New Zealand Tax Facts

Individuals

Companies

Trusts

Flow-through entities

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:

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

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.

 The alternate rate calculation applies the following rates.

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

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.

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:

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.

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).

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.

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.

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.

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:

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

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.

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

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.

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 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.

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).

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.

Resident Individual Investors

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.

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

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 Shortfall

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

Late Payment