT)

RLWT, generally at the lesser of 33% of the gain or 10% of the sale price, must be deducted from the proceeds of residential property sales made by offshore persons where the property was purchased on or after 29 March 2018 and has been owned for less than five years.

The vendor can file a tax return to recover any overpayment.

Portfolio Investment Entities (PIEs)

Resident Individual Investors

Income (worldwide)

Income plus PIE Income/Loss

Rate
0 - 14,000 0 - 48,000 10.5%
0 - 48,000 0 - 70,000 17.5%
All others   28%

Both thresholds must be met for the rate to apply. Row 2 applies if Row 1 thresholds not met. Income is measured for either of the last 2 years.

 

Other Investors

 

Rate
Non-resident investor 0%, 1.44%, 15%, 28% or 30%
Company, incorporated society or PIE 0%
Super fund and trustees 0%, 17.5% or 28%
Registered charitable trust 0% 
Joint investment, partnership, or unincorporated society 0%, 10.5%, 17.5% or 28%
Controlled Foreign Company (CFC) & Foreign Investment Fund (FIF)

CFC

A foreign company controlled by New Zealand residents (being controlled more than 40% by one New Zealand resident, or more than 50% by two to five New Zealand residents). A minimum 10% ownership interest is required. The only income attributed is certain types of “passive income” where this is equal to or more than 5% of total income.

Non-portfolio FIF

A foreign company not controlled by New Zealand residents, a foreign superannuation scheme or life insurance policy. A minimum 10% ownership interest is required. Taxed either as a CFC or as a portfolio FIF.

Portfolio FIF

A foreign company not controlled by New Zealand residents, a foreign superannuation scheme or foreign life insurance policy. An ownership interest of less than 10% is required. Taxed using one of four methods:

  • Fair dividend rate (FDR)
  • Cost
  • Comparative value (CV)
  • Deemed rate of return (DRR)

A foreign superannuation scheme entered into by a non-resident is subject to separate rules when lump sum withdrawals are made from the scheme. Regular pensions and commutation payments are taxed as income.

Thin Capitalisation Ratios

Interest deductions can be restricted if both the New Zealand and worldwide group debt percentages are exceeded.

 

Inbound

Outbound

New Zealand group debt exceeds 60% 75%
Worldwide group debt exceeds 110% 110%
Approved Issuer Levy (AIL)

NRWT is deducted at 0% from interest paid by a New Zealand borrower to an overseas lender where the parties are not associated (or the funds originate from an associate), the borrower is an approved issuer and the debt instrument is approved by Inland Revenue. Instead AIL equal to 2% or 0% (for certain securities) of the interest payments is payable.

Prescribed Interest Rates for Low Interest Loans

Quarter

Rate

1 January 2016 to 30 September 2019 5.77%
From 1 October 2019 2.26%

 This rate is also used to calculate the value of a deemed dividend arising where funds are lent by a company to its shareholders.

Tax Penalties

Tax Shortfall

Lack of Reasonable Care

UnacceptableTax Position

Gross Carelessness

Abusive Tax Position

Evasion

20% 20% 40% 100% 150%

These penalties may be reduced where a voluntary disclosure is made or the shortfall is temporary as well as for previous good behaviour.

 

Late Filing

Return Type

Penalty

Income tax $50 to $500
Employer monthly schedule $250
GST $50 or $250

 

Late Payment

Date

Penalty

Day following due date 1%
Seven days following due date 4%
Each month following due date 1%

The 1% incremental late payment penalty is not charged in relation to GST from 1 April 2017 or income tax from the 2018 income year.

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