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%
70,001 - 180,000 33%
Over 180,000 39%

 

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
ACC Rates

The earners’ account levy is $1.39 per $100 of earnings (GST inclusive) for the 2021/22 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
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%
84,001 - 216,000 33%
Over 216,000 39%
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

Student Loans

The repayment threshold has increased to $20,280, 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

63.93% (single rate) 63.93% (single rate) or the alternate rate calculation (see below)
49.25% (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%
55,981 - 129,680 49.25%
Over 129,680 63.93%
Prescribed Interest Rates for Low Interest Loans

Quarter

Rate

1 October 2019 to 30 June 2020 5.26%
From 1 July 2020 4.50%

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

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 3/23. Non-resident businesses can be refunded GST paid on New Zealand purchases, in some cases.

Depreciation

Straight line or diminishing value can be applied on an asset by asset basis. Depreciation rates vary depending on estimated useful life. Individual asset purchases can be immediately deducted in some circumstances. 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 and fit-outs are treated as follows:

Buildings

Residential buildings are not depreciable. Commercial and industrial buildings are depreciable at 2% DV or 1.5% SL.

Fit-Outs

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

Donations

Companies

Allowed a deduction for approved charitable donations up to their net 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).

Residential Land Withholding Tax (RLWT)

RLWT, generally at the lesser of 39% 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, or on or after 27 March 2021 and has been owned for less than ten years where the property is not a new build.

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

Controlled Foreign Company (CFC) & Foreign Investment Fund (FIF)

CFC

A foreign company controlled by New Zealand residents (being controlled more than 40% by New Zealand one 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 the 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.

Imputation Credits

The maximum imputation ratio is 28:72. Dividends are subject to resident withholding tax (RWT) at the rate of 33% to the extent the dividend is unimputed. Generally, an additional 5% RWT must be withheld where dividends are imputed at 28%, but this is not compulsory where the recipient is a company. The imputation credit account must have a credit balance at 31 March, or a 10% penalty will apply to the debit balance.

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

Tier One: first 14,000 kms

Tier Two: after 14,000 kms

Petrol or diesel 79 cents 27 cents
Petrol hybrid 79 cents 16 cents
Electric 79 cents 9 cents

Inland Revenue updated the kilometre rate for business use of vehicles for the 2021 income year on 27 May 2021.

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. For the 2020/21-year onwards pre-approval of activities must be sought before claiming the R&D credit.

Use of Money Interest Rates

 

Prior to 7 May 2020

From 8 May 2020

Underpayments 8.35% 7.00%
Overpayments 0.81% 0.00%

As a result of COVID-19 there are concessions available in respect of payments dates for adversely affected business. Please seek further advice.

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

  2021 2022 2021 2022 2021 2022
1st instalment 28 Aug 2020 28 Aug 2021 28 Nov 2020 28 Nov 2021 28 May 2021 28 May 2022
2nd instalment 15 Jan 2021 15 Jan 2022 28 Mar 2021 28 Mar 2022 28 Sep 2021 28 Sep 2022
3rd instalment 7 May 2021 7 May 2022 28 Jul 2021 28 Jul 2022 28 Jan 2022 28 Jan 2023
Terminal tax 7 Apr 2022 7 Apr 2022 7 Apr 2022 7 Apr 2023 15 Jan 2023 15 Jan 2024
Calculation of Provisional Tax

Taxpayer & Provisional Tax Year

Year of RIT Used

Standard Uplift

2021 2019 110% of RIT
2020 105% of RIT
2022 2020  110% of RIT
2021 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
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%, 5%, 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).

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.

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. Trust, corporate and non-resident investors are subject to rates of between 0% and 30%, depending on type of entity and other relevant 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%
70,001 - 180,000 33%
Over 180,000 (from 1 October 2021) 39%
Companies 28%
Trusts 17.5%, 30% or 33%
Default (IRD number supplied) 33%
IRD number not supplied 45%
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%
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.

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%
Services
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