New Zealand tax facts

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.

Get your copy of 2022 Tax Facts

Your location

How would you like to receive Tax Facts?

Subscribe to:

Tax facts

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 $136,544
Self-employed people $42,465 $136,544
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.

Calculation of Provisional Tax

Taxpayer & Provisional Tax Year

Year of RIT Used

Standard Uplift

2022 2020 110% of RIT
2021 105% of RIT
2023 2021 110% of RIT
2022 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.

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). Income is taxable in New Zealand if it is a type of “passive income” where this is equal to or more than 5% of total income earned by the CFC.

Non-portfolio FIF

A foreign company owned 10% or more that is not controlled by New Zealand residents. 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.

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

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 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).
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%
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% (pooled alternate rate) 49.25% (pooled alternate rate)
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%
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.

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.

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
Interest Deductibility on Residential Rental Property

For residential property acquired on or after 27 March 2021, interest incurred from 1 October 2021 will no longer be tax deductible.

For property acquired before 27 March 2021, the deductibility of the interest will be phased out with no deductions allowed from 1 April 2025. The amounts of interest that will be denied a deduction are as follows:

Period that interest in incurred

Percentage denied

1 October 2021 to 31 March 2022 25%
1 April 2022 to 31 March 2023 25%
1 April 2023 to 31 March 2024 50%
1 April 2024 to 31 March 2025 75%
On and after 1 April 2025 100%

New builds with a code compliance certificate issued on or after 27 March 2020 will be exempt and interest will be deductible for 20 years. Other specific property will also not have interest deductions restricted.

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

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 83 cents 31 cents
Petrol hybrid 83 cents 18 cents
Electric 83 cents 10 cents
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).

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.

 

Prescribed Interest Rates for Low Interest Loans

Quarter

Rate

From 1 July 2020 4.50%
From 1 July 2022 4.78%

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

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

 

2022

2023

2022

2023

2022

2023

1st instalment 28 Aug 2021 28 Aug 2022 28 Nov 2021 28 Nov 2022 28 May 2022 28 May 2023
2nd instalment 15 Jan 2022 15 Jan 2023 28 Mar 2022 28 Mar 2023 28 Sep 2022 28 Sep 2023
3rd instalment 7 May 2022 7 May 2023 28 Jul 2022 28 Jul 2023 28 Jan 2023 28 Jan 2024
Terminal tax 7 Apr 2023 7 Apr 2024 7 Apr 2023 7 Apr 2024 15 Jan 2024 15 Jan 2025
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. Pre-approval of activities must be sought before claiming the R&D credit.

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 39%
Companies 28%
Trusts 17.5%, 30% or 33%
Default (IRD number supplied) 33%
IRD number not supplied 45%

 

All dividends and interest paid must be reported to Inland Revenue by the 20th of the month following payment, including details of the recipients of the interest or dividend.

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.

Student Loans

The repayment threshold has increased to $21,268, 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.

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%

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.

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%
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 7 May 2020

From 8 May 2020

From 10 May 2022

Underpayments 8.35% 7.00% 7.28%
Overpayments 0.81%% 0.00% 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.

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.

Services

Find an expert

News

05 Apr 2022

Tax Talk | Taxing the gig and sharing economy

With the rapid rise in the use of digital platforms to connect buyers and sellers, tax administrations around the world are realising that meeting tax obligations under current tax settings is a real challenge for those involved in the gig and sharing economy.

17 Mar 2022

Financial support update for businesses affected by Omicron

Inland Revenue has new timeframes around its latest assistance for businesses feeling the impacts of COVID-19.

23 Feb 2022

Tax Talk | Financial support for businesses most affected by Omicron

25 Nov 2021

Government support update

11 Nov 2021

Further COVID-19 support – make sure you claim your entitlement

Recent changes to the structure of government COVID support for businesses mean the dates on which applications open will now be aligned. Applications for both the next round of the wage subsidy and the next round of the resurgence support payment will be opening this Friday (12 November 2021).

08 Oct 2021

Ongoing Government Support for Business | COVID-19

29 Sep 2021

Tax Talk | Interest Deductibility Rules Announced

More than six months after the government announced interest deductibility limitations for residential properties and a mere three days before these rules would come into force for residential rental properties owned prior to 27 March 2021, the government has released the new legislation in the form of a Supplementary Order…

21 Sep 2021

Tax Talk | New Tax Bill

The Minister of Revenue recently introduced the Taxation (Annual Rates for 2021-22, GST and Remedial Matters) Bill (the Bill) to Parliament.   We discuss the key changes here.

14 Sep 2021

Tax Talk | Business support update

With Auckland set to have another week at Level 4, and potentially several weeks at Level 3, the support available for business throughout the country continues to evolve.   We provide the latest on what support is available, the criteria and when it will be available.

13 Sep 2021

Resurgence support payments from 8 September

The Minister of Finance has announced another round of the Resurgence Support Payment.

25 Aug 2021

Tax Talk | Inland Revenue confirms no penalty for late payment or late filing

The Inland Revenue Department is reassuring customers they won't be penalised for late payments and asking that people do not try to contact them via phone, instead to use MyIR.  

25 Aug 2021

Business Checklist - COVID-19

As we progress up and down Alert Levels, businesses need to review their business continuity plans, and take a flexible mindset to operations.  

Our website uses cookies to help understand and improve your experience. Please let us know if that’s okay by you.

Cookies help us understand how you use our website, so we can serve up the right information here and in our other marketing.